How to create the perception of an equitable benefits package

Employee benefits schemes are designed, ultimately, to incentivise, motivate and retain employees. But not every employee is equal, and this is reflected in the way in which benefits schemes have been designed or evolved over time. More senior staff, or those in key roles, are historically more likely to have better or higher levels of benefits provision.

But this can then lead to a situation where some employees feel they are being unfairly treated, particularly if they do not have access to some benefits they would like. Attempts to personalise benefits by offering people incentives that may appeal to certain groups or ages can exacerbate this, even if that is not the intention.

Claire Williams, chief people and operations officer at HR software provider Ciphr, says: “There is a real risk that poorly designed or badly communicated benefits can do more harm than good, creating perceptions of unfairness or even favouritism. Employers can mitigate this by building a strong foundation of core benefits, which are universally available and valued, such as wellbeing support, flexible working and discount platforms. Optional extras, whether they be low-cost or no-cost benefits or flexible benefits, are also important.”

Employee choice

Offering a degree of choice around benefits is important, but it is important to ensure that there is something for everyone, says Jennifer Healy, group chief people officer at Perkbox Vivup. “Employers should recognise that employees’ needs vary significantly depending on their life stages,” she says. “Younger employees might prioritise educational benefits, while those with families may value health insurance and childcare support, and older employees might appreciate retirement planning services. Employers should design inclusive benefits schemes that cater to different life stages, ensuring there is something valuable for everyone.” 

It is also vital to be as transparent as possible, so any design can be justified. However, Tina Chander, head of employment law at Wright, says: “It doesn’t just end with giving everybody the same benefits. As an inclusive employer, you need to consider the different levels of accessibility and make sure that you communicate this in a way which everybody can understand.”

Benefit scheme design

Yet there will often be benefits that are not open to all, whether these are legacies of previous designs or reflections of a particular job role. The approach here is two-pronged: to be open about why schemes have been designed in a particular way, and to offer alternative provisions where possible.

Chris Britton, people experience director at Reward Gateway, explains: “Showing that benefits have been created based on data, usage, employee voice and role type actually helps build trust. It shows things are done with evidence but also thoughtfully rather than random.”

Private medical insurance (PMI) is one example of a benefit that has not always been offered to everyone. Mike Hay, chief people officer at Benenden Health, explains: “Historically, PMI or healthcare cover has often been restricted to senior employees only, making employers particularly vulnerable to claims of unfairness. However, there are now far more accessible and affordable packages on offer, especially those that bridge the gap between cash plans and PMI, or that may be targeted towards a specific audience, for example, employees with families.”

Other benefits can also be looked at, with a view to offering alternatives or extending coverage to all employees. Chander suggests facilitating car-sharing or salary sacrifice schemes as alternatives to company cars, while disparities around annual leave or the allocation of gym memberships can be removed by extending these to everyone.

Employee share schemes are an increasingly common way of engaging staff, but are another area where careful design is vital. Ifty Nasir, chief executive officer (CEO) at share technology platform Vestd, says: “Figuring out how to split equity fairly can quickly become a headache as there’s often no right answer.

“Understanding how different factors, such as when the employee joined, their job role and day-to-day responsibilities, actually correspond to each employee’s share can be tricky and time-consuming, while potentially leaving room for scrutiny.”

One option could be growth shares, which can be awarded if an employee hits particular targets. “Tying the growth share to a goal or milestone means that employees are rewarded fairly for their output and individual performance, rather than a blanket one-size-fits-all benefit,” he adds.

Sometimes there may be unfairness built into schemes because of well-meaning initiatives that have unintended consequences. Charlie O’Brien, head of people at Breathe HR, says: “Fertility and family-forming benefits are areas employers should pay close attention to. When these offerings are too narrow, they can unintentionally exclude certain individuals, such as same-sex couples or individuals looking to have children on their own.

“Employers [that] want to make their benefits more inclusive and equitable should consider offering a broader range of options, such as IVF, surrogacy and adoption.”

Particularly in areas which can evolve rapidly, it is vital that employers regularly review offerings to ensure no one is overlooked, she adds.

Clear communication

Effective communication is vital for any benefits scheme, especially where there is potential for different levels of provision or perceptions of unfairness. Luke Bullen, VP and head of UK and Ireland at Wellhub, says: “The best way to manage differences around benefits is to be open, transparent and have proactive conversations with employees. This manages the perception of inequity by ensuring they understand the rationale behind certain differences and how these aim to address specific needs. Leaders must emphasise overall equity and continue to actively gather feedback on what is or isn’t working.”

Such an approach means employees are more likely to accept disparities, says Cheryl Clements, head of business development at Tusker. “There’s long been an understanding that length of service and job grades have an impact on benefit eligibility,” she explains. “When launching a new benefit, guidance and eligibility need to be communicated clearly. In the case of a salary sacrifice car scheme, for instance, employee communications need to be precise to show how the scheme works and the criteria they need to meet to be eligible.”

Done well, having a clear structure around who qualifies for benefits, and how people can access these, can be motivating in itself, she adds. “If employees understand rules on eligibility: what is available, why and when, it provides a roadmap ahead and takes the disappointment away if they aren’t eligible at that point in time,” she says. “If someone knows that at, say, grade five they will be eligible for more benefits such as a better car, PMI or higher pension [employer] contributions, this can be highly motivating and engaging.”