Promotion is a priority for flexible benefits

Advances in technology mean flexible benefits schemes are more accessible than ever. Traditionally viewed as expensive to set up and manage, these schemes are growing in popularity among organisations of all sizes.

A survey this year by Thomsons Online Benefits found that 25% of UK employers have already implemented or are considering implementing such schemes, where staff can choose the perks they receive from a pre-arranged menu.

Another report detailing research by KPMG found that 25% of small to medium-sized companies now offer flexible benefits and another 18% plan to introduce them over the next year.

Return on investment

Ploughing money into a flexible benefits scheme is all well and good, but how can HR departments ensure they get a return on that investment? It is all about how they communicate the benefits of the scheme to employees, according to Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD).

"You need to look at what you are trying to achieve in terms of the values, behaviour and performance you want from your staff, and how flexible benefits fit in with these objectives," he says.

This is especially crucial at the launch of the scheme. About 80% of Thomsons' clients use branded schemes to grab employees' attention. LAN, the IT recruitment division of Manpower, created the Central Perks brand for its flexible benefits scheme, named after the coffee shop featured in US comedy Friends. The idea was to appeal to its predominantly 30-something workforce, which is spread across 14 countries.

"We put up posters two months before launch, saying that Central Perks was opening soon," says Chris Bruce, co-founder of Thomsons Online Benefits. "Of course, many people thought we were opening a new coffee shop, but it created a buzz around the brand. Then we sent letters home to staff, explaining the scheme and asking them to log on to the Central Perks site."

UK benefits managers need to make staff aware of the monetary value of benefits, and use perks to promote the firm as an employer of choice. It is also crucial to canvass opinion among staff so that the rewards reflect what they want.

From a change management perspective, the involvement of senior management can make or break a flexible benefits scheme. A recent survey conducted by Hewitt Associates found that half of all chief executives and finance directors take an active role in both creating and implementing flexible benefits. "It should not be a purely HR exercise," says Bruce. "If you encounter stumbling blocks when introducing flexible benefits - say with different divisions - a senior person can help to clear the path and overcome obstacles."

Attracting attention

One of the problems organisations can encounter is attracting their employees' attention amid all the other corporate literature they are expected to absorb.

At Cadbury Schweppes, its 'Choices' benefits scheme has an intranet-based, self-service element. But the company also uses a variety of media, including face-to-face sessions, corporate magazines, posters and brochures, to communicate with staff.

The scheme includes discounted products, such as pet insurance, laser eye treatment and car purchase plans, from which staff can make choices twice a year. Many employees are manufacturing-based so do not have access to the internet and e-mail.

"Communications can be a nightmare," admits Suzanne Laverick, UK employee benefits manager. "Flexible benefits can be confusing for staff if they do not understand the value of the exercise and if you do not communicate clearly with them. You cannot just give them a brochure and expect them to read it; they might think it is just another corporate booklet and that it has nothing to do with them."

Don't stop promoting the scheme

There is also a temptation to invest a lot of time and effort in promotion before a scheme is launched and then to let communication lapse. This is a mistake, says Steve Makin, head of the HR service centre at public sector watchdog The Audit Commission. It has been offering flexible benefits to its 2,200 staff for about seven years. "Flexible benefits schemes don't grow by osmosis; you have to continue to promote them. We have had to work hard to maintain our momentum," Makin adds.

Once the scheme is set up and has bedded down, it is important to continually monitor its success. This means evaluating it against the original objectives and using traditional HR measures, such as labour turnover and sickness and absence. "If you have introduced flexible benefits for the right reasons, then you can expect to see a positive impact in these areas," says Cotton.

Many companies monitor benefits satisfaction through their annual staff survey, but staff feedback should be encouraged on a more regular basis. "You can't just look at measures such as take-up rates on particular benefits," says Laverick. "Our lifestyle management benefit isn't hugely popular, but we know that those people who use it really value it.

"Staff have lots of different ways of giving us feedback on benefits, through e-mail and phone, and we make regular visits to staff sites," she concludes. "Getting regular feedback and really understanding staff's needs is crucial for their success."

Top tips for making flexible benefits a success

• Be clear about your objectives and about how flexible benefits fit into overall reward, HR and business strategies.
• Invest time in the business case and get senior management buy-in at an early stage. "It is crucial for the CEO to be involved to highlight to staff that this isn't just an HR initiative; it is an organisational one," says Charles Cotton, reward adviser at the CIPD.
• Develop a brand for your scheme. "You need to try to relate the scheme to the organisation, rather than presenting it as an off-the-shelf product," says Steve Makin, head of the HR service centre at the Audit Commission.
• Do not underestimate the amount of communication required at launch and beyond. Staff need to know what is available, when they should subscribe, and what are the implications - tax and otherwise - of the choices they make.

Case study: Motability Operations

Motability Operations helps about 400,000 disabled people in the UK, providing vehicle leasing, wheelchairs and scooters. It employs 650 staff across sites in London, Bristol and Harlow. The company already had a flexible benefits scheme, which it ran in-house, but decided to consider outsourcing in late 2003. One of the aims of doing this was to make staff more aware of the value of the benefits
it offered.

The company also wanted to improve the performance of its scheme, reducing errors in administration and the amount of form filling involved for both employees and HR staff. "If we make mistakes administering benefits, this has a knock-on effect on confidence and on staff participating in other HR initiatives, such as leadership development programmes," says Anne Downey, HR director at Motability Operations. "Outsourcing administration has given us more confidence in our benefits process."

In June 2004, the company appointed Thomsons Online Benefits to relaunch the scheme, which now includes five core benefits that staff can flex up and down to minimum and maximum levels, and three non-core benefits. Staff access the scheme online.

Downey says that although the company has made some cost savings through reduced paperwork and the streamlining of processes, better communication has been the biggest benefit of outsourcing the scheme. "Staff understand the package and see the real value of it," she says. "This is critical for recruitment and retention."

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