‘Flexed’ benefits offer key to retaining staff

Wouldn’t it be great if reward were based on getting things right first
time. Reward is a powerful tool when driving behaviour and can be used
positively to improve performance and productivity. Unfortunately, even the
best designed schemes can drive the opposite behaviour.

Fixed pay drives the need to be regularly promoted as the annual pay review,
which creeps forward at or around the inflation rate, struggles to cover rises
in public transport fares and council tax bills – neither of which appear to
have any link with inflation.

If poorly designed, variable pay, such as bonuses, promote a dog-eat-dog,
silo mentality with everyone trying to get the bonus they need to fund their
increasingly expensive lifestyle. Benefits, many now fully liable for tax and
NI, have gradually been replaced by cash allowances as companies move away from
expensive benefit administration.

The good news is that enlightened organisations will recognise the pitfalls
and pressures and design reward strategies that provide maximum benefit to the
employer while minimising business costs. The strategy will focus on corporate,
team and individual reward based on performance at all these levels. The trick
then is to create flexibility and choice, extending access to benefits to all
employees and, where possible, their families.

Reward strategies must look beyond just attracting new people. They act as a
powerful retention tool, particularly in the first couple of years when many
companies face high employee turnover. The response can be to extend
eligibility periods for pay and benefits in the first year.

If those same people were able to access benefits that suit their lifestyle,
they may be less inclined to leave. Confident employers whose recruitment
process gets the right people through the door in the first place will feel
better placed to focus on retention.

Flexible benefits make this possible. I am not talking about ‘cafeteria’
benefits, where employees are allocated pots of money or points to buy and
trade benefits set out on a menu. And the funding of self-insured schemes, for
example, does not enable large pots of money to be made available.

Things have moved on and the philosophy of choice must be underpinned by a
scheme which looks at how existing benefits can be ‘flexed’, such as buying and
selling holiday, and adding new benefits, which have either tax or NI savings
or both – childcare vouchers or computers at home, for example.

Employers should also consider offering access to health and lifestyle
benefits through competitive membership schemes i.e. private medical insurance,
and access to those benefits where the company can secure a discount for
employers – for instance, domestic appliances or retail vouchers.

Companies are already offering many of these benefits and by incorporating
them into an effective scheme, they will be able to market and offer a powerful
retention tool for their staff.

By Denise Keating, Head of people proposition Marks and Spencer

Comments are closed.