3rd February2009 - Sales Promotion

When employee Benefits are available to everyone, whether they are good or bad at their job, can they really help to motivate? Mark Ludmon reports

Money off your shopping, free gym membership and other price offers are not just for promotional marketing but are increasingly becoming part of the benefits packages offered by employers to their staff.
These leisure and lifestyle voluntary benefits, such as discounts on vouchers, have been in growth particularly since the start of the economic downturn, according to specialist providers.

“Over the past 12 months, the number of clients using our range of retail vouchers for benefits schemes has grown from three to 90, which is indicative of the growth of lifestyle voluntary benefits,” says Kuljit Kaur, head of business development at Motivcom’s The Voucher Shop. “In light of the credit crunch, this increase is occurring because people genuinely need to make savings and make their salaries stretch as far as possible, and employers need to introduce benefits that allow them to do this with little cost to themselves.”

This trend has prompted a number of leading UK suppliers of vouchers and gift cards to move further into this market. Like many in the sector, Love2reward, part of Park Group, has been providing its multi-store vouchers for benefits schemes through specialist agencies such as You At Work, Motivano, Lealta and Lifestyle Benefits. But sales and marketing manager Martin Cooper says his company is looking at entering the market directly; “We have seen such growth in interest that we will be moving into a more comprehensive offer In this current market, companies are looking for benefits that are cost-neutral or at a nominal cost rather than finding the budget to fund more generous benefits.”

According to research by the Chartered Institute of Personnel and Development (CIPD), only 24 per cent of companies offer voluntary benefits, which describes products and services that are available to employees, usually at a discount, out of their own taxable income or sometimes through salary-sacrifice arrangements. Examples include The Voucher Shop’s Flexbank and Grass Roots’ Benefits4me. This contrasts with flexible benefits which are paid for by the employer — and which are provided by only eight per cent of companies.

However, it tends to be larger companies that go for voluntary benefits — it is offered by just four per cent of organisations with 50 or fewer staff. Cooper at Love2reward says this is where the opportunity lies. “For small companies that don’t have the financial clout, these kinds of voluntary benefits are a great offering, he explains.

Alongside healthcare and pension plans, discounts on vouchers, retailers and leisure are the most common form of voluntary benefit. Employees can set aside a certain proportion of their monthly wages to buy discounted vouchers, helping them to save money throughout the year.

Capital Incentives & Motivation, part of Accor Services, has joined with specialist benefits company Motivano to launch a package of lifestyle benefits as a bolt-on to its childcare vouchers. “In the current economic climate, lifestyle discounts and benefits enable you to go to your employees and say that while we haven’t been able to give you a pay rise, we can save you money in your day-to-day life,” says Accor Services marketing director Andy Philpott “It’s very tangible for employees that you can save five to 10 per cent on your shopping.” Benefits differ from motivation programmes in that they are available to everyone rather than as a reward for performance, but Philpott says they are a key tool in engaging with employees and motivating them.

Research by Accor Services last year found that levels of employee engagement in UK organisations are in decline, with 50 per cent of employees now saying they feel involved in their work compared to 57 per cent the year before.

Philpott says this situation can be addressed not just by a good choice of benefits but also by basing them on segmentation of the workforce. “The ultimate thing that companies want is one-to-one relationships with their customers but they are looking at how to evolve that same strategy with employees,” he explains. “Segmentation is a way to show that they care and recognise that their employees are not all the same, whether they are working parents, single or close to retirement.” Karen Collins, head of HR and development at motivation and communication company BI, highlights statistics that show that up to four generations can work in one organisation at any one time, so there is a broad range of interests across the age groups. “An employer must therefore offer benefits that are flexible and can appeal to employees no matter what stage of life they are at,” she says. Vouchers and points-based systems, such as BI’s own AwardperQs, can offer this flexibility, but she adds: “It is vital to keep in touch with employees to investigate which benefits most appeal to them to ensure that, to a degree, you are matching what they want, while managing expectations.”

Philpott adds that it is important to do more than just an annual staff satisfaction survey and have more one-to-one communication. “Line managers should be observing engagement levels of their teams and reporting them back, taking time on a one-to- one basis to make sure employees understand their benefits,” he says. “Our research shows that people don’t always understand the true value of the benefits available to them.”

Ongoing communication, using channels such as the intranet, email and newsletters, can help educate employees. The Voucher Shop finds that, in the first year of a scheme, there is only four to seven per cent take-up, but “the second year always shows a significant increase as word gets round about how vouchers can help save on the weekly shop or on petrol,” says Kaur.

Catherine Forrest, business incentives manager at House of Fraser, notes that consulting employees and tailoring a package to what they want is better than simply offering as big a choice as possible. The CIF’D says that a typical scheme might offer no more than 10 benefits on a voluntary basis, although some can go up to 25. Forrest suggests: “The tailored approach would suit a company providing just lifestyle benefits, and it could be argued that a large number of options provided by a broad scheme might overwhelm personnel.”

With the emphasis on “total reward”, voluntary benefits are most effective if integrated with other benefits and incentives, such as long service and recognition programmes, says Sheila Sheldon, director of European operations at reward specialist Michael C Fina. “In addition to a standard employee benefits programme, which are usually available to all staff as a matter of course whether they are particularly good or bad at their job, it is always important to offer an extra level of benefit through reward strategy to recognise additional, exemplary individual achievements.”

It is a mistake for employers to take a narrow view of benefits, adds Kevin Harrington, research and development director at voucher and benefits provider Sodexo. “A complete package should include flex and voluntary benefits as well as the component parts such as training,” he explains. “It’s all about balance, offering the right amount of reward, incentive and remuneration in turn for a return on investment from the employee.”