How to ensure a flexible benefits scheme is truly flexible

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Need to know:

  • Online platforms and portals allow employees to access their benefits offering wherever they like for easy access.
  • Any-time enrolment allows employees to adjust their benefits selection to keep pace with lifestyle changes.
  • Trading benefits up or down ensures employees’ selections can be tailored to reflect their individual circumstances.

Today’s always-on consumerist economy means many people now expect to be able to have what they want, when they want it. Flexible benefits schemes were designed to enable employers to offer staff an element of choice around their benefits package, but in their traditional form, these may still come with limitations.

According to the Employee Benefits/Xerox HR Services Benefits research 2016, published in June 2016, 42% of employer respondents are designing their benefits strategies with a desire for flexibility in mind. Meanwhile, Capita Employee Benefits’ Employee insight report 2016-17, published in October 2016, found that 62% of employee respondents that have access to flexible benefits, and are currently using these, feel they are in a good benefits scheme.

So, how can an organisation ensure that its benefits package provides employees with the level of flexibility they require?

Choice and personalisation

To create a successful flexible benefits package, the choice of benefits on offer have to be relevant, fresh and appealing. An employee’s personal situation is constantly changing, so being able to access a wide-ranging choice of benefits can provide staff with the ability to support and enhance their lifestyle.

Striking the balance between providing too much or too little choice is imperative. The average number of benefits to include in a flex scheme is around 15, says Jeff Fox, principal at Aon Employee Benefits.

Benefits should then be divided into areas such as healthcare and wellbeing, financial, lifestyle and protection benefits, adds Fox. If an employer has a number of benefits sat in each of these categories, then this is an indication that offers a good level of choice and flexibility for employees.

Enrolment options

A big change in the flexible benefits landscape in recent years has revolved around a number of organisations transitioning from an annual enrolment window to any-time enrolment, where employees can select and amend their benefits choices throughout the course of the year rather than during a set number of weeks, once a year.

Jack Curzon, head of scheme design at Thomsons Online Benefits, says: “Flexible benefits aren’t flexible if [an employee] can only pick them once a year from a list that [an organisation] is telling [them] to [choose] from. If [the employer] changes that communication method and says, ‘you’ve got these benefits available all year round and it’s not defined by [what] you can select at different points’, then that makes it truly flexible.”

Any-time enrolment windows can suit the speed at which employees’ lifestyles can change. Gethin Nadin, director of ecosystems at Benefex, says: “[Employers] need to keep asking [employees what they want] so, as their lives change, [they] are up to date with that.”

Although an any-time enrolment model is not suitable for insurance-based products, which often renew on an annual basis, it is particularly effective for health and wellbeing benefits, such as gym membership or bikes-for-work schemes, which employees can choose to take up at any time throughout the year. Andrew Drake, head of rewards and benefits consulting at JLT Employee Benefits, says: “It’s about giving [employees] stuff at the point they need it, rather than at a point in time when [an employer] thinks they might need it, hoping that [the] right moment in time coincides with [their] annual benefits window. It gives people control.”

However, while an annual enrolment window could be seen as a more restrictive arrangement, many employers like the focused, internal communications they can implement around a yearly opportunity, creating a boost to the benefits scheme.

One of the advantages of any-time enrolment is its alignment with modern culture, because it more closely matches quick-fire lifestyle adjustments, as well as a more mobile, short-term and instantaneous way of life. “People aren’t in things for the long term anymore because they don’t know how quickly their situation is going to change, so allowing employees to make decisions as and when they need to in their life is really important,” says Nadin.

Technological developments

Technology also supports the flexibility of a benefits offering, as portals and platforms have taken on a more consumer-led approach. For example, mobile optimisation can enable employees to engage with and amend their benefits selection on the move, with single sign on and a single benefits app or website giving employees access to their benefits whenever convenient. In addition, app functionality such as push notifications and augmented reality can aid benefits communication.

Nadin says: “[Flexible benefits] have moved away from being this white-collar benefit. Anyone who was sat at a desk was able to make those choices. Now, all of a sudden, it doesn’t matter if [an employee is] a banker on £40,000 a year sat in front of a desk or whether [they] are on minimum wage working in retail, [they] now have access to flex platforms so [they] can make those choices whenever, wherever [they] like, and that’s really important.”

Consumer-style prompts, such as ‘recommended for you’ pop-ups, are also becoming more prominent, with big data proving essential in helping to offer employees more personalised guidance when it comes to making their selections, says Marena Mieras, senior flexible benefits consultant in the UK consumer business at Mercer. “We’re giving contextualised nudges; nudging people into making more informed choices,” she adds. “It’s using data we’ve learned about that person to help them make more informed choices.”

