The UK voluntary benefits market has been stable for some time but that could be changing. Debi O'Donovan reviews the advances and new players meeting growing demands
- With so much competition from consumer sites, voluntary benefits schemes can no longer be one-trick ponies.
- Providers are now leaning towards creating hub sites able to host other products and benefits.
- The ability to review benefits and share them on social media is becoming more common.
Have you noticed how different voluntary benefits providers look compared to five years ago? Some would argue that pure voluntary benefits providers are a soon-to-be-extinct species. There are several drivers for this radical shift in an increasingly dynamic section of the employee benefits marketplace.
The rise of the likes of Groupon and Wowcher in an already crowded daily deal market, along with the increasing expansion of affinity schemes from banks, airlines, sports clubs and so on, means that employees are bombarded with good discounts outside the workplace.
Personal Group chief commercial officer David Walker says: “From the point of view of providers, we are seeing a lot more companies offering what was traditionally a voluntary benefit, which is something like a shopping discount. There is now more choice in the market, the market is broader, and it is less distinct.”
WorkAngel commercial director Alex Svensson agrees: “The individual employee can get discounts on the open market because there is an abundance of voucher sites, discount sites and daily deal sites. It would take you just a few minutes to find something that is quite good. Reward managers realise that, so they are asking us: ‘What are you doing that goes above and beyond that?’”
From October 2015 childcare vouchers will start to disappear from the workplace which will mean that in a few years’ time, this popular voluntary benefit will have died out.
P&MM’s managing director James Malia says: “We have prospective clients coming to us saying, ‘We don’t want to be with a childcare-only provider anymore so we are looking for someone else.’ And we have others coming to us saying, ‘We are currently a childcare-only provider that wants to be able to offer more – can you help us?’ So that market will change this very significantly.”
What has not changed, in the opinion of some, is the underlying offers available within voluntary benefits or employee discount programmes.
Malia continues: “There are providers out there still focusing on getting one thing right. By doing that, they are possibly getting a bit stagnant. They are focusing on how quickly they can get vouchers redeemed or fixing childcare vouchers.”
WorkAngel head of client services Stephanie Valles also points out that employees tend to only take advantage of gift cards and ignore the other deals.
“So how they are using the offering is causing change. It is being driven by the fact that employees simply do not want to use it,” she explains. “And while some providers have moved to be able to put their website offerings on mobile, the redemption of those benefits and the offerings themselves are still not fresh or modern.”
That said, this market has come a long way in less than ten years.
Reward Gateway founder and CEO Glenn Elliott says: “The market has changed vastly in nine years. In 2007 when Reward Gateway started, you could barely put a sheet of paper between any employee discount supplier. They all had between 80 and 100 benefits and they all had the same benefits.”
In 2008, cashback on employee discount cards was introduced and it is now commonplace. Reloadable store cards and e-vouchers are also on most offerings.
“One thing that still holds true is that there are still things in voluntary benefits programmes that are difficult – if not impossible – to get outside the closed user group, such as shopping offers. The discounts we get on reloadable shopping cards are not something that we would expect to become more widely available in the marketplace,” says Personal Group’s Walker.
But the products in an employee discount or voluntary benefits programme are only a part of the changing landscape. “There is a lot more to offering discounts and making them easy to use. That makes our job more interesting,” says P&MM’s Malia. “It is all about how it is delivered, and how employees and employers perceive it.”
This is manifesting itself differently with each provider, as each plays to its strengths. “I think voluntary benefits on their own aren’t necessarily going to exist without other things to support them. That can be as simple as mobile technology, or more of a platform-based product, or recognition, or engagement,” Malia adds.
Personal Group’s Walker goes a step further: “You used to have a voluntary benefits provider like you would have a childcare provider or a bike provider. From a provider point of view, what we are starting to see is companies more seldom being a single player and becoming more multi-product-based.”
Back in 2012, Reward Gateway added reward and recognition to all its products; it sees itself as being in the employee engagement market. This year Personal Group will launch a hub offering a number of benefits, including employee discounts. A few years ago, employers had a choice between buying an employee discount programme or buying a flexible benefits platform with discounts on it.
“The big shift has been created with a third offer: it isn’t just voluntary but it isn’t full flex. You could call it flex light, or call it a hub. We are seeing more companies, Personal Group included, coming up with the platform that will aggregate a number of benefits, including voluntary,” says Walker.
P&MM also offers a hub. “It is easy to administer and you can still use different companies to provide those elements, but the hub itself sits there in one place,” says Malia. “It is easier to get staff to engage in something – some in training, someone else in childcare, and somebody else needs an induction.”
