Voluntary benefits: Give workers what they really want

If you read nothing else, read this . . .

  • When offering voluntary benefits schemes, employers must ensure they remain relevant to employees’ requirements.
  • A good understanding of an organisation’s employee demographic is important to make sure benefits appeal to staff.
  • Focus groups can help make benefits schemes more targeted by finding out which offers are relevant to the workforce.
  • Communication and promotion of voluntary benefits schemes is essential to ensure employees are aware of what is available.

Case study: IAG ensures staff get discount message

Like many other employers, insurance group IAG (UK) has been seeing much more use of its voluntary benefits scheme in the current economic climate. Ricky D’Ash, remuneration specialist at the firm, says: “We’ve got more and more spend going through the portal. It is at an all-time high.”

As well as seeing a marginal increase in everyday spending areas, such as supermarket shopping, he says areas such as technology and holidays, where discounts tend to be bigger, are also in high demand.

For D’Ash, promoting the scheme is vital. It is included in a benefits session as part of every employee’s induction, as well as being covered in regular communications and one-off promotions. “We have run promotions where we will have a draw to give away a prize such as a camera to anyone who goes and looks at a particular offer,” he says. “This has really helped to push up spend. Employees do jump at the chance to use these offers, but you do need to remind them that they are there.”

D’Ash is also keen to ensure the scheme is as broad as possible and has recently added several new benefits, including discounts on will writing, tax advice, solicitors’ fees and solar energy.

“We want our employees to get discounts and cash back on as much of their spend as possible, whether this is everyday shopping or to help them with the expenditure they might need from time to time,” he adds.

Voluntary benefits can cover a lot of ground, so it is important to ensure that an employer’s offering is always relevant to its workforce, says Sam Barrett

Offering voluntary benefits is a low-cost way to give employees a high-value benefit. Access to savings on everything from supermarket shopping and utilities to meals out and holidays can be greatly appreciated in tough economic times, but employers need to ensure their scheme remains relevant to their workforce.

With pay rises scarce and a pressing need to reward staff as cost-effectively as possible, interest in voluntary benefits schemes has been increasing. Many providers report an increase in new clients and in take-up across existing schemes. Duncan Smith, senior director, business development at Next Jump, says: “We are seeing evidence of the change in the economic climate, with increased use of employee discounts across all shopping.”

In particular, Smith has seen an increase in take-up on discounted everyday items, such as groceries. “Discount levels are not as deep as other categories, but the savings become significant with habitual spend,” he says.
According to Personal Group, if an employee uses voluntary benefits effectively, and excluding any salary sacrifice savings, they could save at least £750 a year by taking up the offers in a scheme.

A prime example of this is a discount in a supermarket. These knock about 5% off your shopping bill, which may seem slight but adds up to an annual saving of £260 on an average weekly shop of £100.

David Wall, managing director of LogBuy’s UK division, has also seen increased take-up of everyday shopping deals, and is not too surprised. “Employees used to be time poor, so they would not bother to take advantage of these types of deal,” he says. “Money is much more of an issue now, so they will look to make savings wherever they can.”

Help to reduce stress

But it’s not just everyday savings that are appealing to employees. Many providers also report an upturn in interest in treats such as meals out, trips to the theatre and gym membership. Richard Davies, head of employee benefits at P&MM, says it is important to help employees access savings on these items. “When disposable income is under pressure, what tends to go are the things we like doing,” he says. “But these treats can really help reduce stress, which can make employees more productive. Helping employees to keep enjoying these treats will benefit the business.”

Employees’ hunger for money-saving deals might suggest that offering as wide a range of benefits as possible will be most effective, but this is not always the case. In the current economic climate, promoting a luxury cruise that, even with a 50% discount, would swallow up three months’ salary would probably not be well received by employees.

So a good understanding of staff demographics is important. Steve Mason, key account director at Personal Group, says: “A successful voluntary benefits programme should appeal to every employee, from the managing director down to a part-time cleaner. Think about the demographics. Where do employees live? Where do they shop? And how do they shop? This will enable [an employer] to understand what to include in the programme.”

Mason recommends setting up focus groups before launching a voluntary benefits scheme. Involving a cross-section of employees, as well as other key influencers such as trade unions, ensures the benefits are relevant and can also kick-start the communications programme.

