Flex is here to stay, but must remain relevant to employers’ and employees’ needs, The Work Foundation’s managing director Stephen Bevan tells Nicola Sullivan
In 20 years’ time, flexible benefits schemes will still be a key feature of the HR landscape, says Stephen Bevan, managing director of The Work Foundation.
As part of its study into the future of HR, The Work Foundation is exploring which significant trends are likely to affect the employment relationship two decades from now. The research, due to be completed by October, is aimed at examining how base pay, variable pay and benefits programmes, such as flex, fit into the psychological contract between employer and employee.
Bevan says: “To what extent can employers expect things like the reward system, and training and development to continue to engage employees when many people want jobs that are intrinsically interesting and give them a sense of meaning, purpose and identity?”
Although flex is likely to remain popular in the future, it will still be influenced by the economic situation, says Bevan. “Flex will be around in 20 years, but I am sure its popularity will again fluctuate according to how competitive the labour market is.
“I hope the use of flex becomes a bit more subtle and nuanced because, at the moment, it is a bit transactional. I would like to see flexible benefits be a bit better integrated into reward strategy with a clear understanding about what role reward plays to engage employees, rather than just compensating them for the hours they work.”
For a flex scheme to be effective, employers need to ensure the benefits on offer address employees’ needs, says Bevan. Employers must also have a clear understanding of what they want their scheme to achieve, whether driving different behaviours, such as loyalty and productivity, or attracting new talent into the organisation.
However, there are now so many products available, including wealth management platforms, software systems and the benefits themselves, that some flexible benefits schemes are in danger of becoming over-engineered and too complex, says Bevan.
Real needs of employees
“The thing that has always concerned me about flexible benefits is whether it is really addressing the real needs of employees or what employers think employees want. I suppose there has been a tendency towards over-engineering with some of these packages, which, to some extent, you could argue has been provider-led.”
As providers launch new products to market, this is influencing the demand for such products, says Bevan. He believes there is a danger employers could end up with an over-engineered and often costly solution to problems they did not know they had.
“Some employers can end up with superfluous [benefits],” he says. “When employees look down the list of things they are entitled to, depending on what stage they are in their career or life cycle, many of the things may not appear as attractive as employers hope or think they are.”
But offering schemes that contain lots of choice is not necessarily the answer, says Bevan. Instead, employers should design their scheme to cater for employees’ differing lifestyle needs, while drawing on the commercial expertise used in other parts of the business. This can be done by segmenting the workforce and then choosing benefits that address the needs of different groups.
Holiday trading, whereby annual leave can be bought and sold, is a good example of a flexible benefit that would be appreciated by all age groups, with many older employees likely to purchase leave and younger workers often preferring to sell, says Bevan.
“A commercial business will have customers. What it does really well and professionally is find out what those customers want and then work really hard to try to provide it. That logic does not always apply to internal things like benefits systems and employers make assumptions. I still do not know of many organisations that get under the skin of what employees want.”
Reducing administration costs
Keeping things simple is also an effective way to reduce the costs of administering a flexible benefits scheme. “There have always been concerns about the administrative costs and flexibility,” says Bevan. “If an organisation has a well-thought-through, simple set of benefits which mostly addresses the needs of its workforce, then it is bound to keep its admin costs lower. The more choice on offer and the more complexity there is, then the higher the admin costs.”
But cost-efficiency does not necessarily mean cheaper, warns Bevan. “It is about the value an employer is getting from every pound they spend and, of course, that depends on what employers think their flexible benefits package is for.”
Bevan acknowledges that the depressed labour market means there is less pressure on employers to offer “bells and whistles” on their flexible benefits schemes. However. many organisations are keen not to neglect reward in such difficult times and want to exploit the motivational power of low-cost benefits that employees really value.
For example, many employers use their flexible benefits schemes to tackle health and wellbeing in the workplace, says Bevan. But he adds this issue cannot be managed by benefits alone. “The health and wellbeing area is clearly something more and more employers are anxious about because there has been a lot of research and publicity about ill-health, particularly around mental health and stress,” he says.
Health and wellbeing policies
As a result, a lot of organisations are trying to deliver slightly more proactive health and wellbeing policies and linking these into their benefits systems.
“If employers are really serious about having a health and wellbeing strategy, they need to think well beyond benefits,” explains Bevan. “It is about how work is organised, whether [employers] have got a psychologically healthy workplace, and how people are managed.”
Overall, a flexible benefits scheme should not be implemented in isolation, says Bevan. Unless its design drives what the employer wants to achieve while also delivering what employees want, it will not be worth the investment required.
- Stephen Bevan, managing director of The Work Foundation, joined the organisation in 2002 as director of research. He became managing director in July 2009.
- Alongside his role at the foundation, Bevan will be working with economist Will Hutton, who has been commissioned by the government to conduct a review into fair pay.
- In the run-up to the review, Bevan will be looking at how private sector reward practices impact on public sector pay. A call for evidence, posted on HM Treasury’s website, seeks information in a number of areas, including pay differentials between private and public sector employers and the extent to which private sector reward influences public sector workers’ pay.
- During his career, Bevan has also carried out research and consultancy for the No 10 Policy Unit, the Treasury, the Cabinet Office and the European Commission.
- He has also advised many blue-chip companies, several research councils and charitable trusts. Bevan’s areas of specialism include health and wellbeing at work, employee engagement, and retention and reward strategies.
- Before joining The Work Foundation, Bevan worked at Ashridge Management College and at the University of Sussex.
The Work Foundation at a glance
The Work Foundation is a not-for-profit independent authority on work and its future. Its origins go back to the Boys’ Welfare Association, which was founded by the Reverend Robert Hyde in 1918.
The following year, the organisation widened its focus and changed its name to the Industrial Welfare Society.
By 2002, it had evolved and so changed its name again to become The Work Foundation. The body aims to improve the quality of working life and the effectiveness of organisations by equipping leaders, policymakers and opinion-formers with evidence, advice, new thinking and networks.
In addition, it provides consultancy, research and advocacy covering the themes of economic change, high-performing organisations and the quality of working life. It also conducts research on, and reacts to, government policy.
The Work Foundation is run by a board of five executive directors and eight trustees.
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