A benefits package can be extremely valuable, but what will determine its real success?
More and more businesses are offering their employees a flexible benefits package. When designing a benefits package, a company needs to understand the key factors which will shape its performance in order to attract the best talent and improve workplace productivity.
How to Set Goals
Businesses introduce a flexible benefits scheme for a number of reasons. It might be a simple case of inertia; they’ve always had one and they don’t want to antagonise employees by removing it. They might want to improve recruitment, reduce turnover and improve the happiness and productivity of employees. They may also have a genuine desire to make their employees’ lives a little easier. These are all valid reasons, but it’s surprising how many companies develop a benefit without any clear goal.
If your goal is ambiguous there’s a greater chance that the results might also be disappointing. So, the first thing you need to do is to decide what you want to happen, what benefits you should use and how you will measure the impact.
There are a number of factors you might want to consider including:
- Staff happiness levels
- The open rates of marketing emails
Each of these will offer an indication about whether (or not) your package is performing well, but they may also be related to other factors. The best indication will be uptake – namely, how many people are choosing to get involved. What might be more difficult to analyse is which factors affect uptake and how much value your employees get from the product.
It’s also important to be aware of the common errors that impact the performance of a benefits package.
- Choosing the wrong provider: There are a host of platforms out there – all offering slightly different services – and some will be better than others. For example, one may have fewer products and services on offer, but another may lack real flexibility, forcing employees to take some benefits even if they are not right for them.
- Failing to measure performance: To get the most from a benefits package you need to monitor how popular each of these benefits are. A flexible benefits platform should provide data on how many people are clicking on a certain benefit and how many are actually taking advantage of it. A business should also monitor if it is actually of use to an employee or if it simply lies dormant. Collecting and analysing this data allows companies to refine their offerings in the future to get maximum benefit from them. In a world in which businesses move data between different providers, information can inevitably become less secure. It’s important to remember that although the third party will be handling your employees’ data you are still responsible for the way in which it is managed.
- Failing to promote benefits: Although most businesses see employee benefits as important, not all of them successfully promote them to their staff. A recent study from Pure Benefits found that smaller businesses with 11 or fewer employees were not actively promoting their benefits packages to their staff. The main reasons were a lack of time and budget, but the result of such inaction is that they fail to see a significant return on their investment.
- Paying too much: Quality varies and so do fees. You may need to watch out for high implementation fees. Make sure you know how much you’ll be paying and what you will be paying for.
An analysis of the uptake data shows plenty of variation. Data from benefits provider Vebnet finds that the highest uptake figure was 33% for travel insurance while the lowest was 0.5% for gym membership. Uptake can also vary from sector to sector where some benefits will naturally see a higher or lower uptake rate. This might be because the benefits package has not been well tailored to the needs of those workers.
Uptake data is a useful indicator, but it does not tell the entire story. Certain benefits will only ever reach a certain threshold. However, core benefits such as private medical insurance regularly rank among the most popular because they offer value to the widest range of people. Research from Glassdoor found that the top performing benefits were health insurance, holiday time, sick days, performance bonuses and pensions – all of which will have almost universal appeal.
For example, a product such as children’s critical illness cover might have a low uptake rate because you company employs a lot of young people who do not yet have children. However, those who do use it will get enormous value from it and those who don’t yet need it will still understand its value.
To get a good idea of whether your package is performing well, you should try to segment each employee. Think about how many people in your organisation would potentially benefit from any single benefit and compare that with the number of them who actually select it. This can give you a good idea of whether it is working well.
What employees want
Another key factor will be how much value an employee derives from a product. This will be informed by the pressures they feel under. A recent survey from Wilson Towers Watson found that financial stability had become a more important factor for employees. A large number of employees are worried by their financial situation or the amount of debt they face. Benefits which can improve that stability or help them manage their personal finances are therefore likely to gain in popularity.
The simplest way to find out what your employees want, though, could be to ask them. According to the Wilson Towers Watson survey mentioned earlier, employee surveys are among the most common ways companies assess the impact of their flexible benefits schemes. By asking the right questions you can find out which products are most popular, what products they would like to see introduced and what drives them to make a selection.
The good news is that we know how much employees value benefits. The Glassdoor survey found that more than half of respondents felt benefits packages formed an important part of their decision about whether or not to join a company. As the market evolves the expectations of would-be employees is growing. Not only will they want the core benefits, but they will want options which truly drive value.
Companies are increasingly introducing voluntary benefits to complement a flexible benefits scheme. For more details on voluntary benefits and other employee benefits, contact the team at Vintage Corporate on 020 8371 5232 or email email@example.com.