Need to know:
- Flexible benefit schemes are becoming more popular as employees come to expect more individuality, and employers focus on retaining them.
- Advancements in technology allow for more variety in terms of both the communication of benefits, and employees’ means of accessing them.
- Organisations can offer a wide range of benefits, but should still be careful to tailor them to their particular workforce, or risk low uptake.
Flexible benefit schemes, or flex plans, are increasingly common, with organisations frequently offering employees a wide choice of personalised benefits.
In most flexible benefit schemes, employees either retain their existing salary while varying the benefits they receive, or adjust their salary by taking fewer or more benefits.
The Chartered Institute of Personnel and Development (CIPD) has recently seen a rise in employers’ interest in flexible benefit schemes, largely due to advancements in technology and increased focus on reward and retention.
Customised flexible schemes are increasingly popular because employees are now viewing their careers as a series of experiences rather than a set of jobs, says Matt Russell, chief sales officer at Benefex: “Employees are moving jobs more often, and flexible benefits are becoming more customised, more personal and more appealing.
“Organisations are keen to track and retain their best employees, and the best way is to provide a benefits package that is very much customised, and gives employees the ability to transact in an individual way. They want to feel they are not only an employee, they are also a person with a personality and individual needs.”
Advancements in technology
When flexible benefits technology was first introduced more than 25 years ago, most systems revolved around basic spreadsheets and in-house IT systems. These days, it’s more common to have an all-encompassing platform, either operated in-house or from cloud-based servers. Systems are designed to interface with all other aspects of benefits and rewards, and are most commonly interactive, with data-modelling tools that can be used by employees.
Much progress has been made since the early days, when employees received a booklet through the post, says Charlotte Godley, head of flexible benefits at Capita Employee Solutions: “Whereas a flexible benefits platform used to be ‘here’s a list of benefits, go on and make your choices’, now it needs to reflect the wider company values and elements of reward. It’s moved on to online communications and progressed even further to personalised communication, augmented reality and all of the different ways of communicating with employees.”
The way employees access their benefits has also changed due to the rise of technology in people’s day-to-day lives.
Apps and online tools have become very important, says Richard Morgan, principal at Aon: “These are expected, and if [an organisation] can’t provide them, employees are like ‘why isn’t there an app for this?’ Employers also have a platform where they can obtain employees’ information automatically so they can manage and get the right message across as and when they need it.”
Russell agrees: “What [employees] want to do is get online and interact with their benefits now and make choices when they want to, in real time, and not have to wait until the available window. I think it’s a major challenge, and it continues to be major issue when it comes to flexible benefits.”
With more organisations offering flexible workplaces and employees working remotely or on-site at various locations, potentially worldwide, there is also a logistical need for easy access to information.
Tailoring a perfect package
With employees at various locations and with varying needs, employers need to offer a range of benefits that will appeal to their entire workforce. Popular benefits might include buying or selling annual leave, a cycle to work scheme or gym membership, or more bespoke offerings such as charity work days, technology funds and new starter loans.
However, while hosting a myriad of options might look impressive, if employees do not feel the benefits are right for them, the take up will still be low.
Jack Curzon, head of scheme design at Thomson Online Benefits, says: “Define a strategy. An organisation has to make sure it’s auditing everything it has in place, from pensions to fruit in the office. Has [the organisation] surveyed [its employees] or hosted focus groups? An organisation should never put employees in the ‘Generation X’ or ‘Millennials’ box; finding out what they need individually, rather than casting assumptions, is the way to truly know.”
Russell agrees: “What is going to attract a more stable workforce? Is it a slightly better pension or more flexible healthcare? Employers need to speak to employees and find out what they value, what they want, what would make it a better place to work and what would retain them. An organisation could throw a lot of flexible benefits at its employees, but actually what it really needs to do is just ensure the package is customised and tailored for its demographic and the type of organisation it is.”
The future of flexible benefits
Pensions, health insurance and life assurance are still commonplace when it comes to benefits strategy; however, technology enables organisations to offer employees more diversity, rather than being limited to an out-of-the-box offering.
“Looking at innovative technology and how can we bring the retail experience into the business and the benefits world, and into a changing workforce, is one of the key things,” says Godley.
Curzon believes that organisations will move further away from sticking to traditional benefits, and will offer more tailored benefits, such as the introduction of personalised reimbursement accounts, which give employees funding for a specific need.
“If an employee wants to go horse riding or swimming, the company doesn’t have to set up a horse riding or swimming fund,” says Curzon. “It’s a new thing for businesses to roll out properly and it can be a big change from going ‘here’s a list of benefits’ to ‘here’s £100, go spend that on horse riding’, but that’s fine because it’s beneficial for an employee’s health.”
Workplaces tend to be decades behind the rest of the world, adds Morgan: “We seem to be slowly catching up, certainly interactively. In our normal lives we’re continuously having online experiences, we like to have the interaction and engagement. In the workplace, portals are slowly moving in that direction and employers are recognising that they need to catch employees’ imaginations, they expect it now. If an organisation’s benefits package falls short, it’s underwhelming.”