RBS was challenged with creating a benefits proposition for its workforce of 78,000 UK employees. Hannah Uttley explores how the group won Best Benefits Strategy / Innovation of the Year by doing so
The foundations for the strategic overhaul of RBS’s benefits proposition were laid back as far as 1998. Initially, the bank adopted a very traditional approach to pay and benefits. Where the cost of benefits went up, RBS was required to meet those costs for employees. And with the introduction of performance-related pay thrown into the mix, the message sent to employees was often confused.
“At one point, we’d be telling an employee, ‘We’ve looked at your performance over the year and we’re not going to be in a position to increase your pay.’ Then at a different point in the year we’d be saying, ‘Great news – the cost of your private medical cover or car has gone up and we’re delighted to meet that cost on your behalf’,” head of benefits Jim Cowan explains.
Further to this, the current benefits offering wasn’t meeting the needs of the majority of its staff.
“When we first introduced it, we had a benefits package that was probably pretty good if you were 35 years old, married and male with 2.4 children,” Cowan adds. “But at that point in time, there was only about 17% of the population that came anywhere near meeting that profile. So in essence, the benefits proposition was wrong for 83% of the population.”
To overcome this, RBS introduced a flexible reward approach under the brand RBSelect. At the core of this programme was its ValueAccount, which includes salary and two elements of funding – Pension Benefit Funding and Benefit Funding. Without the ValueAccount approach – which can be thought of as an employee’s fixed pay – the employer would have been forced to remove a number of staff benefits.
Keeping the defined benefit (DB) pension scheme open to current members was a key commitment and so was, therefore, keeping down the costs and risks associated with the plan. To enable continuation of existing membership in the plan, Pension Funding was introduced through the ValueAccount.
All employees in the scheme were offered an extra 15% of salary as part of their fixed pay to either stay in the plan or opt for something else, such as contributing towards the DC scheme.
“If the decision was taken to stay in the plan then the charge equated to the pension-benefit funding that we gave them. By doing that, we were suddenly flushing a meaningful chunk of money through the payslip every month and helping employees realise the value of the benefit,” says Cowan.
Employee absence and productivity lost to musculoskeletal (MSK) conditions were also a growing concern for RBS, and with MSK claims notoriously high, the healthcare trust faced rising costs from such claims.
Meanwhile, the employees themselves faced further complications, with lengthy claims processes that often incurred unnecessary additional costs under specialist referrals, as well as the further barrier of a £175 excess charge for some claims.
“After much soul-searching, we came up with the Fast Track Physio service. The logic that followed was that we could remove barriers for people accessing treatment but change the process so that we would cut the GP out of the process and move to a triage assessment involving a physiotherapist,” explains Cowan.
Six months on from implementation, MSK claims increased – as expected – but the number of employees requiring specialist referral has fallen by 14%, with the average cost of an MSK claim slashed by almost £900.
RBS was also aware of focusing on the ‘softer’ benefits for staff, such as flexible working as a way of boosting engagement.
To enable employees to work better outside of the office, the company launched a home computing option under RBSelect, offering staff access to a range of desktop computers, laptops and tablets.
“Of course, for employees to benefit from flexible working, they need the right equipment,” explains Cowan. “While our helpline did deal with a few difficult questions, employee feedback was good and 4,000 people elected the new option – in a year of financial difficulty for many, this represented an excellent launch result.”