Voluntary benefits providers can also help to make the perks more targeted. Most providers have several thousand different offers, which can present a real danger of discount overload, but many have introduced ways to personalise offers.

Employers can tailor benefits

Some providers allow employers to tailor their offerings. For example, LogBuy’s Wall says every employer can decide which offers they want to make available to staff. “With some, for instance a fitness chain, it is a matter of not promoting their competitors’ offers, but every employer can decide which benefits they want to include on the scheme’s front page,” he says.

Others prefer to leave the relevance decision down to the employee. For instance, Next Jump uses recommendation technology to enable employees to control the offers they see online and in email reminders. Smith says this helps to ensure a scheme remains relevant. “Everyone can create their own unique set of offer recommendations that are appropriate to them,” he says. “No two profiles need be the same.”

The system also has a failed search facility to help employers identify suppliers that employees would like to see included in the scheme. Once identified, these, or a similar recommendation, can be added.

The management information generated by providers can also help to ensure benefits stay relevant. Matt Waller, chief executive of Benefex, says the information he provides to employers includes the top 10 benefits and the take-up across different segments of the workforce. “If we see that take-up is lower among certain employees, we will work with the employer to find out why this is,” Waller says. “It might be that they want different offers, but it can also reveal other issues around engagement.”

Communication is the key

Although these exercises can help to ensure voluntary benefits are as relevant as possible to employees, the key to any scheme’s success comes down to communication. Reminding staff that the benefits are available is essential.

Providers can help with a variety of tools, including leaflets, posters, benefit cards, emails and content for intranet sites. As well as supplying all these items, specific resources for the human resources department can be included in a communications strategy. P&MM’s Davies explains: “We provide them with a toolkit every fortnight. This contains details of all the upcoming offers, so they can design promotions around these.”

Some providers also encourage employers to run presentations for employees. For example, Personal Group’s Mason says that when a company is looking to launch a voluntary benefits scheme, it should tell as many key people as possible. “The ultimate form of communication is to brief employees face to face and show them what is in it for them,” he adds.

Once a scheme is up and running, there are ways to make a communication strategy more successful.
Glenn Elliott, chief executive of Asperity, says employers should not be afraid of repeating themselves when promoting voluntary benefits. “One of the biggest mistakes is to think they need to promote something new each time,” he says. “Do this and they will soon find they are promoting offers that are really niche. To improve take-up, [employers should] stick to the basics and keep repeating the message.”

Facing up to social media

Word-of-mouth recommendations were once the holy grail when it came to increasing voluntary benefits take-up, but switched-on employers are now turning to social media to improve benefits usage. Matt Waller, chief executive of Benefex, says: “Peer-to-peer promotion is very powerful. We are seeing more and more employers setting up groups on Facebook to promote their voluntary benefits.”

In this medium, case studies are particularly effective. “Seeing how a colleague has used an offer and saved money is a great way to drive take-up,” says Waller, adding that he has seen many employers encouraging employees to come forward with these good news stories.

But not every employer is comfortable with social media. If this is the case, internal social media such as Yammer can be used to complement voluntary benefits intranet sites.

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Savings to be made

  • Whether through online discounts, cash back, reloadable cards or SMS vouchers, voluntary benefits schemes can harness significant savings for employees.
  • The size of discount an employee can access varies. Glenn Elliott, chief executive of Asperity, says: “Everyday spending tends to be a lower level of discount, for instance you might get 5% off in a supermarket. Other spending can generate larger discounts, with high-street stores giving around 10% off.”
  • On top of this, some suppliers, especially for items such as holidays and technology, will run special, short-term promotions. With these, discounts can be as much as 50%.
  • Discounts are also available on utilities and phone packages, but tend to be one-off cash-back offers for changing providers. Paul Bartlett, head of reward and benefits at Grass Roots, says it is possible to get up to £150 cash back by switching to a 24-month mobile contract.
  • Discount voucher and deal-of-the-day websites give everyone access lower prices, but voluntary benefits providers insist they can offer bigger discounts. David Wall, managing director of LogBuy’s UK division, says: “There are a lot of websites available to the public, but they often have short-term tactical offers. Ours are much longer-term discounts and tend to be deeper, too. Many stores offer the same discount as they would give to their own employees.”

Read more articles from the Employee Benefits voluntary plans and tax-efficient benefits supplement 2011