With numbers of employed people steadily increasing, recruitment and retention is a hot topic again. As employment goes up, the opportunity to shift jobs increases as well. So how can companies design their benefits and pay packages to keep the employees they want? More so, are benefits the way to retain employees? According to Thompsons, a flexible benefits provider, over the last year there has been an increase from 58% to 70% in the proportion of companies who provide information about their benefits package to prospective employees during the recruitment process.
In addition to recruitment and retention, the principle reasons for introducing them are to:
- increase employee engagement
- make direct cost savings
- harmonise benefits
The idea of flexible benefit packages has been popular for a while, though in practice they’re often not taken up in the way that employers expect. People have different priorities, so in theory a scheme where employees have a certain number of points to ‘spend’ on different benefits available can be very attractive. But some companies have found that flexible benefits can be an expensive and under-used option.
Take-up varies considerably and for a variety of reasons. Some benefits, for example, childcare vouchers, will be limited by their very nature, with the product or service appealing only to a certain group of employees. There are also significant differences across different sectors and take-up tends to be higher in professional environments.
So why don’t employees take up the benefits on offer? Often it’s because companies don’t make the effort to ask employees what they want so the benefits are not relevant to the employee, they’re poorly communicated and the benefits are not clearly spelled out.
Recent research by PwC has found that employee benefits are wasted unless they are tailored to the workforce, particularly regarding gender and age. Female employees value medical insurance more than men. Company car schemes are more popular amongst men than women, particularly amongst younger workers. Employees starting out in their careers are more willing to take on workplace training, with a quarter of 18-24-year-olds choosing training programmes over monetary rewards.
The state of the economy also plays a part. During the recession employees wanted benefits that would make their money go further, not necessarily gym membership. Respondents still overall prefer benefits that help cut the cost of living, with 44% choosing discount shopping vouchers. Extra holiday also scored very highly.
The best way to find out what your employees want is to ask the prospective recipients what they will value and respond accordingly. Civil engineering company Arup has taken a flexible approach to flexible benefits, extending its range of options to appeal to its younger workers. New benefits now include a computer salary sacrifice scheme, which has had a particularly high take up in the under 30 age bracket.
Once you have decided what to include, ensure benefits are properly communicated so that employees know what’s on offer, how it will operate and are able to make an informed decision as to what will be best for them. That in itself can be a challenge and employers use all sorts of channels to broadcast the information. It’s a marketing activity in its own right and many companies have used quirky ideas to attract the attention of their employees – from announcements at parties, scratch cards, handwritten notes as well as the more usual intranet.
The theory of flexible benefits is fairly simple – it just isn’t always easy to implement. The key is to actively find out what people want. Guessing rarely cuts the mustard.
Russell HR Consulting provides expert knowledge in HR solutions,employment law training and HR tools and resources to businesses across the UK.
Kate Russell provides expert knowledge in HR solutions,employment law training and HR tools and resources to businesses across the UK. Check out her tool kits and guides in our HR shop.
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