Tailoring voluntary benefits to suit workforce demographics is increasing in popularity, says Kate Donovan
Case study: Somerfield
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When it comes to voluntary benefits schemes, many employers have traditionally chosen to provide staff with as many options as possible in a bid to be seen as a top employer. This task was made easier by the fact that many providers in the market previously charged little or nothing for such plans.
But the tide is now starting to turn, and increasing numbers of employers are choosing to downsize their voluntary schemes in order to offer a more select range of perks that has been tailored to suit their workforce demographic. Sally Winter, marketing manager at You at Work, says: "Choice has been one of the big buzzwords in the last 10 years or so and the accepted wisdom is that it's a good thing. Give people more choice and they have a better chance of getting what they want. However, there is such a thing as [offering] too much choice."
By adopting a broad-brush approach and providing staff with as many benefits options as possible, employers risk de-valuing their offering, which is arguably counter productive. Mark Eaton, director of benefits provider firm Personal Group, says: "I've seen a lot of organisations in the past that have almost given voluntary benefits as a token gesture."
If delivered in the right way, voluntary benefits can be a vital retention and motivation tool. Recognising a workforce's diversity and appealing to employees' individuality can help to maximise a scheme's effectiveness in achieving these aims. "A lot of the employers we work with are taking a more strategic approach. That's not to say that they are not offering a wide range of benefits, but they are trying to ensure the available options are relevant to their employees and meet any strategic HR objectives of the organisation," says Winter.
The reasons for taking a more strategic approach can be plentiful. "Partly it's because a company has over-arching objectives and [is] very clear with what [it] wants to achieve with [its] HR policy, but it's also about getting the most value out of the benefits. The more targeted it is, the higher the perceived value of the benefit to employees. Benefits are there to create greater employee engagement which will create a better result for the bottom line," she adds.
When looking to tailor a voluntary benefits scheme, however, employers should not assume that less will automatically equal more. The key is to make the options available to suit the workforce demographics.
It is important for employers to understand employees' buying habits and provide a package that addresses their likes, dislikes and routines. "I think that sometimes HR people get a bit messed up with thinking they're almost going to change people's buying habits," says Eaton.
Where there are an overwhelming number of voluntary benefits on offer, tailoring that programme may take some time. "Depending on feedback you can add to the programme, you can prune it, [and] you can even take away the elements that haven't worked," adds Eaton.
However, it is important to remember that the majority of workforces are diverse and even where there is a dominant demographic there will still be exceptions to the rule, so employers may not be able to cater for everyone to the same degree. Mark Carman, marketing manager at benefits IT firm Motivano, explains: "It's important to recognise that people are from different walks of life with different lifestyle choices so it can actually be detrimental to limit the number of benefits."
Communicating the package in the right way is also vital to highlight its relevancy to employees. Some employers may even find that they do not need to revamp the benefits on offer, but can improve take up by targeting communication of particular perks to certain groups within the workforce. For example, if a large number of employees have families, then highlighting offers on family days out can be beneficial. "You could keep a vast array of choice as long as you're targeted in how you communicate it," explains Winter.
Appointing staff as benefits champions for their peers to consult can also be beneficial when communicating a scheme. One issue for employers to watch out for when streamlining their voluntary benefits package is age discrimination. Winter explains that targeting communication to suit all groups can help to prevent even the slightest chance of discrimination. "If you've got 90% of your employees under 30 [years] that doesn't mean you want to totally exclude the 10% who aren't."
If more employers are beginning to demand more strategically-designed voluntary benefits for their staff, it raises the question of whether providers can cope.
Most are certainly aware of employers' new demands and insist they are rising to the challenge. "You have to have the flexibility and functionality to be able to adapt to the client," says Carman.
Some can also help employers with market research to find out more about their employees and with the design and communication of a scheme. "One of the things we're looking at is helping organisations which want a strategic approach capture a lot more information about their employees so they can segment their audience," says Winter.
While most providers claim they are confident in their ability to offer a streamlined package, their capacity to provide useful measurements of the value of various benefits has come under fire from some camps. Michael Whitfield, managing director of Thomsons Online Benefits, is disappointed with a lack of management information that he believes is offered to employers.
He explains that the shortfall means that it is difficult for employers to measure whether they are getting anything out of their voluntary benefit programmes. "It's disappointing that where we are currently with advances in technology that the providers out there cannot provide the type of information that the employer needs to be able to say, 'my employees value days out [and] my employees value discount holidays'. There has to be joined-up thinking between the offering of a voluntary benefits package, the effect on the employee and the benefit to the company."
Where employers are dissatisfied with provider support, some have embarked on offering a scheme under their own steam. Perhaps unsurprisingly, providers claim that this is possible but a difficult task. "If you are putting in 15 or 20 different perks and you're having to have 15 or 20 meetings with separate providers all offering a different service [and] all wanting to communicate it in a different way, it becomes a resources issue," says Eaton.
Carman says he has worked with companies which have tried to take a voluntary benefits programme in-house but found it too hard to administer. While Phil Ainsley, senior manager employee benefits services at Lloyds TSB Registrars, says employers that have successfully taken a scheme in-house are the exception rather than the rule.
While taking a strategic approach to voluntary benefits is on the increase, allocating dedicated time and resources to scheme management is more important than ever. "[But] it's easy for an in-house benefits scheme to become a cottage industry all of its own and that can eat into the resources of a whole team of people," warns Winter.
How to make a scheme more strategic
Define staff demographics and employees' priorities.
Measure the impact and popularity of previous voluntary benefits schemes.
Possibly add or remove voluntary benefits options.
Target communication.
Case study: Somerfield
With a diverse workforce of approximately 45,000 employees, Somerfield's strategic approach to voluntary benefits is integral to its total reward strategy.
Tim Jones, head of organisation development, explains: "We restrict the number of voluntary benefits, preferring to offer a small group of targeted choices rather than taking a broad-brush approach."
This ensures employees are not overwhelmed with options, particularly those which are irrelevant to them. "There is little value in offering concierge services to colleagues earning close to the national minimum wage or offering internet-only solutions when our store-based colleagues do not have a PC at work," adds Jones.
To identify which benefits are attractive to staff, the supermarket chain uses a combination of focus groups, informal conversations and feedback on previous voluntary arrangements. "Most importantly, the package is not fixed but will continue to change and develop over time. We took feedback after the initial launch and continue to collect feedback through multiple channels, looking for new innovative benefits to add or unwanted benefits to drop from the scheme," says Jones.
Somerfield works with external provider Personal Group.