The use of modellers and offering complementary benefits, for example, payroll loans alongside financial education, meanwhile, empowers employees to tailor their choices more effectively to their individual circumstances.

Flexing benefits muscle

Giving employees the option to trade benefits up or down also puts control in the hands of the individual. Trading offers an extra element of flexibility that lets employees tweak their benefits to suit their life stage, for example, new parents may look to extend private medical insurance to family members or increase levels of life insurance.

Communications to staff should be honest, transparent and jargon free to ensure that employees fully understand how to utilise and tailor benefits in this way, and staff should have access to benefits summary information, as well as detailed policy documents via their online platforms, says JLT’s Drake.

Employers should also consider whether allowing employees to trade up or down on their benefits selection will contradict an organisation’s benefits or business strategy. For example, if an employer wants to provide a form of healthcare for all staff as part of a health and wellbeing strategy, but then allows employees to trade down or opt out of the chosen provision and exchange it for cash, this could go against key business objectives.

The continued evolution of flexible benefits schemes, therefore, has enhanced just how flexible such plans can be, providing a greater variety of options for both employers and staff.

callcredit-case-study-imageCallcredit introduces any-time enrolment to increase engagement with flexible benefits package

Data organisation Callcredit Information Group re-launched its flexible benefits package for its 1,000 UK-based staff in May 2015, creating its mobile-optimised benefits brand Benefits for People Like You.

The organisation enhanced its package by adding new benefits that included a car salary sacrifice arrangement, bikes-for-work scheme and childcare vouchers. In addition, it opened up access to its benefits by using a rolling, year-round enrolment method where possible, supported by its new web-based platform.

Tim Simpson, head of reward and HR administration at Callcredit Information Group, says: “The rolling enrolment is essentially the choice aspect but it’s also a good reminder of the benefits that [employees have] got all the time. If [employers] only have a single window, then [employees] forget what benefits they’ve got on offer. It really is about facilitating choice.”

Callcredit also added further options to allow staff to personalise their benefits. This includes the option to add dependants or partners to private medical insurance (PMI) or critical illness insurance, as well as the ability to flex cover levels up or down on benefits such as group income protection or life assurance, which can be traded down to two-times’ salary or traded up to 10-times’ salary. Staff can also buy and sell holiday days.

To communicate these changes to staff and to ensure employees have a thorough understanding of what they could gain from engaging with the flexible benefits scheme, Callcredit used employee profiling, carried out in late 2014 to early 2015, to create eight avatars that reflect different personal characteristics. Staff could then take an online quiz to see which avatar they most resembled and thereby discover which benefits may be of the most interest to them depending on their needs and wants. This enabled staff to make more informed decisions around their benefits selections.

The re-launch of its flexible benefits scheme has been a success; 89% of employees logged on to the new benefits portal up from 10% who logged on to the previous platform. Of those who logged on to the new site, 72% have gone on to make benefit elections.

Julie Wright, HR director at Callcredit, says: “Having more flexibility around the benefits we offer is one of those areas that [an organisation needs] to be offering as an attractive employer that is going to get the best talent. [The] big thing for us was around offering people choice in how they took their [benefits].”

Callcredit won the Employee Benefits Award 2016 for best flexible benefits plan.

michael-rose-2016Viewpoint: Build flexible benefits slowly to tie in what employees value

It all starts with the aims of the flexible benefits plan. As an organisation, agree why flexible benefits are being introduced and what success will look like. By definition, providing choice is almost certainly one of the aims. But it does not mean that complete flexibility has to be provided from day one. As retail employees often find, offering too much choice can cause the individual to walk away; but narrow the selection down to a more limited number of choices and shoppers are more likely to buy. In flexible benefits, it may be sensible to offer a more limited range of choices in the first year. As people become engaged and familiar with the system, the choices and flexibility available can grow.

To make the plan as flexible as possible, employers should start by understanding what employees already know about the current benefits and what they may value. So ask them.

One employer recently gave its employees a list of benefits and asked which they valued and which they would like to see introduced. The results showed that a large number of people did not know what benefits they already had. But it also indicated what they would like to see.

Initially, try using flex to just remind staff what benefits they have available; then building on this foundation of benefits can prove valuable. Even if in the first year there are not many changes made, value can be added so long as employees are engaging with the system.

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When the choices are expanded, the flex systems available now are so efficient that a huge number of choices can be offered with little extra effort. It then comes down to how the choices are presented; group the benefits by themes and communicate them really well.

Michael Rose is director at Rewards Consulting