To create well-targeted benefits get to grips with behaviour

Understanding human behaviour has been an ongoing challenge for many of the world’s greatest minds. While marketers, desperate to understand what makes consumers tick, have historically claimed ownership of behavioural science in the world of commerce, it can also be applied by HR in industrial relations through to benefits selection.

But there is more to behavioural science than meets the eye. It is not simply a case of applying logic in order to determine how someone will respond to a certain set of circumstances. If that were the case then employee take up of a final salary or a defined contribution pension scheme backed by generous employer contributions would be 100%. While some finance directors may thank their lucky stars that is not so, HR, and compensation and benefits practitioners are generally concerned that employees are failing to sign up for benefits they are entitled to, and which help engage staff with the business.

Part of the solution may well be to educate staff about the value of the perks that their organisation is offering. But, it is not the whole answer. Some staff will still not take positive action – perhaps because they are confused by the financial jargon, or the array of options on offer or, in the case of pensions, negative media coverage. Employers can go one step further by structuring a scheme in such a way that staff are helped along that decision-making road. Auto-enrolment may be the key for pensions, or fewer options in the case of flexible benefits.

Behavioural science can also be applied to pay and motivation schemes. Speaking at the HR Solutions and Employee Benefits Exhibition and Conference 2007, held in Manchester last month, Peter Thomson of Henley Management College, said that many employers are stuck in the dark ages paying for overtime and not performance.

It is essential to keep abreast of changes in society in order to anticipate the behaviour of future generations of workers. Already, industry figures, such as Thomson, are predicting that the so-called ipod generation will demand to work in a more flexible manner, possibly from home, and to receive instant reward for their work.