Flexible benefits must fit an organisation’s culture

Flex is a tool that can help an organisation reaffirm its identity, and for it to work there must be a strategic and cultural fit, says Peter White

Case Studies: LogicaCMG, Greene King

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Asking an organisation to define its own culture can often be similar to a woman asking a man to gauge the size of her posterior; the answer will always be excessively complimentary regardless of reality.

Nonetheless, employers spend a considerable amount of time, money and energy cementing and explaining the ethos of their business. And it would be rude of its benefits structure not to complement this thinking. A third of organisations running flexible benefits plans believe that flex has been effective in reinforcing company culture, according to the Employee Benefits/Towers Perrin Flexible Benefits Research 2005. And a further 35% believe this protection of culture is the main advantage of flexible benefits arrangements.

Chris Bruce, managing director of flexible benefits provider Thomsons Online Benefits, says that the way to really discover what the culture of the organisation is like, rather than what it claims it to be, is to bypass senior managers. “One of the biggest lessons is you can’t learn about culture until you talk to the employees.”

Once workforce demographics have been considered and feasibility studies taken onboard, employers can start to design a flexible benefits scheme that truly incorporates their corporate culture. “Once you’ve identified what the culture actually is, you can shape the benefits to a certain extent around what is going to be appropriate for that culture. If you have a particular location that has a lot of females in their 30s, childcare may be of real importance, whereas in Europe we find the most important area is luncheon vouchers,” adds Bruce.

Ensuring that specific benefits in a flex plan do not contradict or upset the way an organisation views itself or does business is sacrosanct. Holiday trading is one of the more contentious arrangements currently populating such plans. Morag Prosser, senior consultant at Watson Wyatt, explains: “In year one [of a flex scheme] companies are very conservative, especially around holiday. They do not let people buy and sell too much holiday because their managers tend to be nervous about how they are going to get their business done. Once they realise [it doesn’t harm the business] they become very relaxed about it.”

Philip Hollingdale, managing director at benefits provider Staffcare, agrees: “A service-based business might be more hesitant in allowing flexibility on holiday trading because losing their people for more days might have an impact on their business, whereas in a production firm, it’s less of an issue.”

Home computing schemes have been a popular addition to many flexible benefits arrangements over the past couple of years. However, not all organisations feel such a scheme is necessary. It is estimated that between 10% and 15% of UK organisations would not offer discounted computers to staff because they have other arrangements in place such as already giving staff free machines for their homes.

“Most companies will have something that they just don’t feel culturally they want to offer or don’t feel fits with their agenda. Take a big IT company, which has a whole load of very technical IT people, and the home computing initiative, which allows you to buy a basic Dell computer, is probably not going to be too popular because these guys have been building their own computers for years,” adds Watson Wyatt’s Prosser.

This is the situation that technology firm LogicaCMG has found itself in after its first successful flex launch. Graham Drewett, UK compensation and benefits manager, says that it is currently considering which benefits to add to its relaunch in January 2006. It is likely to include a home computing scheme, albeit one that is carefully tailored to its tech-friendly employees. “The computer [scheme] was an area we needed to look at carefully. Because we’re an IT company, our people can go down to the local computer fair and come back with a bag of bits to build their own. So we need to be sure [that the scheme suits staff] when we come out with that offering,” explains Drewett.

Thomsons Online Benefits’ Bruce agrees that it’s important to carefully consider each benefit with the workforce in mind. “It’s very dangerous to make assumptions about what benefits people want, for example, a home computing scheme in an IT firm. Staff may already have two computers but they may want a third and the tax-efficient benefit would be very welcome.”

Another benefit available through salary sacrifice that can fit culturally is the tax-efficient bike plan. A number of organisations have specifically placed a bike scheme into their flexible benefits packages because they want to encourage staff to get healthy or be more environmentally friendly. Charles Ashwell, corporate sales manager at bike provider Halfords, says: “There are a number of employers that believe in green issues or want to alleviate car parking problems, where their macro environment forces them to consider the scheme. If they have a flex scheme, it’ll be easiest for them to put it under this umbrella, in terms of the administration of running the scheme.”

