Long gone are the days when HR and benefits professionals were merely administrators responsible for processing staff pay and tracking their organisation’s sickness absence rates.
If you read nothing else, read this…
- The role of HR and benefits professionals has evolved from administrator to business growth driver.
- Employee engagement is at the heart of the HR and benefits professional of the future.
- Benefits professionals that develop a neurological approach to employee engagement will have a more competitive edge.
HR and benefits professionals are increasingly expected to know about every aspect of employee benefits, from pensions and share schemes to critical illness and bikes for work , and to understand their interconnectivity. For example, they need to understand the importance of, say, providing share scheme members with access to workplace individual savings accounts (Isas) to optimise their tax efficiencies through the transfer of any share scheme proceeds into an Isa to mitigate capital gains tax.
This is particularly the case for HR and benefits professionals working with a small team. Neal Blackshire, reward manager at McDonald’s Restaurants and winner of the accolade Employee Benefits Professional of the Year at the Employee Benefits Awards 2014 , explains: “Because of the relatively small size of our team, we need staff with a broad understanding of a number of things. We wouldn’t hire someone just to do benefits or just to do payroll or pensions or whatever it may be; it would a case of hiring across a multiple set of responsibilities.”
And as the breadth of benefits that professionals are expected to be able to cover widens, they must be able to take a more strategic approach to their role, which includes a more commercial focus. Martin Freeman, director at JLT Employee Benefits, says: “It’s about [them] understanding their organisation’s business goals and how benefits play a part,” he says.
Benefits professionals need to understand how best to optimise employee wellbeing
This may involve HR and benefits professionals learning how best to optimise employee wellbeing in terms of health or finance, or to boost staff productivity or reduce their organisation’s sickness absence rates. They may also have a role in understanding which employee benefits can help their organisation to recruit, retain, motivate and reward staff so that it can compete in the ongoing war for talent and become, or maintain its position as, an employer of choice.
Charles Cotton, performance and reward adviser at the Chartered Institute of Personnel and Development, says that part and parcel of this commercial approach is an ability to keep track of, and forecast, new market trends. “It’s about [professionals] looking for new trends and developments in the marketplace and trying to show a relevance to their organisation,” he explains. “They’re not just a transactional admin department, but able to offer insight and help their organisation either do what it wants to achieve or be able to, from a position of credibility, maybe challenge this.”
For example, benefits professionals may challenge their employer’s policy on workforce planning, or indeed be called on to devise a policy to help manage its workforce . “Employers have now got to think about what responsibility they feel they have for staff that are retiring,” says Freeman. “Do they feel that they have a duty to provide guidance, even access to advice, in terms of workforce management?”
Cotton says that HR and benefits professionals should revisit which benefits they offer their employees, and why, as part of their commercial agenda. “They need to see if the benefits are actually delivering value for their organisation and employees,” he adds.
A finance background can help inform benefits professionals
Jamie Jenkins, head of workplace strategy at Standard Life, believes that HR and benefits professionals with a finance career background are often well placed to take a more commercial approach to their role. He says: “They can look at something and question how they can make it work commercially and financially for their organisation, and how they can turn a cost into an opportunity.”
But he adds that understanding how to engage employees in their organisation’s benefits package is probably the most important skill that the benefits professional of the future will possess. “The main thing is staff who have a track record of, or experience in, engaging employees in benefits more widely,” he says.
For example, with retirement planning, benefits professionals of the future will understand the value of engaging staff in pensions rather than becoming preoccupied with how the scheme works and the surrounding compliance .
Neuroscience can help to engage employees
Jan Hills, author of Brain-savvy HR: A neuroscience evidence base and partner at Head Heart + Brain, a consultancy designed to improve leadership through findings from neuroscience, believes this will be a core discipline that HR and benefits professionals of the future will draw on to perform their role and engage employees .
”Neuroscience is the scientific study of the nervous system and will be used by HR and benefits professionals of the future to help shape their benefits propositions,” says Hills. In short, it can be used to help professionals understand which benefits create positive reactions in employees’ brains and, therefore, optimise the extent to which they engage with their organisation.
Hills explains: “In the area of reward, [neuroscience] is challenging the almost lopsided view that reward is really about money and bonuses, and beginning to show thatstaff get a sense of reward as much from working together and helping others to achieve and be trained and developed .”
