Benefits Overhaul 2012: Part 9 – The appeal of modern benefits

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Retail vouchers, experience days, cycle-to-work schemes, iPads, free gym membership. The benefits market has devised numerous new perks in recent years, but which are most effective? Emma Page reports.

Benefits are evolving, albeit slowly, in response to the new economic reality. Unable to justify salary increases, and with leaner, increasingly stressed workforces, employers are looking to reward staff with practical perks that help their budgets go further. At the same time, there’s an increased focus on wellbeing, as bosses seek to reduce costly absenteeism and boost productivity.

Richard Stewart, director at Mazars Employee Benefits, says that technology and health benefits are on the rise: “We’ve noted interest in technology solutions centred on the ubiquitous iPad. There’s no doubt that on-site employer health and wellbeing initiatives are popular, can be offered cost effectively and can complement a wider benefits package.”

Retail vouchers

While cash incentives, such as bonuses, often end up as part of an employee’s overall salary at the end of the month, easily sucked up into household expenditure, vouchers and gift cards are more likely to be spent on treats or put towards larger purchases. This can help to boost employee engagement.

The UK Gift Card and Voucher Association (UKGCVA) says the gift voucher market in the UK is now worth more than £4 billion, with more than half bought for business-to-business use. Paper-based or electronic gift cards can be used at a single store or at multiple retailers. Employers can also offer travel or experience vouchers, although these have lost out to more practical rewards in the last few years.

“Vouchers and gift cards are a conventional way of rewarding staff for meeting sales targets, but we also see employers using them to reward full attendance, long service and suggestions,” explains Andrew Johnson, director general of UKGCVA.

While the market is moving from paper vouchers to electronic cards, the latter is still in its infancy, and largely being bypassed in favour of digital delivery. “Large employers tend to have established fairly robust systems for the delivery of paper vouchers,” says Johnson. “It can be complicated to load electronic gift cards. In a call centre, for example, there will be a significant level of ad hoc rewarding, with the team leader dishing out vouchers from a locked drawer.

“Purchasing paper vouchers in advance is a bit of a liability, especially if the retailer is likely to go out of business. We are seeing a movement toward digital delivery. Huge savings can be made emailing or texting vouchers to a large workforce. For a large workforce, it’s sensible to use a range of vouchers that can be used in a number of outlets, but what you gain in diversity you lose in engagement, which will be higher if the reward is personalised.”

“Giving a reward digitally loses its tangibility,” continues Johnson. “Rewards are about recognition, so make sure that employees in receipt of digital rewards get recognised in company newsletters and so on.”

Electronic cards can be branded with an organisation’s name and logo, and can be reloaded and reused, which can reduce administration. Staff can also be given gift cards with no assigned value, which can be loaded with value remotely. Other types of motivational voucher that are available include travel, theatre and restaurant vouchers.

Iain Laws, corporate sales director at Jelf, says that vouchers and gift cards remain attractive: “Five or six years ago, vouchers seemed like a novelty, with lots of suppliers jostling for position; but now employers have focused on areas of demand.

“With energy and food costs rising, staff appreciate being able to help towards essentials such as school uniforms. The most important thing is to keep diversity in what you offer.”

Alex Bailey, marketing manager at Asperity, agrees: “It is important to pick a provider with the widest choice of retailers to ensure that your employee discounts programme is relevant to as many people as possible.

“No-one is immune to discounts anymore,” she adds. “Being able to maximise your employees’ salaries is indispensable to them, and complements the growing consumer trend to hunt for bargains before making a purchase.

“Discount vouchers don’t cost much to implement, but represent a much higher value to your employees. It is much easier to justify implementing a low-cost benefit that has tangible reurn on investment. The trick is to get everyone in your workforce using the benefit to their advantage, which you’ll only succeed with if you have a provider that can tailor its communication approach to your specific demographic.”

Bailey says that a discounts app can revolutionise the impact of an employee discount scheme: “Apps enable employees to shop and save on the move. Some providers’ apps simply offer members the ability to check rates, but by picking an app that allows them to do everything they can do on their desktop, you multiply the opportunities for employees to engage with their benefits package.”

Technology temptations

Helping staff to buy or hire IT equipment for home use can help to develop IT skills and literacy that transfer back into the workplace. Personal computer schemes, including Apple products, enable employees to pay for a computer or laptop over a fixed term, with the cost deducted monthly from salary. Many NHS trusts, along with KPMG and National Grid, offer staff access to iPads or computers, through updated versions of the former home computing initiative, tax breaks for which were removed in 2006.

