Optimise flexible benefits through segmentation

Targeting flex communications is increasingly important, says Lloyds TSB’s Tim Fevyer

There is a clear business benefit in offering more choice to employees. Tailoring packages to better meet the needs of a diverse workforce means that employers are better positioned to recruit, retain and engage the people they need to take their businesses forward. It also means that every pound spent on benefits has a better chance of being perceived by individual employees as more valuable.

Flexibility obviously has a key role to play in reward packages but to optimise its potential employers should go a stage further. This is something we are trying to do at Lloyds TSB.

First, we are changing the way we communicate the choices contained in our flexible benefits scheme to staff. While we have given our employees greater choice to reflect their differing needs and desires, historically we have tended to treat them as a homogeneous group when it comes to communication.

By contrast, if you look at our customer base we operate a much more sophisticated approach, communicating differently to different customer segments in ways and styles that reflect their particular needs and characteristics. Using this marketing expertise, we have now extended the concept of segmenting communications to our employee base. This has had a significant impact on take-up, particularly in areas where we previously had difficulty in reaching people (and where we needed to reach them most).

Employee segmentation This approach involves treating employees differently in terms of the style and tone of communications, the case studies we use and the offers we promote. At a time when we are seeking to expand flexibility, the area of segmentation is something we will continue to explore, not only by looking at enhancing our segmentation data-base and expanding it to other areas of reward but also by introducing the concept of employee self-segmentation to provide greater accuracy and an enhanced hit rate.

Another area of employee benefits we are looking at is taking things beyond the concept of simply providing what people want. This means first focusing benefits provision on the people we value most – identifying the core populations who really make a difference to our organisation.

We then aim to use the data we have available to analyse whether the provision of a particular benefit which may be popular with our people helps change attitudes or behaviour that, in turn, adds value to our business.

For example, we will look at whether such a change will have an impact on engagement, retention or recruitment. Of course, this means we will have to become more sophisticated in the way we measure things and draw linkages between these measures.

The third area we are exploring is simplification. There is a risk that when it comes to giving people greater choice – especially where this involves concepts such as salary sacrifice – things can become overcomplicated. Helping people understand what is available to them, what benefit it might be to them and what other impacts it might have on them in a clear and simple way is a key challenge that needs to be addressed.

Having the greatest product offering in the world is not enough if people do not respond to communications. This necessitates adopting a simplified approach, again drawing on professional marketing expertise.

Finally, we are reviewing the benefits we provide to employees to ensure we are not just providing them because we have always done so. This means understanding more about what people truly value and what sort of trade-off decisions they want to make.

With flexible benefits schemes now commonplace, those employers that have them will, like us, be taking a closer look at what perks make a positive difference to both the individual employee and the organisation as a whole.

Tim Fevyer is head of pay policy and employee benefits, group HR, at Lloyds TSB

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Key Points

  • Employers need to get better at measuring what benefits make the most difference both to individuals and to business goals.
  • Treating employees differently does not just mean giving them more choice – it is also about communicating with specific groups of employees in differing ways.