Preparing for flex

Many employers have used flex to recognise the needs of a diverse workforce, but unless HR is ready and staff understand what is actually on offer, these good intentions are sure to be lost, says Jamin Robertson

Case study: Rushcliffe Borough Council

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The opportunity to upgrade a standard company car to a sleek sports model or spend extra days on a sun-drenched beach are two tantalising possibilities often offered through a good flexible benefits scheme. So when such an initiative fails to attract much interest among staff, this may be due to the fact no one shouted much about the benefits on offer. A sound communications campaign is vital to the success of a new flexible benefits scheme. According to Employee Benefits Flexible benefits research 2006, 80% of employers put flex in place to recognise the varied needs of a diverse workforce, but unless staff understand what is on offer such good intentions go by the wayside. It should be relatively straightforward to raise interest in a scheme because before the green light is given to flex, proper foundation work should have ensured the benefits on offer reflect employee needs.

However, Tim Roberts, managing director at Talking People, says this can be overlooked. "One thing I really get frustrated with is the tendency to go for a vanilla approach with flex when employees will probably have some great ideas on what they’d like." When the benefits have been chosen, and a launch date pencilled in, staff will need reminding of their existing package and the opportunities available under flex. Pat Wynne, a director at provider Entegria, says employers should ensure the communication is focused on employees’ needs. "We’re a bit worried some providers are coming in and trying to use flex as a means to sell products. That’s not what it’s about. It needs to be driven by what the company wants." The communications phase also allows employers the chance to talk through more complex benefits on offer.

A growing number of organisations, for example, offer pensions through a salary sacrifice arrangement in a flexible benefits plan, which has tax and National Insurance (NI) savings for employers and staff. About three months before a scheme’s launch, employers should step up the campaign using a variety of media. This can include emails, brochures and posters. Seminars where employees can participate in an informal question-and-answer session should garner a high level of understanding and interest. Organisations will also need to tailor the method and style of communications to suit their workforce, particularly where staff work across disparate locations. Branding the flex scheme should also help to raise staff interest.

Consumer-facing organisations will have plenty of experience in this area, and should not hesitate in bringing internal expertise to bear. Mark Eaton, a director of the Personal Group, says: "If you were selling a product you would research your market, promote the product, and provide ongoing support for queries. You would also measure results and make adjustments along the way. All this is relevant for any flex package being introduced." Examples of brands used by organisations include: Cadbury Schweppes’ flex scheme Choices, British American Tobacco’s Free2 and IT recruitment company Elan’s Central Perks. Staff become familiar with these brands, which may help to dispel any notions that benefits packages are dull. During the communications phase, consultants recommend providing access to financial advice, as this will allow employees to better explore their options.

Philip Hutchinson, a principal for Mercer HR Consulting, explains: "An independent financial adviser will help staff to make an informed, educated decision. If you understand, you are more likely to buy in. It’s also an ethical backstop for the employer." Initially, flex schemes should be extremely user-friendly, incorporating a limited and balanced range of benefits. Employees faced with a long list of menu options may retreat to the safety of the default option, which defeats the point of offering flex. Clive Cripps, flexible benefits practice leader at Entegria, says: "It’s important you get the [right] balance. You don’t want so much that there’s information overload, but not so little that it’s not exciting to people." Employers unfamiliar with the concept may regard flex as a major change, particularly where only a few core benefits have previously been offered. The introduction of an online total reward platform may smooth the transition. Employees will be able to log on and survey their pay and benefits in order to better understand their current entitlements ahead of the introduction of flex.

Chris Bruce, director of marketing and technology at Thomsons Online Benefits, says: "In 75% of [our] schemes, we use total reward statements as a precursor to flex. It shows the organisation is [implementing] change, and taking extra steps to make an effort for employees." However, total reward statements can also make employees painfully aware when flex has been used to paper over cracks. "One firm introduced flex after they had cut the level of bonus payments. If they had issued a total reward statement, and employees [then compared the bonus], you can see that would have had a very negative effect," says Hutchinson. Before a flexible benefits scheme is rolled out, voluntary benefits can introduce the idea of choice to staff.

These plans can also incorporate salary sacrifice benefits, so staff begin to understand how they can make tax and NI savings on products that may then be included in flex. "Voluntary benefits can provide a great stepping stone as they get staff used to choosing for themselves and taking ownership of their benefits package," says Eaton. But some consultants are sceptical about the value of using voluntary benefits in this way, arguing that a package of discounts might distract employees from the high-quality flex programme that lies in wait. "Some of these voluntary benefits are quite cheap. If you have them leading the process people may not truly value the brand," says Wynne. Cripps adds: "I think if you’ve got voluntary benefits coming first it will discount flex when it comes along, with people [assuming] ‘it’s just like that other thing’."

However, IT can be used to help convince employees of the degree of choice available through flexible benefits schemes. Online platforms allow employees to quickly access personalised benefits information, model outcomes and calculate investment returns. These help staff to understand ramifications of their choices so they are more likely to buy in to the scheme. "If people can do it online that makes life easier. You really want the individual to quickly be able to look at the benefits and make a choice easily. Financial modellers and pay calculation facilities [help them do that]," says Wynne.

Preparing employees for flex

Consult employees Employers will maximise interest and take up of a new flex scheme if employees have had a say in what is included.

Communicate the scheme Allow plenty of time to embed the scheme in people’s minds. Give the scheme a name, and introduce teaser campaigns, desk drops, emails and seminars, as these will heighten interest in the plan.

Use total reward to underline benefits If flex represents a major change compared with what has previously been offered, total reward statements and voluntary benefits can be used as a precursor to a full flexible benefits programme.

Offer financial advice Facilitating access to an independent financial adviser will help to underline the value of any financial benefits and help employees to make the right decision.

Technology Where it suits the employee profile, implement a web system that allows staff to model the available options. They are more likely to review their benefits options online.

Case study: Rushcliffe Borough Council

Rushcliffe Borough Council was faced with significant challenges when preparing its 480 eligible employees from a range of disciplines for the implementation of a tax-efficient flexible benefits scheme in July 2006. The council did not previously have a formalised benefits scheme so introducing flex was a major undertaking. Futhermore, just two days before contracts were due to be signed the axe was swung on the home computing initiative disappointing many council workers. Tom Grainger, head of HR, had the challenge of getting the scheme off the ground. "Introducing flexible benefits, it was very difficult to get the concept across. We had an extended [communication] period with the provider Prudential. We set out a very clear communications campaign. We had a series of presentations and mail drops, and got to most employees personally face-to-face." The council also posted details on its intranet and sent information to employees’ homes. Some 20% of staff elected to take up at least one of the benefits on offer in the scheme. "Looking at that [in advance], it would have been a target I wouldn’t want to have gone below," says Grainger. He is now looking to build on this foundation during the scheme’s first renewal period.