Implementing or replacing a flexible benefits scheme is an intricate task. Here are all the key points for doing it successfully.
- A flex scheme should help reduce benefits administration and tie in with other company objectives
- Communications should embrace all staff groupings and encourage them to take action in a simple way
- Technology can support compliance burdens and give greater feedback of the scheme’s impact
As with most things, it is good to start with a well-structured plan in place, recommends LCP senior consultant Dipa Mistry Kandola. There are five key elements which should guide benefits professionals through the process of installing a flexible benefits scheme, she contends.
“By doing this feasibility design stage, you can hopefully narrow down the best partner for you in implementing flex for your people and your company. The foundation of your flex project should consider: your key objectives and expected outcomes; where your journey starts and how your scheme will evolve; how your existing benefits will work in flex; the project stakeholders; and your current HR policy and processes,” she says.
In the first step of this design stage, employers should review their objectives and expected outcomes, including reasons for introducing a flexible benefits scheme.
“This might be really simple – you might want to do flex because your competitors are doing it. For some it may be that you want to retain and then track the best staff in the sector – so your flex design will be focused on benchmarking yourself against your sector, and putting in your time and money if your benefits are not on a par with your competitors,” she says.
“If your project is based on simplifying the administration, then you will be focusing on system integration, single sign-on, straight-through processing, that sort of stuff.
"You need to define these because they will be your measure once you launch the project. And think about other initiatives within your business, things like corporate social responsibility or if there is a big recruitment drive.
"Latching it on to other initiatives will help you get sign-up on any investment that you might need in the future.”
Overall, though, the key approach that employers should consider is engaging with staff and consolidating administration. “You do not want to create extra work by introducing flex,” Kandola says.
She also highlights that the new scheme does not have to be launched in one big bang, suggesting instead that using phases which are more specific to the organisation’s requirements can be more manageable and appropriate. This planning stage is also a key point to address many other questions that can be raised:
- How should you educate staff about the present benefits offering? Total reward statements can play a critical role here.
- How will it tie in with the scheme and company year? When is the best time to launch it?
- What basic levels of benefits should be offered and how much should employees be allowed to sell or buy?
- Will a discount scheme be added alongside the flex scheme? If well-promoted and -targeted, these can prove great value for money for employees.
- How will it interact with auto-enrolment and other compliance obligations? This can also be a good point to tie it in with company HR policies
A final point to approach during the planning stage is to obtain feedback from employees, both on the current offering and some of the ideas for the new scheme. Doing so can ensure that the time and money being invested will be appreciated by employees and that it is likely to target the important areas for the business. It also provides the opportunity to make changes before going too far down the road of implementation.
Once a new scheme has been introduced, it is important to ensure it is communicated well to the workforce.
As Benefex head of communications Simon Andrew explains, a company with a great benefits scheme but poor communication is no more effective than a company with a poor benefits scheme.
“The research we have done shows that there is a really high correlation with take-up rates based on the more channels you use in communication. And actually, when you use face-to-face communication, that doubles,” he says.
Andrew agrees that, like the implementation of the scheme itself, the planning is really important when conducting a communications campaign.
“It is not just the fact that it is about using the right channels; any communicator will stand up here and tell you about making it multi-channel, making sure you touch all the employees,” he continues.
“It’s really important to have clear goals and to tailor it to your audience. Ultimately, what we are looking to do in communications is drive that change in behaviour so it is not just a case of trying to impart some information. At the end of the day, we want these employees to go and find out more about their benefits and potentially part with some of their salary as well. So we have to look at how we drive that behaviour.”
This is crucial when considering a widespread workforce in terms of pay, age, diversity, location, job role and any other key factors; it is important for staff not to feel any part of the organisation has been ignored.
One of those end goals for a new flex scheme should be to encourage more people to make an active decision about the benefits they are being offered. According to Andrew, this needs to be made as simple and clear a process as possible, turning it into a case of “click on this link and, in doing that, you will make huge savings”.
“Ultimately, people are not going to do anything until they know what you want them to do, so you have got to be really clear with the information,” he adds.
“So we need to think about the journey that people go on and give them the best chance of getting it right. If we are coming up to a campaign, for example, perhaps we want to push them to their total rewards statement before the campaign starts: have a look at what you had last year, remind yourself of your remuneration package, think about the benefits and what is right for you, your disposable income.”
After the fact
Once this smooth path has been completed, it is important to measure the campaign’s effects. Flexible benefits schemes have the easy statistic of measuring take-up, but surveys after the process can also prove useful, particularly when questioning those who did not participate in the scheme.
Why did they not take part? Did nothing appeal to them? Did they not understand the communications?
By getting feedback from these people, changes can be made for the following year to hopefully draw in more employees.
Andrew concludes with three key points to consider when communicating flexible benefits schemes.
“Be clear on your actions. People are really good at doing the right thing if they know what that is. So give them a really clear call to action, and be really clear about what you want.
“Make it personal. Tailor it to your audience. Look at the way you get your Tesco clubcards – how personal they make it these days and that makes all the difference,” he explains.
“And be aware in terms of the budget and how much you can do, but make it as relevant as possible. If we have different populations, pension or non-pension members, let’s break it into those two streams and make sure that we give them the right message at the right time.”
Typically, most new flexible benefit schemes are now delivered through web platforms of one sort or another. Although this is not essential, and paper-based programmes do exist where they are better suited to the workforce, the widespread use of new technology either at home or work means this is often the easiest way to conduct a scheme.
It helps that employees are increasingly comfortable in accessing work systems though personal technology and that these systems can be made secure enough to be accessed on the wider internet, rather than being restricted to company intranets.
However, as more systems and benefits bring more usernames and passwords, there is greater potential for errors in data – an important factor where benefits professionals are concerned.
Aon Benefit Solutions commercial director Tobin Murphy-Coles recognises the importance of this situation.
“The way that we think the marketplace is now starting to move is to take all of those disparate platforms and effectively collapse them into a single environment and sign them into that environment at the same time,” he says.
“So that is what it looks like for the employee at the front, but the data is starting to move between these platforms in the back. So as something happens over here, the next time the data files run, they are next to each other in their Northgate platform, and the data is updated over here as well.
"Our assertion is that unless those mechanisms are in place, there is a fragmentation of data between the core platforms and some of the data then becomes inaccurate. That is particularly powerful when pension communication is being issued against data that is held within the platform.”
This can be important when complying with regulations – The Pensions Regulator has already issued a warning over the quality of basic data held by many pension schemes.
Allowing employees more control over their data also means they can correct errors more readily. And greater connectivity between systems means that new benefits can be easily added to or replaced in flex systems without having to totally re-design the technology infrastructure.
“So now we can start to position different services in front of employees, saying, ‘Well, can we help you spend your money in a slightly more appropriate way?’” Murphy-Coles continues.
“Can we create more disposable income each month to invest back into your benefits, back into your flex, back into your pension programme? We can do that by bringing into the single sign-on environment things like online shopping.
“So through this, we can now say, ‘Here is your spending profile: this is what you are spending your money on, but have you looked in here? We can see that 13% of your income is being spent on utilities each month. Can you come into this platform and see if you can pick up providers at a lower cost?’”
This also provides the opportunity for employers to see if they have materially affected the outcome for an employee by using the total reward value of the savings that an employee has made by connecting to these platforms over the course of a year.
Eventually, it can allow employers to tailor flex programmes more individually to employees without imposing massive administration burdens on benefits professionals – an admirable end point for any flex scheme.
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