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- Avoid trying to shoehorn benefits to fit employee segments.
- Do not assume that people of the same demographic segment will want the same things.
- Employers should be creative in the way they communicate key messages about benefits to staff
Supermarket giants know every aspect of their customers’ shopping behaviour, from the products they buy to their average spend. They then use this data to motivate them to spend more. This is done via a savvy approach to customer profiling known as segmentation. Customers are categorised according to certain criteria on which the organisation bases its business strategies, from marketing through to procurement.
A simple example is a supermarket segmenting customers according to their weekly spend. The process can help the store target groups of customers with the right promotional literature about certain brands according to their spend, with higher-value and aspirational brands promoted to bigger spenders, and lower-cost and value brands directed at more modest shoppers. In a similar way, employers can use segmentation to motivate their workforce.
Segmenting the workforce can help employers tailor their employee benefits more effectively to achieve certain outcomes. For example, an organisation might off er a sales team a bonus to hit a particular profit level if it agrees with the common assumption that sales teams are best motivated by monetary rewards.
Matthew Gregson, managing consultant at Thomsons Online Benefits, says: “Overall, we see segmentation as the next iteration of reward and benefi ts. From a package perspective, it is about providing the right benefits according to what people value. From a communications perspective, it is about making huge efficiency gains by providing as little information as possible to get people engaged with the programme. Put the two together and [employers] have a winning approach.”
So, where can employers start? They should first identify their desired outcome. Is it to motivate staff to hit a profi t target or to promote a particular corporate culture?
Next, employers must understand what motivates their workforce in order to identify the most suitable benefits to offer, rather than making their own assumptions about the products and services that they believe will be most effective.
Supermarkets learn about their customer base from a range of sources, including loyalty cards, such as Tesco’s Clubcard and the Nectar card. Employers can use surveys and focus groups to help understand what motivates their employees, as well as online forums.
Misguided programme
Stephen Mork, principal in Buck Consultants’ compensation practice, says a misguided motivation programme is as good as having no programme at all. “I was working with a large IT company in the Netherlands,” he says. “It was having a problem with turnover. It had a pension plan it had put in to avoid that, which was a very rich defined benefit (DB) plan. But after the scheme was implemented, the [high] turnover remained.
“We went in and did some employee focus groups and discussions to fi nd out what employees really wanted. The average age of staff was 26 or 27. What they wanted and what they were getting were two different things, which was the reason for the [high] turnover. The company just assumed that if it put in a pension plan it would attract and retain employees.”
After holding a number of focus groups with staff , Mork quickly learned that employees were more motivated by being able to wear jeans to work, by being able to get a bus pass because the office was located outside Amsterdam, and by training and development, rather than by a pension.
“The employer spent millions of euros to develop this pension scheme and it wasn’t getting a return for it,” he says. “It could have invested a fraction of the cost in developing these programmes, that a lot of the time are very minimal [in cost] or even free, to get more of a return for its investment.”
Once employers understand what motivates their workers, they can begin to decide how to approach segmentation. Criteria to consider include employee age, job role and geography. However, Mork says he rarely comes across job role as the basis for segmentation based on a motivation programme, and says age is more popular. “If the population is 50-plus, it is going to be more interested in pensions,” he says. “For those in their 30s and 40s, it is more about compensation, and for 20s and below, it is more about training and development, and getting their career on track.”
The work environment is an equally important, but not necessarily obvious, motivator for the under-20s. Mork adds: “The mobile workforce that we have means that having a workplace environment where you have the freedom to work at home or wherever you are, versus having to come into a concrete building every day, is very important.”
Global employers
Geography is also an important factor, particularly for global employers, says Mork. “Employers need to look at locations, country-specific locations as well, to make sure rewards make sense to that particular country and area, and from a number of different angles, such as the appropriateness of it. Does it fit? I often see somebody will put in a good reward system, say in the UK, and then they try to export it globally. When [an organisation is] in 40 countries, obviously having one reward system is not going to fit in all those 40 countries.”
Organisations also need to assess how engaged employees are with their current benefits package, because even the most comprehensive motivation programme in the world will not be effective if staff are not engaged in the motivational tools from the outset.
In such cases, the employer’s initial required outcome may be to achieve employee engagement with their benefi ts package before even considering how best to use it to motivate certain desired behaviours. But Yannis Georgellis, professor of leadership, human resources management and organisation at the University of Kingston, says employers can help themselves by ensuring that they employ people that they can motivate in the first place.
“Devise recruitment methods that enable employers to self-select the right people for the right job,” he says. “For example, if the job is about off ering a service to society in a nonprofit organisation, such as a university, then employers need to attract individuals who are socially motivated.
“If they appoint the wrong people for the wrong job, then the quality of the match [between the employee and the role] will be very low and therefore productivity will be very poor. The only way [for employers] to deal with this is to either get rid of the people who don’t fit their values or try to train them. The recruitment process is critical.”
Thomsons’ Gregson adds: “All of that said, segmentation can be only one part of the thinking around the right package of benefits. Organisational drivers, such as reducing risk or remaining competitive, are also key.”
Viewpoint
Matt Duffy, head of online benefits, Lorica Employee Benefits
Accurate data is the key to effective segmentation
The starting point for any segmentation strategy should be clean and accurate data. Employers should liaise with HR and payroll to ensure they have as much relevant information on employees as possible.
Analyse this data to identify different segments and populations of employees. While most employers acknowledge the obvious categories based on standard demographic dimensions, such as generation, gender and ethnicity, few recognise that even employees of the same demographic group can be highly diverse, with different abilities, work styles, and preferences and motivations to work.
Effective segmentation involves an employer creating its own groups and categories, but then going a step further to find new populations within those groups. This enables it to offer choices tailored to these segments with respect to benefits, compensation, training and development.
Shoehorning existing benefi ts to fit different employee segments simply does not work. Employers must find new and appropriate benefi ts that genuinely match their employee populations. Focusing and defining benefits in this way can have a big impact on take-up and perceived value. The process is not just about segmenting a workforce, but also about segmenting communications.
To increase take-up of benefits, employers need to identify the methods and frequencies that resonate with each group. Also keep all communications simple, concise and easily digestible.
CASE STUDY
Sykes ensures staff connect with right incentives
Segmentation is key to the recognition and incentive programme launched by Sykes Global Services in May.
The call centre services fi rm’s programme, SykesPride, was designed to improve recognition among its 650 Edinburgh-based staff through a range of award schemes. These include key performance indicator (KPI) awards for staff who hit their assigned KPIs, ad-hoc awards for those who go the extra mile in their role, and long-service awards.
A dedicated IT platform, provided with the programme package from AYMTM, enables managers to set targets and monitor employees’ progress, thanks to the segmentation process AYMTM undertook with Sykes at the outset.
Alice Wilson, operational business support manager, Western Europe, Middle East and Africa at Sykes, says: “It was segmented on the level of the person, approval authority and department. There is a wide range of KPIs, which are department specific. For example, the KPI requirements for an inbound team are diff erent from those for a technical support team.
“Administration and support staff are awarded for going the extra mile and taking on extra responsibilities (fire wardens, for example) while inbound call-focused staff have activity-driven KPIs.
“Managers can view and approve the awards, nominations and corresponding data that are relevant to their team and their specific roles, preventing employees being bombarded with irrelevant information.
This enables staff and managers to understand the core values, business objectives and their own performance against targets.”
