Employee Benefits Voluntary Benefits Supplement 2006: For successful schemes just add value

Despite their use in helping to promote the core organisational culture, voluntary benefits schemes must represent good value otherwise they will fail to win take-up, says Alison Coleman

Case studies: Neal’s Yard Remedies, John Lewis Partnership

Article in full Employee benefits are said to work best when they reflect an organisation’s values. Some employers have taken this theory a step further by tailoring their benefits schemes to mirror their company culture and image even more closely. The effects of this are two-fold: such a move raises levels of employee engagement, and sends out a clear signal to prospective staff that the employer understands and represents their needs and interests. Jenny Kidby, a principal consultant at business psychology consultancy OPP, says: "Ultimately, what employers are trying to elicit is organisational citizenship behaviour, or goodwill. How willing your employees are to go beyond the black and white of their contract to make the business successful will depend on how engaged they are with the organisation and how closely they feel it represents their own interests and values." Voluntary benefits schemes are a cost-effective option for employers, which, rather then requiring them to fund benefits enables them to arrange preferential rates on a range of products and services for their staff to choose from.

These also provide the greatest scope for communicating company values and image in a way that employees can identify with. David Wreford, a senior consultant at Mercer Human Resource Consulting, explains: "Base pay is driven by skills, bonuses are driven by performance and contribution, but voluntary benefits are driven by the value and culture they are trying to promote." Some options may not necessarily receive a high take-up, but will be used to communicate to staff and promote the wider perks package.

Bikes-for-work schemes, for example, are often used to communicate an organisation’s green credentials, even though the restrictions surrounding the use of bikes often results in a relatively low take-up. An organisation that wants to be seen as family friendly, meanwhile, could offer childcare vouchers, which are made even more valuable through the tax breaks staff are eligible for. "Employers are getting better at finding out what motivates people and what attracts them, identifying who they are employing, and tailoring their voluntary benefit schemes accordingly," adds Wreford.

In understanding the links between benefits, corporate image and workforce demographics, some organisations have recognised that several of the more traditional benefits on offer are out of alignment with the profile of their workforce. Some of the traditional healthcare and insurance benefits, for example, do not necessarily reflect the needs of younger employees. Given that people are now less likely to be planning long-term careers with any one organisation, benefits should be geared more towards their current here-and-now lifestyle needs. These include options like mobile phones, which are often seen as the next must-have benefit.

Nearly everybody now has one, but with the rapid pace of evolving handset design and technology, younger staff tend to upgrade to the latest model more frequently. This presents firms that employ a young dynamic workforce with an opportunity to demonstrate their awareness of what staff really want, and through a salary sacrifice arrangement, provide it at no significant cost to themselves.

Where employers have a larger workforce, encompassing a broader mix of social groups, they are typically segmenting their voluntary benefits offerings into packages, such as travel, motoring or childcare to reflect the diversity of interests. But if they are to win employee approval and boost loyalty through these tailored schemes, then they must be communicated clearly.

Keir Tutt, operations manager at 4th Contact, says: "A good example of this can be found in a pure voluntary benefit such as retail vouchers. There are many different types, appealing to people for different reasons. "Where you have a predominantly younger workforce, in a call centre, for example, gift vouchers will be seen as a high-value benefit, but where you have a slightly older workforce, possibly with younger families, vouchers that can be spent on weekly shopping will be welcomed."

Employers must also be clear on which other brands they are comfortable being associated with. Paul Bartlett, principal consultant at Grass Roots, explains: "New technology is often used to promote a company’s preferred image, for example, the ubiquitous Ipod is often prominent in the advertising of voluntary benefit schemes. However, some retailers are restricted as to what benefits they can offer in order to avoid advertising products supplied by competitors, either directly or indirectly."

Above all, the benefits on offer must represent good value otherwise, in spite of promoting a company’s image or culture, they will not be popular. They must be simple for employees to order and administration should be negligible from the employer’s perspective. Communication to employees is crucial. Employers looking to attract the attention of their employees must seek a wide appeal and interest from their voluntary benefits scheme if it is going to be successful in attracting, retaining and ultimately motivating staff. "Employees will naturally be looking to understand the rationale for introducing these benefits if the objective is not apparent. Each scheme needs at least one stand-out benefit to draw in employees’ interest. The greater the logic and fit with other initiatives the company is operating, the less room there is for any cynicism," adds Bartlett. In certain sectors, forward-thinking employers have been successful in identifying a stand-out benefit that identifies them as an employer of choice in the opportunity for staff to buy themselves some time through the use of concierge services. "These have become hugely popular, particularly among organisations operating in fast-paced, high-pressure industries like finance and media, where a lot of the work is deadline driven. "Concierge services have an immediate appeal to employees who thrive in this type of environment, but they also illustrate very clearly the employer’s appreciation of their contribution and an understanding of their needs," adds Tutt. So communicated correctly, voluntary benefits provide an opportunity to promote the value of working for the company and evidence that employees are treated consistently with the company’s values and image. "For those [organisations] that get it right, it is definitely a move in the right direction," concludes OPP’s Kidby.

Case study: John Lewis Partnership

When the John Lewis Partnership redesigned and relaunched its voluntary benefits package, Partner Choice, a year ago, it took the unusual step of including speed dating in the scheme. Far from being offered as a gimmick to grab people’s interest, it was what a large proportion of its staff, or partners as they are known, actually wanted.

Adam Brooke, manager of Partner Choice, says: "When we really started to look at the demographic of our partners we were quite surprised to find a mismatch." Of the organisation’s 64,000 partners, 27,000 are under 30 years of age. "The type of voluntary benefits that had been offered, including discounted healthcare and private medical insurance products, reflected a slightly older workforce.

And while we offered a car purchase scheme, there was nothing around driving lessons, so we sourced a provider, the AA, and included them in the new package," explains Brooke.

But this relatively young workforce had ideas of its own and, when prompted for suggestions, requested discounts on a speed-dating service. "It makes perfect sense. We work in a shift-based, flexi-time environment, which can make it difficult for young, single people to meet new people. It is an unusual benefit, but one that suits our culture perfectly," adds Brooke.

Case study: Neal’s Yard Remedies

At Neal’s Yard Remedies, many of its voluntary benefits have been selected to reflect the company’s holistic, organic approach to health.

These include a range of discounted therapies, such as shiatsu and aromatherapy, massages, yoga classes, and the use of company bikes. Elizabeth Smith, HR director, says: "As a business, we focus on the health of the whole person.

If you want to have a workforce that genuinely buys into that ethos, extending the same focus to them by offering holistic, health-related perks, is one way of attracting and keeping people." The firm, which is based in Gillingham in Dorset, employs 200 people. Some are based at shop locations around the country, which means that benefits are not always as consistent as the company would like.

"What we do know is that many of our employees, both here and in our stores, were attracted to our company by its ethos, and its reflection in the benefits we offer," adds Smith.