Which brings us to our next big influencer of change: technology. Technology means that the how of using voluntary benefits and employee discounts has changed faster than what they offer. A common complaint with these programmes is that staff often do not use them because the experience is wrong.
“There is still a lot of hassle in redeeming discounts. We have tried to remove some of those stumbling blocks and make it more seamless for users and make it easy to take advantage of offers,” says WorkAngel’s Svensson.
Walker advises employers to watch out for the manner in which some discount programmes are designed because they are not congruent with the way we live our lives. “Typically, we live our lives now, in the moment. If you have to wait more than three seconds for a webpage to load, you’ll find another site. So if we’re not prepared to wait three seconds for a webpage, why do we think it is acceptable to wait nine days for a reloadable shopping card?” he asks.
“If you get the experience right, then people will naturally use it more often,” agrees Svensson.
The good news is the market has sped up on delivery. “Retailers are moving heavily to instant voucher. In the past 18 months, we have been using automatic top-up, auto-reload and topping up by text. Previously, it took 24 hours to reload a card; now it is instant,” says Reward Gateway’s Elliott.
Employers can also look within their organisations for help in selecting the right benefits platform. “Reward managers have got digital and communications people in their business. If they engaged with them, they could bring information about technology to the table,” says WorkAngel’s Valles. “In some businesses, they are quite advanced in terms of the digital side, but on benefits they come nowhere near that.”
Joining the dots
Not joining up benefits and technology in HR is quite common.
“I started this journey a couple of years ago when I went to the HR Directors Show. There was a lot of discussion about engagement and communication in the workplace. And there was a lot of discussion about technology. What wasn’t happening is the combination of all these things,” says P&MM’s Malia.
“One person was talking about Salesforce Chatter or Yammer, someone else was talking about their brilliant recognition app, the training team was talking about their training app, and then you had someone else talking about technology for benefits. It was clear that everyone was focusing on doing what they currently do much better, rather than looking at it as a holistic offering – looking at how we can combine all these things.”
Closely linked to technology is the rise of social media and sharing. “Technology is a massive enabler. It is all about speed and convenience,” says Reward Gateway’s Elliott. “We have launched a fully integrated login with LinkedIn, Twitter, Google and Yammer. It is all about convenience and making sure people do not have to create new accounts and can share quickly.”
Reward Gateway, which has also added live blogging to all product pages so that staff can share their thoughts, is not the only provider to focus heavily on social media. WorkAngel’s offering is strongly social media- and mobile-based. “Everyone is a movie critic; people want to recommend things. It is important to allow people to do that. The reason TripAdvisor has sky-rocketed is that people want to share experiences, whether they are good or bad,” says Svensson.
Perhaps the most interesting aspect in all the changes to employee discounts and voluntary benefits is how they are fighting their way towards becoming the most engaging employee benefit. Employers spend a fortune on pensions and insurances, but they rarely engage staff.
“Pensions are important when you are sixty years old, but they won’t make you more engaged with your employer now,” says Elliott.
WorkAngel’s Valles agrees: “You don’t feel the benefit of life assurance until you die, you don’t feel the benefit of health insurance until you are sick, but you actually feel voluntary benefits: the discounts you are getting, the feel-good factor. You are feeling these every minute of every time you use it. It is a massive driver of engagement in the business. It is not just this weird suite of discounts you add on to a core benefits-driven package.”
This is important when you consider that HR is now charged with looking at employees’ engagement levels and getting staff more involved in the business.
“The change following on from that is HR looking at engagement far more from a personal level: getting to know staff, understanding what makes them tick better, rather than just driving profit or financials,” says P&MM’s Malia.
By including social media, sharing and having the ability to offer platforms that adapt to each employee’s buying patterns, employers can get to know individual staff better. “The tools currently being invested in by these companies, things like total reward statements, can all be personalised and put onto the mobile device within one function,” he adds.
Once you have a community of staff using the programme, you can use push notifications or segment emails to groups that demonstrate particular interest.
“You can then build a community within the social element where, if you have a lot of new mums, or people who cycle to work, or vegetarians, or computer geeks, you can build these networks up. The more you know about your employees because they voluntarily pass the information over, the more you can get to know your staff, which is the exciting bit,” Malia continues. “That is the only way you are going to get engagement because they think you have reacted because of them as an individual rather than because of a blanket push-out email.”
The idea of a generic benefits programme that looks and feels the same to all the employees in a single organisation could fast become outdated.
“There will be an expectation that we will be treating employees as consumers. If voluntary benefits providers were in consumer land, we would be working pretty hard to get the right offers to the right people at the right time,” says Walker. “The real skill here is delivering it in a way that is much more congruent with how we live our lives now.”
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