A recent survey reveals that organisations have not got to grips with how best to motivate and retain staff using benefits packages despite clear evidence that they can work wonders with morale.
Private health insurance, share options, company car, pension scheme, gym membership – there is little doubt that what employers like to call a ‘generous package’ looks great in a job advertisement.
But does this multitude of benefits really help motivate and retain staff? Do employees actually make use of their benefits? Do they want them at all?
A survey of almost 750 UK firms across all sectors suggests the answers to these questions are far from clear.
More than a quarter of companies surveyed offering standard benefits package felt the major issue they faced was that it wasn’t sufficiently valued by staff.
Difficulty in communicating a benefits package was a key issue for more than a fifth of firms, while 16 per cent thought their package was too costly, and 15 per cent believed it required too much administration.
Michael Whitfield, managing director of Thomson Online Benefits, which commissioned the survey, said the findings show that firms can make their benefits strategies more effective. Better communication should result in better take-up and appreciation of benefits, he said. But, of course, no amount of good communication will persuade staff to appreciate benefits they do not want.
“Gym membership is the classic,” said Whitfield. “There are some people who are never going to go to the gym, regardless of how well you sell it. Similarly, childless people do not want discounted crèche facilities, but may appreciate a higher pension scheme contribution.
“You have to look at your workforce and take a view on whether you have the right benefits strategy in place,” he added.
The survey suggests there are signs that this is beginning to happen. Flexible benefit schemes – where staff are given a degree of choice about what type and level of benefits they receive – are becoming more popular.
However, what change is occurring is slow paced. Only 5 per cent of organisations have a flexible benefits scheme in place, although a further 10 per cent are actively considering introducing such a scheme.
Mobile phone company O2 is one organisation that decided against a flexible scheme. Andrew Harley, group HR director, said: “We looked at introducing a flexible benefits scheme after our staff asked us to consider it, but we quickly found the cost of administering such a scheme was too much.
“We decided it was better to spend the time getting our pension scheme into shape and concentrating on our core benefits, rather than letting our employees choose and manage their own benefits.”
Harley said O2 offered its staff the core benefits of a pension scheme, subsidised restaurant and discounted gym membership. The company also provides discounts on mobile phones and O2-sponsored clothing, such as Arsenal football tops and England rugby jerseys.
Staff were more than happy with this arrangement, he said. “We have conducted focus groups and formal conversations with staff – most want the cash and core benefits rather than other options.”
But Harley agreed that communication was vital in the management of any scheme. “We are in the process of launching a website that will provide all staff with their benefit statements online,” he said.
“We are also communicating with our employees by issuing new pension benefits statements that give employees a clear understanding of the value of their scheme and the choices open to them.”
But Mark Childs, vice-president of reward at the Chartered Institute of Personnel and Development (CIPD), said the extension of technology – especially the internet – has made the cost of administering a flexible benefits scheme more affordable for employers.
The momentum behind flexible benefits has increased, said Childs, but companies still need to be thorough when considering such a scheme.
“Be clear about the reasons for introducing a scheme,” he said. “Invest heavily in the design and planning – don’t rush it. And don’t underestimate the importance of communication on an ongoing basis.”
Online benefits double take-up at software firm
A software firm has doubled the number of staff taking up company pensions after overhauling its benefits package and putting it online.
Firstwave, a software and management systems company, overhauled its benefits package in a bid to increase take-up among staff.
Amanda Brooker, finance and administration manager, said the review of the company’s benefits arrangements had paid dividends.
“Take-up of the pension scheme has gone from 50 per cent to 100 per cent of employees. Staff now have access to view and manage their benefits online, and can receive advice and help in person or over the telephone,” she explained.
The review was launched to improve participation among the company’s predominantly young workforce and reduce the time spent on administering benefits.
Following a joint review with Thomson Online Benefits, Firstwave decided to change the pensions scheme to one with lower running costs, and also put the whole package online.
Employees now receive an information pack and meet with an adviser to get help choosing and accessing their benefits. They also have access to a series of interactive web tools to help them choose the most appropriate strategy.
“Our benefit package was not doing what it was supposed to,” Brooker said. “Primarily, we wanted to increase the appreciation and take-up of benefits, particularly the pension scheme.
“We felt it was important to improve communication so that employees understood their benefits and recognised the value of the company’s investment in them,” Brooker said. “Firstwave also viewed the benefits shake-up as an opportunity for the company to demonstrate our commitment to staff.”