With the web delivering evermore competitive prices,using suppliers that deliver on promises is crucial to maintaining a vibrant uptake of voluntary perks, says Victoria Furness
Case Study: Notting Hill Housing Trust, Capita Services
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You don't have to be an internet whizz-kid to find the best deals for goods and services online. Internet price comparison sites or 'shopbots', such as Kelkoo and Pricerunner, will even do the job for you. The high street can also throw up some competitive deals, especially if you're willing to hunt hard enough.
So with discounted goods and services readily available both on- and offline, is there any value left in employers offering voluntary benefits schemes to staff? After all, the attraction of such schemes is that they use an employer's purchasing power to deliver employees discounts on anything from days out to electrical goods and the weekly supermarket shopping trip.
Charles Cotton, adviser for reward at the Chartered Institute of Personnel and Development (CIPD), admits that offering discounts is no longer enough in a competitive market, but points to the other advantages of a voluntary scheme, such as the benefit of buying from a trusted supplier. "If an employee's company is arranging the discount, [staff] might feel more relaxed about buying from them, as presumably the employer will have chosen someone who is reputable," he says.
Mark Carman, marketing manager at benefits provider Motivano, agrees. "The advantage of a voluntary benefits package is that all suppliers are vetted on their ability to deliver on their promises. If employers feel that they are not getting very good customer service, we will remove [the supplier] from the scheme and not bring them back until they can prove that they have improved their service," he explains.
The other regularly-touted advantage of voluntary benefits plans is convenience. It is much easier for employees to purchase an item from their desk than to spend a lunch hour searching the high street or waiting until after work to race around the shops. Argos promotes its scheme to staff based on the ease with which they can purchase discounted goods and services. Vicky West, ARG benefits manager, who oversees benefits for Argos and Homebase, explains: "There may be occasions when employees perform a price check and find that they can get a better price elsewhere.
This is inevitable in the current market. Our scheme is a convenient package for our employees, which holds all of the discounts in one place." George Bosswell, director at benefits provider You At Work, cites one example where a scheme user found convenience more important than the discounts on offer. "One of our clients does a lot of travelling and we have arranged with the nearby Barclays [bank] branch to deliver currency on an hour's notice and drop it off at his office. He is not getting a better deal on the currency, but it is a time-saving convenience," he says. Some in the industry still believe that the discounts available through voluntary schemes do offer good value.
Employee benefits provider, People Value, for example, is so confident in its discounts that it will give a 110% refund of the difference if an employee can find an item for less elsewhere. Mike Morgan, chief executive, claims: "We have never once had anyone claim a refund. Our raison d'’tre is that, unlike many of our competitors, we buy wholesale. We are also an e-commerce retailer in our own right so not only do we discount third-party sites, but we sell goods from 30 wholesalers that do not have an [internet] presence. We pass on the discounts direct to our customers and make no margin on the goods." Such factors explain why voluntary benefits schemes have continued to gain in popularity.
According to the CIPD, around a quarter of employers offer employees access to a voluntary benefits plan. "Organisations might implement a voluntary benefits scheme because they want to expand the purchasing power of their employees, because other firms are offering a scheme or because recruiting candidates expect it," says the CIPD's Cotton. Compared to flexible benefits schemes and other potentially expensive recruitment and retention initiatives, voluntary benefits plans represent good value for money. "In some cases, it works out less than £1 per head to put the system in place," says Carman.
Partly for this reason, more small- and medium-sized organisations are showing an interest in voluntary benefits schemes, as well as those operating in the voluntary sector. For many employers, it is also a first step towards introducing a flexible benefits scheme and more choice into their benefits package. As the market has matured, Morgan has noticed that providers are becoming involved in many second and third-generation voluntary benefits schemes. In these instances, organisations are looking for a new provider, "perhaps because they poorly communicated the scheme, it was not used or there was an overbearing promotion of financial benefits over other [products]," he suggests.
Whatever their reason for seeking out a new provider, most employers are determined not to make the same mistakes again. "In some contracts we are being bolted to the floor on performance, and being asked to provide proper management information on a regular basis or benchmarked against the value employees receive," admits Morgan. One of the key drivers behind a successful scheme is good communication. "You need to sell it to employees the way you would sell the company to them," says Cotton. Alongside the usual communication tools of posters, emails, leaflets on desks and printed brochures, he suggests asking "frontline managers to talk or champion the scheme", or in an unionised workforce, "encourage unions to mention it to members".
