Need to know:
- Employers are catering to increasingly diverse workforces, many of whom want autonomy over their benefits and remuneration.
- Flexible benefits packages facilitate those employees who want to focus on their finances, while also providing a range of perks to appeal to many demographics.
- Flexibility when it comes to working hours and holiday provisions allows employees to take more control over their work-life balance, without seeing their pay suffer.
- One method of helping employees become more financially stable, without relying on increased pay packets, is to provide the opportunity to access earned money before a set payday.
Flexibility is high on the priority list for the modern workforce, and the desire to break free from rigidity goes beyond working hours. According to research published in October 2018 by payroll and HR service provider SD Worx, more than four in 10 (43%) UK workers want a flexible reward package and the ability to control their benefits.
According to Fiona McKee, head of human resources at SD Worx, employees are seeking more influence and flexibility over all aspects of their professional lives. Nevertheless, according to the same survey, 83% of organisations retain complete control over their employees’ remuneration.
So, is flexibility around pay a natural part of the current employee benefits journey, and are those organisations missing a trick?
Increasingly flexible benefits
Many organisations now house more than four generations of employees, all with different wants and needs. It is impossible for a rigid benefits package to cater for them all, according to Jack Curzon, consulting director at Thomsons Online Benefits. This leaves employers with a dilemma when it comes to using reward to differentiate themselves in the market.
Curzon explains: “While increasing pay would be one option, few organisations can afford to supplement salaries across the board by an amount that would make an impact on employees.”
Helen Payne, principal at professional services organisation Aon, believes online flexible benefits platforms provide the solution. Scheme designs vary according to budget and business needs, but employers typically provide some fixed benefits to comply with legislative requirements, and then allow employees to purchase or trade additions. This, says Payne, results in packages that appeal to diverse workforces.
Transitioning to a reimbursement model for benefits is an attractive and effective alternative, notes Curzon: “This gives every employee a pot to spend on benefits that will make a real difference to them. They can use this to fund a Spotify subscription or a patisserie course, for example, to support their individual wants and needs.”
Options for all employers
While there are a range of platforms that can provide flexible pay and benefits packages, these may prove less appropriate, or affordable, for smaller organisations.
This does not mean small and medium enterprises (SMEs) do not have options, though, says Vanessa Landreneau, ambassador in Cambridge for the Institute of Directors.
“Some easy things that a smaller employer can do with a manual system include allowing flexible pension sacrifice, so employees can choose to put more in their retirement savings,” she explains.
Some employers also provide a fixed amount that staff can spend, at their discretion, on training courses that are unrelated to work. “The exposure to new learning can enhance both creativity and productivity in the day job, as well as increasing engagement,” Landreneau says.
Robert Hicks, group HR director at Reward Gateway, says that pay flexibility is an effective tool when it comes to employee engagement. “Empowering individuals to make their own personal choices is a really great way to make them as engaged as they can be,” he says. “Personal responsibility is a great way to motivate and empower staff.”
Emma Yearwood, director of HR at Sodexo Engage, adds that this approach helps make the benefits package relevant and engaging for everyone: “Those driven by financial rewards will have the chance to increase their earnings, while those who prefer rewards like private [medical insurance], life insurance or extra holiday can opt to sacrifice a portion of their salary for these benefits.”
The importance of pay
Although employees increasingly expect more flexible, varied and personalised benefits, with non-monetary elements such as wellbeing provisions, social perks and mental health support gaining traction, pay has not been replaced as an important hygiene factor.
According to the SD Worx survey, almost three in 10 (28%) UK workers, given the option, would prefer to have fewer benefits in favour of a higher salary. Regardless of how relevant or attractive benefits schemes are, many still need and appreciate cash in the bank.
To address this without relying on salary increases, Payne points out that money-saving provisions like advances, debt consolidation and personal loans for significant life moments, such as moving house, are increasingly popular.
Nevertheless, Work that keeps the UK working: How flexible working can help power a 24-hour Britain in a post-Brexit age, published by Quinyx in October 2018, showed that there is a balancing act to be considered between providing monetary reward and creating strategies that help employees with their finances more indirectly, such as flexible working. The research found that 36% of UK full and part-time workers would need a salary increase of 31% or more to encourage them to waive flexibility.
The recent spate of organisations, such as Muckle Media and Farnell Clarke, instating unlimited holiday schemes further reflects a push to consider employees’ work-life balance needs and personal responsibilities, without creating a negative impact on their pay packages.
Flexible pay cycles
Flexibility in terms of pay frequency is an element that many employers are taking into consideration, enabling staff to gain access to their pay as they earn it, rather than waiting for a set payday.
James Herbert, chief executive at flexible pay provider Hastee Pay, believes that this should be a natural part of the wider progression toward a more autonomous and personalised approach to the employee experience.
He explains: “Workplaces are becoming more flexible in terms of when, where and how people work. Pay cycles, on the other hand, remain staunchly unchanged.
“The ways and opportunities for people to spend their salary continue to increase, making it harder for workers who are paid on a fixed basis to balance their incomings with their outgoings.”
Giving staff access to their pay as soon as they have earned it means that, when faced with an unexpected bill, they are able to simply advance the amount they need. This can help individuals avoid resorting to high-interest loans to meet everyday financial needs, and can thereby boost their overall financial wellbeing.
Whatever solution employers choose, there is little doubt that they will have to get used to offering employees greater flexibility in all aspects of work and, indeed, all aspects of reward.