Flexible benefits: BNP Paribas banks on savings

When banking group BNP Paribas introduced a flexible benefits scheme, technology and communication were major factors in its success, says Jennifer Paterson

As the UK struggled through the financial crisis of 2008-2009, BNP Paribas was preparing to launch a new flexible benefits system.

Of the French banking group’s 8,000 UK-based staff, 3,500 are eligible for its flex scheme, Spectrum, which was launched in July 2010 in conjunction with Towers Watson. Most of this group work in its corporate and investment banking, and securities services, and are based in its London offices.

Employees in the company’s retail banking arm are not eligible to take part in Spectrum. Instead, they are offered a voluntary benefits scheme, provided by Vebnet, that includes retail discounts, childcare vouchers and bikes for work. Thomas Hiles, benefits manager at BNP Paribas, says: “The hope is, especially since our scheme has grown and received good attention, that more areas of the business will want to adopt it.”

Before Spectrum was launched, the organisation offered a traditional package of core benefits with limited choice for staff. Although its benefits were competitive, BNP Paribas wanted to address the lack of flexibility and offer co-ordinated communications, as well as overcome the package’s disconnected nature.

“It was completely disjointed,” says Hiles. “We had a very good core benefits package [including] healthcare, dental, life assurance and pension. Administration was all paper-based. There were no options to do salary sacrifice around pensions and no bikes for work, either. The only real voluntary payroll benefit at that time was childcare vouchers.”

To determine staff attitudes towards its benefits, the bank carried out a survey, which showed more than 70% of employees would value more choice and 45% expressed an interest in increasing, or buying new, benefits.

In response, BNP Paribas began to focus on introducing a flexible benefits scheme. Its goals included: creating a plan that was attractive and valued by all staff; increasing the return on investment on the bank’s spend; and using technology to bring all benefits together in one place.

“We used a lot of the responses from the survey to determine what the benefits would be,” says Hiles. “There were aspects that are in every survey, for instance staff wanted more choice. It was quite useful in identifying some benefits that would be of interest.”

Benefits offered though the bank’s flex scheme are: bikes for work, carbon offsetting, childcare vouchers, critical illness cover for staff and their partners, dental cover, health screening for staff and partners, holiday purchasing, defined benefit and defined contribution pension schemes, retail vouchers and travel insurance.

Because all these benefits were grouped onto a single online portal, a key focus during the flex roll-out was to ensure the technology was right for the organisation and user-friendly. The system is set up so all staff can access a single sign-on through BNP Paribas’s intranet, via the internet, or by phone.

Lot of challenges

“There were a lot of challenges in terms of structuring and configuring the benefits, but that is an area we felt comfortable with,” says Hiles. “Ultimately, a project can be completely undermined if everybody’s payroll is processed incorrectly. We invested a lot of time in making sure that did not happen.”

He believes one of the reasons for the scheme’s success it was a runner-up in the 2011 Employee Benefits Awards is the investment in technology. “We had an 1,100% increase in pension scheme take-up in the first three weeks,” he says. “We had more staff in those three weeks interact with their pensions than in the entire year prior to that. Largely, that was due to having a simple link that takes employees straight in.”

The plan’s success is also down to a major communications campaign leading up to the launch, which included booklets, office-based plasma screens, banners and posters, e-cards, intranet animations, emails, news features highlighting various benefits, branded desk drops, ‘Who wants to be a pensionaire?’ presentations to help with retirement and financial planning, and provider roadshows.

“It was quite a comprehensive communications roll-out,” says Hiles. “We made sure we communicated from the top down as well as directly to employees. We invested quite a lot in the communications because we wanted it to be visible, we wanted staff to know the brand, and we wanted them to take up the benefits that appealed to them and suited their lifestyle and family circumstances.”

Recognising that employees had a lot to consider, the company made their initial flex choices valid for six months, followed by an annual enrolment period. When the scheme was launched, 82% of staff accessed the system and 68% actively changed their benefits. In June this year, when BNP Paribas harmonised its benefits with those of Fortis Bank, which it acquired in 2008, more than 90% of Fortis’s 400 employees accessed the system and changed their benefits.

The success of the scheme has resulted in a significant return on investment (ROI) for the company. The first year of the scheme brought cost savings of 150%, and the second year’s ROI is expected to reach 800%. It also achieved national insurance contribution (NIC) savings of £435,000, while, for employees, these totalled £1.64 million on a total flex spend of £4 million.

Hiles says: “In the same way that the user statistics increased, the cost savings have increased as well. The cost savings when we first launched were about £500,000, just in national insurance. If we include reduction in rebroking costs and insurance renewals, it is more like £2 million. In annual NI savings, we have got to about the £1 million mark now we have introduced Fortis into the mix.”

Savings reinvested

BNP Paribas has reinvested these savings in its benefits package, enabling it to increase paternity pay from one week to two weeks on full pay, increase maternity pay from three months to six months at an enhanced rate, and increase holiday entitlement by an average of two days per employee. The firm also shares 7% of its NI savings with staff through a salary sacrifice arrangement to encourage pension savings.

In August, the company introduced an emergency back-up service for childcare and eldercare, and is now looking into developing its health and wellbeing provision.

“We have made it clear to staff we are not seeking to profit from flexible benefits,” says Hiles. “We have made the commitment to reinvest in the benefits package and technology to maintain its competitiveness and ensure the best provisions and levels of cover are in place for our staff.”

BNP Paribas at a glance

BNP Paribas is a European banking group with a global presence. It was formed in 2000 from the merger of Banque Nationale de Paris (BNP) and Paribas. In April 2009, it completed the purchase of a 75% stake in Fortis Bank, the Belgian banking business.

The group is split into three strategic business units: retail banking, corporate and investment banking, and investment solutions, which includes asset management, custodial banking and real estate services.

Its global headquarters are in Paris, with four domestic markets in France, Italy, Belgium and Luxembourg.
It has significant retail operations in the US, Poland, Turkey, Ukraine and South Africa, as well as large-scale investment banking operations in London, New York, Hong Kong and Singapore.

It employs 205,000 staff globally, with more than 8,000 of these based in the UK.

Case study: Thomas Hiles

Thomas Hiles, benefits manager at BNP Paribas, joined the banking group as a reward consultant in 2009.

He moved to BNP Paribas from law firm CMS Cameron McKenna, where he was on a four-month contract as employee benefits project manager, managing the closure of the firm’s trust-based pension scheme and movement to a group personal pension scheme with a salary sacrifice arrangement.

His other previous roles include compensation and benefits manager at Bureau Veritas, which he joined from the firm’s financial side, where he was a business analyst.

Read more articles from the flexible benefits supplement