Theoretically, the motivation for employers to offer flexible benefits schemes stems from their need to attract employees and reduce labour turnover. Both are key measures of labour market performance, which ought to be improved by offering benefits that are attractive to a wider range of workers. Given the increasing demographic diversity of labour markets, flexible and wider ranging benefits that can be selected contingent upon employee needs, will, for many employers, be a cost-effective route to improving labour market performance indicators.
However, such schemes bring a degree of complexity to the reward process and therefore attention should be paid to their implementation in order to maximise positive employee, and consequent performance, benefits. For example, taking the implementation of employee stock ownership (ESO), research by Andrew Pendleton and Andrew Robinson, in Employee stock ownership, involvement and productivity: An interaction-based approach, published in Industrial and Labor Relations Review, 2010, points towards a variable interacting effect with wider human resources management (HRM) mechanisms of employee voice and participation. An ESO with minority participation requires complementing processes of employee voice in order to deliver productivity improvements, whereas an ESO with majority participation works independently. Such complexities highlight the need for qualified and nuanced understanding by employers of the processes through which various schemes work in practice. Flex schemes are becoming increasingly common, so as is the case with strategic HRM systems, those firms paying attention to coherent implementation are those likely to achieve productivity benefits.
Dr Hugh Cook is lecturer in employment relations and human resource management at Leeds University Business School