However, despite a simpler administration process, if a company wishes to introduce the benefit because it fits its culture, it might be best to launch it outside of flex. “Take up of bike schemes tends to be lower in flex schemes because they are vying against a number of other benefits. If an organisation has such [cultural] objectives for their bike scheme, we try and encourage them to do it outside of a flex scheme,” adds Ashwell.

Gym membership is also often introduced because a company wishes its staff to become healthier and to reflect the fact that it is a fit organisation. But, because of this, it can often be shoehorned into a flex scheme, and end up failing because it doesn’t fit. Glenn Rankin, managing director of gym provider Incorpore, says despite the fact that, according to Employee Benefits/Towers Perrin Flexible Benefits Research 2005, 28% of organisations include gym membership into flex, it works better if it is offered on a voluntary basis. “The issue is that if employers are looking to offer gym membership on a national scale, through more than one operator, it becomes more difficult because of the administration.”

Most employers that offer a flexible benefits package choose to exclude their company cars from this arrangement. But car policies often reflect exactly how an organisation views the provision of benefits, for example, either by outsourcing car administration or encouraging employees to take a cash allowance to take away this burden. And by incorporating this into a flex plan, in addition to offering staff extra choice, it extends these values.

Paul Roberts, associate director at fleet provider Lex Momentum, says: “From an employee angle, it doesn’t make sense to the workforce to have more than one benefits structure and that’s often what you get. In a lot of companies, you get a flexible benefits structure with great communication and marketing and then you’ll have the car scheme. It seems weird to the employee that there are two structures.

“Because a company car is an expensive benefit, putting that money into the flex pot makes that flex pot grow considerably. As long as there are sensible parameters, that’s very exciting for employees and takes the ethos of flexing to the next level.”

And employers take this ethos very seriously. “It depends whether the employer wants to give them the money and complete freedom over what they do with it. There are some employers that, while they want to give staff some choice, as a responsible employer, they want to be sure they have benefits that they regard as important such as life cover and a minimum pension contribution,” says Staffcare’s Hollingdale.

John Roberts, group HR director at brewer Greene King, which introduced an online flex system in 2002, agrees: “The beauty of flex is that it gives people the opportunity to match what they want to where they’re coming from. If you’re a company that would want people to take personal responsibility for sorting things out and taking action, you’d want your benefits to reflect [these] values.”

Communicating a flexible benefits package that reflects company culture adds another complicated dimension to the cause. A publishing company such as Emap is used to communicating in a bright and colourful way through its magazines, so doing the same for its flex package is no different. Thomsons Online Benefits’ Bruce says that he has watched media firms give presentations on flex wearing ripped jeans and t-shirts, which was appropriate for the type of organisation but in legal firms, for example, it has to be more serious and business-like. “What goes down really badly on the shop floor is sending in someone who is suited and booted.”

Case Study: LogicaCMG

When LogicaCMG decided to launch flexible benefits for its 6,500 employees, it made sure the scheme fitted with its company culture.

As a technology company, it was important that the scheme was online and as up-to-date as possible. At one point, it even considered constructing its own system.

Graham Drewett , UK compensation and benefits manager, says: “We’re a very cost-conscious business and we didn’t have a budget for flex at all. It had to be self-financing, which it was through salary sacrificing our pension schemes. That was very important to us.”

Choosing which benefits were included in the plan was also a crucial process. Holiday trading was particularly scrutinised. “Our board thought particularly carefully about holiday trading because being an integration company, we make our money by hiring out our people. Our people produce our revenue so we had to think carefully about [the effects of] holiday trading and decided we wanted to go ahead with that,” Drewett explains.

Case Study: Greene King

Flexible benefits has helped Greene King update its culture of patronage to a modern, online world of personal responsibility.

Group HR director, John Roberts, says it introduced an online flexible benefits system to assist in their culture shift. Previously, the brewer was known as a family-run business in a small market town, Bury St Edmunds, Suffolk, and the company was very paternal.

“We’ve veered away from doing things for [staff] and encourage them to sort them out themselves. We’ll give them all the resources they need, but they have the responsibility to make the decisions. Flex is just a mirror image of that.

“In terms of benefits I’m not going to make the decision for [them] about what benefits they have, what we will do is give them a choice. That’s the essence of flex, underpinning your company culture.”