Flexible benefits: Know your audience

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• Employee profiling can segment the population to ensure relevant benefits are included in a flexible benefits plan.

• Key data includes age, gender, length of service, type of role, salary, family background and current take-up of benefits.

• Profiling can be conducted through data extraction from HR and payroll systems, employee surveys, focus groups, individual interviews, and suggestion schemes.

• Resulting profiles can ensure communications are as appropriate as possible.

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Case study: Pub group staff show character

When Punch Taverns launched a flexible benefits plan in January, it did not want a scheme with one-sizefits-all approach.

Sarah Bell, reward manager at Spirit Pub Company, which has since demerged from Punch Taverns, says: “We have quite a varied workforce, with staff at head office, as well as field-based and pub-based. A one-size-fits-all focus was not going to work for everyone. We needed something that was much more engaging and managed their day-to-day life rather than just a work product.”

The organisation began by holding focus groups to profile its staff, who were asked to share their attitudes to benefits, money and lifestyle choices.

From these focus groups, the organisation was able to identify key traits among its staff, which it used to create characters such as a wise owl, happy hedgehog, crafty fox and floating butterfly. Each character related to particular types of lifestyle and money habits. Using these characters, and with provider Vebnet, the company was
able to choose an appropriate mix of benefits for its staff.

“We assumed things like life assurance and critical illness were dull but useful benefits,” says Bell. “After the focus groups, we realised it was something staff really wanted because they were already spending a lot of money on it outside work, and they could save money through the flex scheme.”

Case study: D Young focuses on staff choices

Law firm D Young ran focus groups last year before launching a flexible benefits plan to find out what perks its staff wanted. The firm’s 150 staff includes partners, as well as fee-earning staff, support staff and managers.

The focus groups, run by Thomsons Online Benefits, were held first with partners, and then with the rest of the company’s employees. Jennifer Mead, HR manager at D Young, says: “We felt that by engaging a third party to run those focus groups, we might get information that employees may not be comfortable to say in front of the HR team.”

Mead says that the most important lesson from the profiling exercise was that employees were engaged from the earliest focus groups right through to the launch of the flex scheme. “We were able to do that because our provider did both the focus groups and the subsequent communications to staff when the scheme was introduced,” she adds.

Following the flex scheme’s launch in June, D Young is to carry out an online employee survey to identify changes for next year’s enrolment period. Mead says: “We want to get employees’ thoughts on what we have currently done and find out whether they have any other requests we can consider.”

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There is a lot of groundwork to do to ensure a flex plan gives staff what they really want, says Jennifer Paterson

A flexible benefits scheme’s effectiveness and appeal will be increased if, prior to its launch, it is constructed and communicated in such a way as to reflect the lifestyles and profile of a workforce.

For example, pensions and financial education could be targeted to older staff through their flex packages, while childcare vouchers and flexible working arrangements could be highlighted to staff with children.

To maximise take-up, employers should conduct an employee profiling exercise before launching a flex plan to identify which perks to include and ensure communications will effectively target segments of staff. Matt Duffy, head of online benefits at Lorica Employee Benefits, says: “Unless employers go through that process of profiling and identifying employee demographics, they can fall down by delivering a package that is not relevant, and miss on the communications in terms of style, message and medium.”

Martha How, reward principal at Aon Hewitt, adds: “It is almost insane to go ahead and design a plan without doing something like this. If employers deal with the analysis of the results carefully, it can be a good guide to segmenting the population.”

In any workforce profile, key data that employers can consider includes age, gender, length of service, type of role, salary, family background, and current take-up of benefits. Paul Brown, senior consultant at Towers Watson, says: “If an employer looks at age or family situation, it can decide which benefits would relate to that profile. Lifestyle benefits would appeal to someone young and single, or an older employee would be interested in insurance and family-related benefits.”

National insurance savings

Some employers even look at the national insurance (NI) savings an employee might make. “That helps to understand their ability to spend money and how much they can spend above the national minimum wage threshold,” says Brown. “If they are making savings from pensions salary sacrifice, then it is useful to have the benefit in there.”

Employers can also analyse employees’ workplace and home postcodes, which can help to determine whether benefits such as gym membership or health assessments in certain areas would be appropriate.

Analysing postcodes and salary levels can be done by firstly extracting data from HR and payroll systems. This can be followed by staff surveys to elicit initial feedback. Mark Szypko, managing director of international compensation at Kenexa, says: “In doing that, employers get a good cross-section, which is why I think surveys are a better tool, rather than getting just a specific group or sub-group participating in a focus group.”

Focus groups are also used to profile staff, and some employers will carry out individual interviews or use suggestion schemes. Aon Hewitt’s How says: “With focus groups, the upside is getting depth around a particular issue, but the downside is only covering a very small proportion of the workforce. Because surveys tend to be tick boxes, it is difficult to get the depth of feeling. Employees might rank their favourite benefits, but employers cannot get any real depth, just bald data.”

Employers could also use both methods within one profiling exercise to achieve coverage and depth. This can be done using a marketing technique called conjoint analysis, which is an online intelligence questionnaire that starts with 10 straightforward questions, then learns from the user’s responses and asks appropriate follow-up questions.

How explains: “It is not just testing what employees’ overall responses are, it is testing their preferences, what is valued and not valued, and what they would be prepared to forgo to get more of something else.

“Leading up to a flex launch, it is absolutely dynamite data because it provides the coverage, as well as the depth that has historically only been attainable through focus groups.”

Personalisation techniques

Marcus Underhill, global reward director at Thomsons Online Benefits, says 90% of employers do a basic demographic profiling exercise before a flex launch, 50% do some sort of employee research, and less than 25% use proper personalisation techniques in their communication. “Communication should be a broad-brush investigation into what media channels would be attractive, trying to get to the base level of employees’ understanding of what they have got,” he says.

There are a number of ways profiling can be used to determine how flex is best communicated to staff. For example, if most employees do not have computer access at work, then emails and intranet updates will not be the most effective method. George Farrow, client services director at Asperity Employee Benefits, says: “A security firm like Mitie does not have a solid attachment to an office, so its communication will be focused on home rather than work-based methods.”

Once employers have looked at their workforce profile, the right communications can be sent out. “For employees, they receive a much more targeted message,” says Towers Watson’s Brown. “For the organisation, it helps to communicate with employees more cost-effectively because it can target the messages in the right places.”

Workforce profiling also means that instead of treating employees as individuals, an employer can come up with segmented groups. Underhill adds: “Then [it] can create branding around new employees that do not know much about benefits, through to someone who is later in their career and risk-averse, through to someone who is financially literate. It can use that profile to work out which staff would be in each category.”

So, by identifying staff demographics, employers can build up case studies to ensure the right benefits are included in a flex scheme and the right communication tools are used. Lorica’s Duffy adds: “For example, employers could target young graduates with a relevant vehicle that will engage them, perhaps an online video they can access on the go. Then they make sure the benefits and communication tools are relevant as well.”

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