Employee Benefits Research 2007: Evaluation and attitudes

There is little point in devising a comprehensive benefits package and spending large amounts of money providing perks to staff without evaluating the effectiveness of the benefits strategy. But less than half (41%) of employers actually do so. Larger organisations with more than 10,000 staff are the most likely to undertake this task (57%), whereas organisations employing less than 100 are the least likely (30%). Those in the public sector are also among the most likely to evaluate their perks (52%) while bosses in the voluntary sector are the least likely (35%).

Evaluating benefits strategies is not a particularly costly exercise. For those that undertake this task the most popular method is to conduct staff surveys (81%). Unless employers ask what their employees think of the benefits on offer they will not know whether they appreciate them or motivate them in any way. Another way of analysing whether the package is capable of engaging staff is by monitoring the take-up of benefits, which 77% of respondents do. This is something that most employers offering flexible benefits plans will do as a matter of course. But it is an exercise that is also worth carrying out if an employer provides a large range of voluntary benefits or discounts as they could be offering something that, in fact, nobody wants.

It is perhaps surprising that so few try to evaluate the effectiveness of their benefits strategy in relation to recruitment and retention when these are two key areas where the perks package should make an impact. It is a tricky exercise to undertake, but employers in the public sector manage to do this more than most other types of organisations. Despite the large amount of money spent on healthcare benefits, just over a third of those that measure the effectiveness of their benefits package track it against sickness rates.

Given that so few employers actually evaluate the effectiveness of their benefits strategy it is difficult to understand why 76% believe their benefits package provides them with value for money. This belief is unsurprisingly strongest among organisations with less than 100 staff (83%), and employers in the voluntary sector (82%), indicating perhaps that many of them have limited funds. It may be that a lot of publicly-listed and privately-owned employers also take this view (77% for both) because they believe that they have negotiated good rates with providers. However, in order to understand the full impact of the package on retention, motivation and productivity, further analysis of its effectiveness would be beneficial, especially for those employers that claim their package is not appreciated by staff, of which there are more than half (54%).

A surprisingly high proportion of employers believe their package reflects the employer brand (61%). This is highest among organisations employing between 5,001-10,000 staff (70%) and publicly-listed companies (67%). Much has been made of this concept in recent years and it goes way beyond simply reflecting the employer brand in communication materials. Good examples include Enviros, the environmental consultancy, which made sure that its green credentials were carried through to its flexible benefits plan with options including a carbon offsetting scheme. In addition, members of its stakeholder pension scheme are able to invest in ethically-sound funds and the choice of company cars has been limited to those with low emissions.

The last time we conducted research into UK employers’ benefits strategies in 2004, the strongest attitude to emerge from employers was that their benefits package was outdated. Although the proportion of employers now expressing this view (41%) is similar, it is no longer the top concern. It may be employers are now paying more attention to other issues. Also many may have taken the complicated step of modernising their package since then, perhaps by introducing flex or reviewing their pension scheme. However, it is somewhat disappointing a fifth believe their perks are poor.

When it comes to competitiveness within their own sector, 18% of respondents believe that their organisations’ packages fall into the lower quartile, while 25% fall in the upper quartile with the remainder in the middle. In the voluntary sector, however, only 6% of employers believe their packages fall into the lower quartile while 29% consider themselves to be in upper quartile. A staggering 43% of organisations with more than 10,001 staff believe their package falls in the upper quartile for their sector.