Another popular technique - particularly in light of the current emphasis on employer branding - is to give the scheme its own identity and name. Here, employers should be careful of opting for style over substance by ensuring that the choices available in the scheme match the needs and tastes of employees.
No doubt Chancellor Gordon Brown's decision to scrap the home computing initiative (HCI) will have left some schemes with a large hole, particularly where the benefit had proved popular with staff. Unsurprisingly, most in the industry still believe that voluntary benefits schemes represent good value. This is often especially in workplaces where the employer is constantly working to improve its package of discounts.
Most organisations run some form of competition on the anniversary of their scheme's inception to revive interest from employees. The anniversary also provides an opportunity to assess the scheme and its fit with employee feedback. "We review the companies and offers on an ongoing basis throughout the year with a bigger review of the whole scheme prior to its relaunch in April.
We have also changed the style of the booklet and how we promote the scheme based on feedback," says Argos' West. Regular special offers are also a constant reminder of the plan's existence throughout the year.
Morgan cites a deal that it recently promoted in partnership with RCI Holidays, which offered a family of four self-catering accommodation in the Canary Islands or Spain for £49. Rather than looking globally, Motivano's strategy going forward is to return to grass roots. "We are coming to the stage where most voluntary benefits are hitting parity with suppliers and the level of discount they can achieve. Over time, we want to try using more local discounts. If we can create local discounts for specific offices - such as local dry cleaners, restaurants and so on - we can make the scheme part of everyday life," explains Carman.
So while the level of discount may no longer be the primary reason why employers offer voluntary benefits, initiatives like these will ensure that such benefits schemes continue to evoke interest from and deliver value to employees.
Case Study: Notting Hill Housing Trust
Notting Hill Housing Trust is to launch a voluntary benefits scheme this month to help it stand out from its competitors. Jayne Hilditch, corporate services director at Notting Hill Housing Trust, admits it is unusual for an organisation in the social housing sector to implement a voluntary benefits scheme.
"Our pay is average for the sector and we offer the same pension and holiday as pretty much everyone else. There is very little in the core benefits package that differentiates us so this should make us an employer of choice."
The scheme, which is administered by You At Work, will be the first for the organisation. Previously, it only offered discounts at nearby amenities, such as the local gym or Wagamama's restaurant. "We want to be more consistent and offer a bundle of benefits rather than an ad-hoc mix," says Hilditch.
However, one of the main benefits that attracted the housing association to offer a voluntary benefits package - HCI - is no longer available. If tax exemptions were not still available on bicycles, Hilditch doubts they would have opted for a voluntary benefits plan. "The rest of the benefits are nice but people could get the same discounts elsewhere," she says.
Bicycles tie in with the Trust's 'Healthy Workforce' initiative, however, which it is promoting this year. Hilditch will be watching closely to see if staff value the voluntary scheme at its launch. If it proves successful, the plan could pave the way for the introduction of further perks. "Ultimately, we want to go down the flexible benefits route but approach it in a phased way," she adds.
Case Study: Capita Services
Capita, which has 25,000 employees went live with its voluntary benefits scheme, Capita Value, in November 2005. Bridget Green, HR director, says: "We introduced the scheme because the previous offering was not perceived by staff to represent good value.
There was a limited choice [of options] and the platform consisted of ad-hoc discounts and services." Almost six months after its launch, employee take-up is running at 32% - the previous scheme had take-up of just 12% - and increasing each month. "Our unique selling point is the value of the discounts employees can receive, and the variety and choice available because the offers are very wide-ranging," explains Green.
The company plans to review the working and contents of the scheme after six months and will canvass staff opinion in an employee survey. "For us, it is important there is an ongoing promotion of the benefits. It is not a must-have, but an additional benefit for staff, which we need to be competitive in the marketplace.
Even where we have [Transfer of Undertakings (Protection of Employment)] Tupe transfers, staff want to know what benefits are on offer," adds Green.