As consumers, we’re used to being bombarded with special offers and incentives. And employers have long recognised that if their business offers a product or service that staff could enjoy, it makes sense to offer them discounts too.
However, there has been a subtle shift in emphasis in the delivery of these rewards, with a greater focus on what they mean for employer brand and staff engagement.
Utility company Npower, for example, rewards staff with loyalty points for being its customers, while at the same time incentivising them to provide feedback as customers (see box below). And many car manufacturers, such as Ford, offer their staff the opportunity to buy brand new cars at a discounted rate and change them on a regular basis.
“Trying out new models is part of the customer experience. Hopefully the employee will report back favourably,” says Gary Hull, a director of HR services at consultancy firm PricewaterhouseCoopers.
A ticket to ride
In offering travel discounts to staff, First Group, the UK’s biggest bus and train operator, has gone the extra mile. In addition to giving free local bus and train travel to employees and their spouses, the company gives staff the opportunity to buy discounted bus and train tickets for themselves, their family and also their friends on its UK services. By doing this, it both highlights the breadth of its brand and increases the ‘feel-good factor’ for employees.
“Our mission is to position First as the employer of choice in our sector,” explains John Chilman, First Group’s head of reward. “Our scheme recognises that each employee has different needs and priorities, and aims to provide benefits and opportunities that are relevant to as many people as possible.”
Rewarding employees for being loyal customers is subtly different from the old-style staff discounts.
First, for employers, the feedback element is a hugely beneficial way of conducting market research with critical and involved respondents. Second, employees get good deals, as well as first-hand engagement in the employer’s products and services. Third, the employee opinions have an effect on the employer brand.
“If you are a car manufacturer and your staff drive round in cars made by another organisation, what sort of message does that give out about the company you work for?” Hull points out.
Tax implications
But while the benefits are clear, there may be some pitfalls in introducing such schemes. There may be tax implications if the schemes are entered into the wrong way, warns Hull.
In addition, the costs of the schemes may be quite high initially and need to be evaluated against their impact on employee motivation and the increased feedback provided to the employer.
At utility firm Npower, the head of propositions, Patrick Harvey, says the initial investment is worth it. “The business will eventually benefit from getting the experience right and from increased understanding of its customers.”
Getting employees to buy in to goods or services is all very well. But what if the goods and services are not up to scratch?
Hull says: “It’s a gamble employers take if something goes wrong when an employee is trying out their service or product, but that’s a risk you take with everyday customers. If a member of staff has a problem, you will sort it out pretty quickly.”
Protecting the brand
It’s also important to consider how offering your products or services fits in with the rest of your employee reward package, and how you communicate it.
“If you get it wrong it can have a detrimental effect on the value of the scheme that then affects the employer brand and the relationship it has with its employees,” says Mike Morgan, managing director of employee benefits firm People Value.
That is why the management of these schemes often falls into marketing’s remit, rather than HR, says Harvey. “The focus is on the customer experience and it needs a campaign behind it rather than a normal HR style,” he explains.
But that doesn’t mean HR should be excluded. As HR departments become ever more commercial, they realise that staff can be your most discerning customers – and should be rewarded as such.
Case study: Npower
Utilities provider Npower launched its ‘smile’ campaign in July. The scheme rewards employees for being customers of its energy products, while at the same time asking them for feedback as customers.
“We want to improve the experience for customers by making sure our employees understand it inside out,” explains Patrick Harvey, head of propositions at Npower.
The scheme reflects the diversity of the company’s workforce, allowing employees a huge choice of rewards. All of its 11,000 UK employees are given a ‘smile’ account credited with 15,000 points (worth £150) if they can demonstrate that the property they live in – whether it’s owned or rented – takes both gas and electricity from the company.
Points can be redeemed against 5,000 items, ranging from a Ferrari experience or pampering days, iPods or DVD players, gift vouchers, or donations to a charity.
“We have already beaten our projected take-up target,” says Harvey. “We want our employees to tell us where to focus the effort to make our business better. Getting it wrong is as important as getting it right.”
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