Benefits professionals do not need to take formal qualifications
Training and development is important for HR and benefits professionals of the future. This is particularly the case in highly valued skills such as data mining , which will be a core competency of HR and benefits professionals of the future, according to Emma Long, human resource outsourcing operations director at MidlandHR.
“Historical data will be used to predict hiring needs, shift patterns and economic factors affecting the workforce, and the HR professional of the future will need to be able to take this data and apply it to their business,” she says.
McDonald’s Blackshire agrees. ”Increasingly, the principle skill that everyone in HR as a whole, but reward particularly, is going to need is the ability to disseminate important information from the vast raft of data that we get deluged with every day.” He adds: “From email inboxes to Twitter and LinkedIn, we’ve got information coming at us all hours of the day and night, and it’s then easy not to see the wood for the trees. We need to be able to spend time on what is important and filter out what isn’t.”
Mercer’s Freeman believes that social media sites, such as LinkedIn, can actually provide a good source of free information with which professionals can develop their skill sets and keep track of industry trends , overcoming the challenging costs of formal qualifications.
But Blackshire says that the most valued attribute requires no training at all. “That’s a good sense of humour because it’s quite important, given the amount of time we spend at work, that we have fun while we’re doing it.”
Joe Gladstone: Why HR professionals need behavioural economics
Understanding what motivates employees is fundamental to what an HR professional does. Yet, for decades, they have used the same superficial frameworks to model ways that staff evaluate information and make decisions, ignoring decades of evolving scientific research.
The recent surge of interest in behavioural economics , which draws insights from psychology and economics to help explain how people make choices, means that the old ways of doing things in HR are over.
Employers, such as Google, are gobbling up expertise in this area to apply to their HR department, or ‘people operations’, as it prefers to call it. This is because the field has produced remarkable insights into how to effectively design and communicate employee benefits plans and motivation schemes .
Motivate and retain staff
Examples include how to motivate and retain employees without raising costs. Economics tells us that staff put in more effort only if they are compensated with higher wages . Surprisingly though, financial incentives can actually undermine personal motivation. Rewards are powerful when they make employees feel valued, and give them a sense of progression.
Another example is how to optimise the communication of employee benefits . ‘Choice architecture’ (how various options are framed, ordered, and described) is an effective technique to engage employees. For example, having too many options can create decision-making paralysis. HR and benefits professionals should limit them to make the choices they offer meaningful and differentiated, not overwhelming.
Stop wasting time and money on employee research
Surveys and interviews, widely used by HR and benefits professionals to decide which benefits to offer, are premised on staff being consciously aware of what they want. This is rarely the case. Only a controlled experiment can offer adequate answers to many of these questions.
As results from behavioural economics continue to spread out of dusty journals and into the public sphere, HR professionals need to be at the forefront of engaging with this new science or else risk being left behind.
First, they need to realise that they are not intuitive psychologists, and that years of experience rarely trump insight gained from thorough experimentation. Second, they should also read a range of useful books. A particular favourite is Thinking Fast and Slow by Nobel Laureate, Daniel Kahneman.
Recognise when help is required
Third, they need to recognise when they need external help. A cost-efficient method can be to engage industry specialists or academics to offer training sessions and/or to consult on key questions.
Organisations have spent decades meticulously studying customer behaviour. It’s time they applied the same energy to understanding their employees. People operations departments are just the beginning; the new race is to understand human behaviour.
Joe Gladstone is an academic researcher and consultant based at the University of Cambridge
Employee Benefits Academy
Reward and benefits managers looking to develop their career or grow their compensation and benefits knowledge could benefit from 2014’s courses from the Employee Benefits Academy.
A joint venture between Employee Benefits magazine and Total Reward Academy, the Employee Benefits Academy provides expert, practical training in benefits and compensation management.
This year’s remaining benefits course will take place on 20 – 24 October.
Upcoming compensation courses will take place on 15 – 19 September and 24 – 28 November.
These will cover: using salary surveys; analysing, interpreting and presenting pay data; job analysis and progression systems; pay setting and progression systems; and planning and managing salary review budgets .
Employers can also choose to run in-house courses, which can be arranged for a minimum of six delegates.