Using voluntary benefits to motivate staff

Discounts offered through a voluntary benefits scheme can help keep staff motivated when budgets are tight, says Victoria Furness

Money may be the root of all evil, but it is also widely recognised as a big driver of employee performance and motivation. So in the current economic climate, with job cuts and salary freezes, what can employers do to keep staff motivated and engaged? Lee French, proposition director at Alexander Forbes Financial Services, believes anything organisations can do to help their employees’ salary go further will be appreciated. “With many employees and their families affected by the recession, saving money anywhere is more valuable than ever and can help to improve recognition in how a business contributes in terms other than purely salary,” he says.

Voluntary benefits plans give staff access to discounted products and services at little or no extra cost to the employer. Unlike flexible benefits, there is no annual election period, and employees can use the perks as and when they like. Caroline Jordan, head of sales (voluntary group income protection) at Personal Group, thinks this can be hugely motivational. “Good news always spreads, so if someone saves money on their holiday, they will go out and tell their friends,” she says. “It comes back to the fact that ‘I work for this organisation and get all these discounts’.”

Jordan adds voluntary benefits are becoming more important as some employers cut costs, postpone plans to launch flexible benefits or drop company-provided perks, choosing to offer them on a voluntary basis instead. “So while staff may be demotivated because they have lost their pay rise this year or their company-funded private medical insurance, [the employer’s rationale is] at least we are putting in a low-cost alternative.”

Popular voluntary benefits

Not surprisingly, the most popular voluntary benefits with employees at the moment – and therefore those that could be considered the most motivational – are discounted supermarket and high-street retail vouchers. Glenn Elliott, managing director of Asperity Employee Benefits, says: “Month on month, we have seen between 15% and 20% growth in vouchers since the start of the year.”

Cashback facilities, whereby employees receive some money back for their purchase on top of any discount they already get, are also valued by staff. For example, users of Asperity’s platform spent £18 million on cashback last year, says Elliott.

Other popular voluntary benefits are UK holidays and days out, say providers. Chris Heather, chief executive officer of employee benefits provider Brinc, says: “UK breaks have been exceptionally popular this year, compared with overseas and European trips.”

Offer topical deals

Mobile phone operator O2 capitalised on this trend with a ‘summer staycation deals’ site to motivate employees, which proved popular (see case study below).

Concierge-style services, whereby errands such as dry cleaning are taken care of by a third party, could prove particularly motivational for time-poor employees in the current climate. But Mark Carmen, marketing and communications director at Motivano, warns employers to be careful about how they communicate such perks. “Most of us seem to be working over lunchtime these days just to keep up, so the problem employers have is being perceived as putting these benefits in to keep employees working,” he says. “But if an employer makes it clear the intention is to make the employee’s life easier, not so he or she can do more work through lunchtime, people appreciate that.”

Tailor communication carefully

Clear communication is critical in determining whether employees take up the voluntary benefits. It also affects whether they perceive a link between the benefits package and their own performance.

The standard marketing practices of segmentation and targeting through specific campaigns tend to work well. Richard Davies, head of employee benefits at P&MM, says: “It is important to understand the profile of a workforce and then offer the types of voluntary benefit that will appeal to them directly. Establishing the desires and needs of the workforce, then meeting them, is the first way to motivate them through employee benefits.”

In the current climate, it is equally important for organisations to be sensitive about communicating their voluntary benefits package when redundancies are being made. “In many ways, employers want to dissociate the voluntary benefits package from redundancies,” says Carmen. “But when they are making redundancies, they often forget about the people [left] behind. At this time, more than any other, employers should be looking to engage their remaining staff, and voluntary benefits can play a part in the wider scope of employee engagement.”

Ensure deals are competitive

Employers must also ensure the discounts they offer through voluntary benefits cannot be beaten elsewhere, for example through an online price comparison shopping site. Debby Hannaford, benefits consultant at NorthgateArinso, says: “One of the things that sometimes concerns me with benefits like shopping vouchers is that employers need to be careful these can also be used online, because often they cannot. It is about making sure there is something in the package to appeal to everybody.”

One of the selling points of voluntary benefits is that they are available to everyone, unlike flex or a core benefits package, for instance. But this non-exclusivity can also make the link with employee performance less obvious. Asperity’s Elliott says: “Voluntary benefits motivate staff in that if they are working somewhere that appears to look after them and goes the extra mile, they are more likely to feel positive towards the employer and, therefore, more motivated. But the link is more tenuous than in a reward scheme [in which staff might be rewarded for hitting a target], which is more cause and effect.”

Motivation platforms

These two approaches can be combined via what is sometimes known as a motivation platform. The Personal Group’s Jordan says: “A lot of our clients link their incentive programme to the voluntary benefits package, so the top sales person that month receives a card that has been pre-loaded with an amount of money to spend on the voluntary benefits site. It is a real motivator and gets staff into the mindset of using the voluntary benefits package.”

So although a voluntary benefits plan may not be as directly motivational as an incentive or bonus scheme, it clearly has an indirect role to play in motivating staff, particularly in the current climate, when employers and employees are both looking for ways to make their money stretch further

Case study: Domino’s Pizza

Domino’s staff enjoy extra toppings

Domino’s Pizza has not suffered as much as some other businesses in the recession, but that does not mean its staff are not on the lookout for a bargain. The company has offered its voluntary benefits scheme, Perks at Domino’s, for a year and 67% of its 300 staff have registered on the site.

Jane Roberts, HR director at the pizza chain, says: “I definitely think the voluntary benefits are motivational. We are seeing an increase in use of our Perks system because everyone is looking for a bargain in this environment.”

†The most popular offers are deals at Apple, Dixons, Superbreak and theme parks, and discounts start from 10%. The provider of Domino’s voluntary benefits plan carries out online surveys of its customer base, and according to these, 54% are using the system more because of the credit crunch.

Roberts says: “Everyone is more aware of their spending and a discount is now expected.” With this in mind, she has renewed the scheme for another year. “It gives staff a bit more and, for us, the cost is minimal.”

Case study: O2

O2 connects with ‘staycation’ discounts

Mobile phone company O2 Telefonica UK decided to have a taste of its own medicine after publishing customer research that revealed almost one-third of Brits would forsake a holiday abroad this summer in favour of a break in the UK.

To help employees join in the trend for holidaying in the UK, O2 launched a ‘summer staycations deals’ store on its voluntary benefits platform, provided by Next Jump.

The promotion offered O2’s 14,000 employees access to discounts on UK hotels, hire cars, theatre trips and festival tickets. Colin Watt, head of reward at O2, explains: “We saw an extra 500 people registering, so it definitely generated more interest.” By the third week of the campaign, nearly half of O2’s workforce had clicked to view the staycation deals.

“Since we launched deals last year, our people have spent £1.8 million through the site, so we knew it was worth putting the effort behind the staycation campaign,” he adds.

“As an organisation, our strategic approach is connecting people to things that are important to them. Approaching that internally, we want people to connect to things through rewards that are important to them.

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“So if employees are spending money on a festival or some other treat, we want to help them and their pay go further.”

Read more articles on voluntary benefits