A home computing scheme can work as a salary-sacrifice arrangement, free from national insurance and with some tax saving. An alternative is for employees to take out a hire agreement, spreading the cost over 24 months, with payments taken from net salary.

Apple reseller and service provider ACS has provided 120 iPads to staff across its three sites. The company’s experience so far has suggested that the move will help to improve efficiency and ease decision-making processes at the organisation; a happy side-effect of educating them about their product.

“With a corporate-wide iPad deployment, we’ve seen a massive increase in productivity. People are working smarter as a result with more flexible working hours, because they are always connected and available. Motivation is also enhanced as a result of supporting employees’ working preferences,” explains Jon Thorpe, ACS’s managing director.

A standard set of apps are provided, including email, recommended business apps and an ACS iPad portal for links to company tools, as well as an enhanced secure password service. Staff are encouraged to download and install their own apps to experience the full range of benefits the devices can offer, both at home and work.

Wellbeing

Access to gyms, wellness days, smoking cessation programmes and organising team sports are all highly visible ways of showing staff that you consider their wellbeing important. Similarly group income protection or employee assistance programmes allow organisations to demonstrate a concern for staff welfare.

“As an employer benefit, discount vouchers have a limit in terms of engagement value. But wellbeing benefits have a well proven advantage for employers of providing employees with pathways to achieve and maintain engagement through better health, increased productivity and organisation performance,” says Laws. “Of the Sunday Times’ Best Companies to Work For, the top 10 consistently achieve high ratings in their wellbeing criteria.

“Lots of organisations are running very lean, with people under greater pressure to perform so it makes sound business sense to invest in their wellbeing. The results are sometimes intangible. The only way to measure the effectiveness of any wellness benefit is to record absence so that you can directly attribute savings made. As it costs £450-£600 per day [of absence], it doesn’t take too many days to make a saving. The key is in the accuracy of absence recording, training in management.”

Cycle to work

The demand for cycle-to-work schemes has exploded since the Olympics, according to Laws, himself a cycling enthusiast. “Cycling is a great way to start and end a working day, providing exercise and valuable severance between working and home. A scheme won’t leave you lumbered with a huge liability, like a fleet of cars, and now that so many bikes are being bought, you can get a really good-quality bike, or even a hybrid, for a good price.”

Cycling results in high engagement. “People love it. It’s not a high-impact sport, it’s easy to get started and it won’t involve a high level of injuries or absence,” he adds. “And if the price of petrol rises further how will people get to work?”

There are hundreds of schemes to choose from. “Either choose a supplier with national coverage or go to a local independent retailer if it’s more of a fit with your corporate social responsibility strategy to support local businesses. You could link up with both to accommodate the different requirements of your workforce. Perhaps have a scheme that meets the demand for a straightforward bike to get someone to and from work and another arrangement to accommodate those who perhaps belong to a cycling club and want something a little more sophisticated.”

Halfords’ scheme enables employees to get up to 42% off the cost of a bike. Chairman Dennis Millard says that more businesses should benefit from the plan. “Our research shows that 97% of participating businesses say the scheme is an important way to encourage a healthy workforce, while 86% feel the scheme improves employee engagement.

“Everyone can be a cyclist, enjoying the thrills and fitness benefits. Cycling to work is one of the best ways of incorporating cycling into everyday activity,” he adds. Halfords has just launched Businesscycle, an online information portal for employers that offers guidance on how firms can promote the benefits of cycling to their workforce.

Holiday trading

Another modern benefit expected to grow is holiday trading. Staff tend to purchase holiday rather sell it. Here, companies can save as much as 14% of the value of the holiday if the benefit is offered on a salary-sacrifice basis, on top of the savings generated through the reduction in an individual’s salary.

“Holiday trading remains a very common element of flexible benefits schemes,” says Laws. “The upside is that is provides a mechanism to provide flexibility for employees, for example working parents are able to buy additional holiday to help cover school holidays, so seems likely to continue to be a popular option. But there has been a slight trend of reducing the number of days that can be traded.

“The downside is only in the ability to sell holiday which then becomes additional payroll cost to the business but in general there tends to be only a small net growth or contraction in the total holiday taken.

“Employees selling holiday will effectively increase pay and therefore the employer’s national insurance contribution, the net effect of the saving can still be significant and would certainly subsidise the delivery of adding that benefit to the flex arrangement.”

It’s important to ensure a holiday trading system is set up over the same duration as a holiday year, and that no employee goes below the statutory minimum of 28 days a year, inclusive of public holidays. Things can get complicated when individuals have different entitlements according to length of service. And there is a potential for staff shortages at popular times of the year – such as school holidays.

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