How can data from benefits technology be used to inform a reward strategy?

benefits data

Need to know

  • Effective analysis of benefits data can help ensure packages are meeting the needs of employees.
  • This can help businesses benchmark themselves against peers or competitors.
  • Data can be used to tweak reward strategy in line with specific organisational priorities.

The old phrase ‘knowledge is power’ was not designed for employee benefits systems, but it perhaps could have been. An effective benefits strategy not only provides a means of boosting employee engagement but also offers valuable insight into the nature and preferences of a particular workforce.

Jeff Fox, principal at Aon Employee Benefits, says: “When employees interact with their benefits, make selections, trade down from core, or interact with total reward, [employers] start to get the behavioural data. This can range from simplistic take-up data to richer engagement insights, such as repeat selections or even advocacy. The holy grail is to capture employees saying great things about benefits, telling others about it and striving harder in their roles as a result of the benefits [their employer] offers.”

Analysing this kind of insight can help organisations develop a more compelling, and potentially cost-effective, benefits strategy. Alex Tullett, head of benefits strategy at Capita Employee Benefits, says: “The market is rapidly moving away from a finger-in-the-air approach to reward and benefit strategy towards data-led, evidence-proven, strategic design. This allows businesses to reject the old habit of adding rewards or benefits for the sake of simply broadening an offering, or hoping for an improved outcome. A data-led design helps to ensure that that cost leads to a clear strategy, backed up by a robust business case.”

Shaping a reward strategy
Data can also help to shape reward strategy more generally, says Iain Thomson, director of incentive and recognition at Sodexo Engage. One example is where schemes are designed to recognise exceptional performance. “[Employers] can track which employees are recognised the most, which times during the year rewards are redeemed, and what incentives are the most popular. With this information in hand, [they] can start to tailor a reward programme that’s based on which benefits and incentives are having the biggest impact.”

However, employers can only rely on such insight to a certain extent and should not overlook the importance of speaking to staff too, adds Thomson.

Effective use, and communication, of data can also help organisations get value for money from their reward strategy. Pensions are a good example, says Paul Waters, partner at Hymans Robertson. “Ultimately, this will result in a better return on investment on [defined contribution] DC spend as workers start to recognise and appreciate their pension benefits,” he explains. “Our research, The science of attraction, [published in] February 2017, found that employers have a 12% higher chance of attracting the most talented candidates if they advertise the role’s financial security benefits.”

Benchmark reward strategy
Data can also be used to benchmark organisations against their competitors, whether in the same sector or against firms with similar demographics, although it is important employers are clear about why they are doing this. “The question of benchmarking is fascinating and often the biggest area of debate,” says Fox. “The key questions are whether knowing what the sector is doing will drive any kind of change in [the employer’s] strategy, and then where in relation to peers [it] wants to sit. This really boils down to being in line with peers from a comparative perspective, or below or above. Without knowing this, the comparative piece is actually irrelevant, a nice-to-know.”

Effective use of the information held in benefits packages should also support organisations with their broader business objectives, particularly in areas such as recruitment or productivity. Graham Meinke, head of product management at Staffcare, says: “A well-defined benefits scheme can play a key role in helping to attract, motivate and retain talent across an organisation. Likewise, organisations focused more specifically on productivity challenges may have an interest in improving the wellbeing of their workforce, boosting fitness, reducing sickness and ensuring people have access to healthcare.”

Health and wellbeing strategy
Health and wellbeing is a good example of how benefits data can be used to help shape strategy. The use of insurance claims information, for example, can be combined with data from other sources, such as wearable devices, to provide insight into the overall health of a workforce, says Rebekah Haymes, health and benefits senior consultant at Willis Towers Watson.

“Collating this data with that acquired from benefit claims experience, sickness absences and health risk assessments can help identify and anticipate trends, leading to early intervention and a healthier and more productive workforce,” she says.

However, employee concern about sharing personal data remains a barrier to effective adoption of such insight. “This is particularly prevalent and problematic when dealing with highly-sensitive issues, such as alcohol misuse, obesity, and mental health,” adds Haymes.

Health screenings can also help to generate data, which can be used in conjunction with other information to help shape strategy. Danone UK, for instance, offers all staff an annual health assessment, provided by Bluecrest Wellness, to monitor factors such as body mass index (BMI), blood pressure, heart health, diabetes and cancer risk as well as musculoskeletal health and psychological wellbeing.

John Mayor, head of rewards at Danone UK and Ireland, says: “The data has led to new insights for our HR teams. We know that issues of weight and obesity are a problem in the UK population generally, but weren’t perhaps expecting the kind of results we’ve seen within the organisation. Now we know it’s important and still needs to be high on our agenda.”

As a result, the business has changed its menus in workplace cafes and set up exercise clubs designed to appeal to those who do not want to go to a gym.

Taken a step further, being able to measure outputs in areas such as reduced absence or increased productivity can help to provide evidence of a return on investment in benefits. There is much work to be done in this area, however; The benefits score research by Aon Employee Benefits, published in September 2017, found just 20% of medium to large organisations are measuring the return on investment of their benefits programmes at all.

Upcoming legislation will also make it more important for businesses to be able to extract information that will help them with broader priorities, adds Tullett. “With increased focus towards gender and equal pay, [employers] are going to need to understand how their benefits are consumed by different groups in their workforce,” he says. “Employee benefits data is going to increasingly feature in organisations’ approaches to reward parity.”

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