Flexible benefits: Profile – BG Group

Oil and gas company BG Group has a far-flung workforce, which presented challenges when implementing a flex scheme, says Tynan Barton

Implementing a flexible benefits scheme takes time, money, effort and huge commitment from everyone involved, but it will pay dividends in improving staff retention and engagement.

BG Group is a great example of how to adopt a scheme and ensure its success, having won the accolade of ‘Most effective use of a flexible benefits plan’ at this year’s Employee Benefits Awards.

The oil and gas company decided to introduce the scheme after its 2006 employee opinion survey revealed that its staff wanted more flexibility and transparency around their benefits. Previously, BG provided core benefits, such as life assurance, but the survey showed workers were not necessarily aware of the value of their perks package.

Dan Steer, benefits manager, helped to implement the scheme and is now responsible for BG’s benefits in the UK. He says: “For BG Group, it is an engaging and retaining mechanism for employees, and also the best way to make use of income tax and national insurance savings with particular benefits through our salary sacrifice scheme.”

Rather than giving staff a lot of paperwork to fill in, the firm decided a flex scheme was the best way to meet their requests, says Steer. “This is a much better way of doing it – it is a one-stop shop. They go in, select what they want, leave out what they do not, and they get a clearer understanding of what the core benefits are, that is, what the company is paying for and what they need to pay for.”

After careful design, preparation and an enrolment period in February and March 2009, the scheme went live in April last year. Steer says: “The real challenge with flexible benefits is that because HM Revenue and Customs will not sign off a scheme until it’s in place, you have to do so much due diligence work to make sure you get as comfortable as you can that it is actually going to work.”

Steer says BG used various methods to communicate the scheme in October 2008, including emails, intranet messages, company-wide presentations, poster campaigns and a benefits provider fair. Employees were also given Slinky toys with details of the flex scheme on the box.

Communication was big challenge

BG Group has more than 1,800 UK-contracted employees eligible for the scheme, about 600 of whom work overseas on expatriate assignments. One of the biggest challenges in implementing the scheme was to reach out to all staff and inform them of the changes. “The communication element was definitely one of the biggest challenges,” says Steer. “We had to go through as many channels as we could.

“We have people who might work four weeks on, four weeks off, so we had to tie in communications so they had plenty of time to read what we had sent, digest it and respond to it. We were mindful that these would not be the only emails they would have to read, so we made sure we started our communications well in advance.”

The scheme, provided by Vebnet, includes a range of benefits divided into four sections. In the finance section, benefits include pension, group income protection, critical illness cover for employees and their partners, personal accident insurance for employees, their partners and children, and the main part of the scheme, the share incentive plan (Sip).

It was the structure of the Sip that most impressed the judges at the Employee Benefits Awards 2010. All eligible staff (those with a UK contract), regardless of their grade, are awarded shares to the value of £3,000, pro-rated for part-time employees, which they can either accept as the entire value of shares, or as part shares and put the rest towards other benefits. If workers choose to accept the entire allocation of shares, they can take up other benefits through salary sacrifice arrangements.

The healthcare section includes private medical insurance, dental and optical cover and health assessments. In the leisure section, employees can buy and sell annual leave up to three days, take part in a cycle-to-work scheme and travel insurance. The lifestyle section includes childcare vouchers and a carbon-offsetting scheme.

Steer says implementing an online system was a huge culture change for staff, because previously they would sign bits of paper to indicate benefit choices. “Getting people used to this new way of doing things was another challenge, and has been an ongoing process. This year, we had a greater take up of the benefits offered, which suggests people were more comfortable with the system, they knew how everything [worked] and how they could get value for money.”

Total reward statements

BG hosts its total reward statements via a Vebnet-run portal, which Steer sees as a way to increase transparency around employees’ benefits packages. “People historically tend to think of their salary, bonus and, perhaps, pension as what they are earning, but actually there is so much more to it.”

No more benefits have been added since the scheme was introduced because BG only keeps the offers that are viable for its employee population and are valuable or give good savings, such as insurances. But staff feedback is vital to the success of the scheme, says Steer. After listening to workers’ views, the company is reviewing the benefits and may make further changes next year.

The results of BG’s most recent employee opinion survey are yet to be published, but Steer is confident the flex scheme meets staff requirements. “From the ad-hoc feedback I have had, it seems to be hitting the mark,” he says. “Some employees have come back to me with anecdotal comments such as ‘the cost of this benefit is fantastic’ or ‘the tax savings I get on this are brilliant’. It seems to be achieving what we wanted it to and has raised people’s awareness of the benefits available at the company.”

Impressive take-up figures

Take-up figures for the scheme reflect how successful it has been: this year’s 99.3% is the same as the first year’s figure. “Of course, 100% would be great – that is the ultimate target – but we are very pleased,” says Steer. The Sip has achieved great results, with more than 80% of staff opting to take either all or part of their share allocation in the first year.

Steer offers some words of advice for employers that may be considering flex for the first time: “Be clear on what you want to achieve. There is no point introducing a flexible benefits scheme just for the sake of it; you need to have a clear objective.

“Make sure you get a good scheme design together and engage with employees to find out if it’s something they want, and what they would like to see in there. And communicate from start to finish.”


Career history: Dan Steer, benefits manager, BG Group

Dan Steer joined the BG Group just over five years ago in a finance post in accounts payable. He originally intended to stay at the company for only a few months before training as a carpenter, but was offered a contract to stay on, and after 18 months moved to a position in HR that interested him. He joined the global mobility team that looks after expatriate employees as global mobility case adviser.

Steer then had the opportunity to join the team that was working on the implementation of the company’s flexible benefits plan, and now, as benefits manager, looks after benefits for the UK.

Steer says he has never looked back and has enjoyed the past few years. “If we can save employees money at the same time as getting them to engage with the organisation, that is a fantastic result and part of what my job is – making sure I do what I can to engage and retain employees,” he says.


Case study: Holiday purchase valued

Andrew Foster, development engineering manager at BG Group, has been with the company for two years. One benefit he values highly is the option to purchase up to three additional days’ holiday a year. “I have purchased two additional leave days this year,” he says. “I have got school-age children, so it is useful to have that bit of extra flexibility to spend with them.”

For Foster, the ability to buy private medical insurance and increase pension contributions through salary sacrifice are some of the key benefits in the flex scheme. He also extends some benefits to cover his family. “I have critical illness cover and additional life assurance for my wife. We also have dental cover and private medical insurance for the entire family.” The scheme’s ease of use is also a great advantage, he adds.


Click on the links below for more sections

FB_coverFlexible benefits: Interview with Steven Bevan of The Work Foundation

Flexible benefits: Scheme structure can be made to measure

Flexible benefits: Corporate wraps

Flexible benefits: Benefits take-up boosted by flex

Flexible benefits: Linking flex with incentive schemes

Flexible benefits: Will flex scheme be a good fit?