Offering a voluntary benefits (VB) programme to employees can be an inexpensive, quick and effective addition to an organisation’s benefits scheme. VBs provide a practical way for employees to stretch their often frozen net pay at little or no cost to the employer, since they are paid for by the employee, often through the payroll. However, the way in which voluntary benefits plans are implemented by HR professionals is crucial as to whether they are perceived as a knight in shining armour, or a cover up for other problems within the organisation.
There are three main types of voluntary benefit programmes. Voluntary benefits, the most common type of VB offering, consists of a range of discounted lifestyle products and services such as gym discounts, retail vouchers, or wine clubs.
A second type, worksite marketing, is offered predominantly by insurers and regulated businesses focussing on distributing insured products, such as cash plans, cancer plans and life insurance. A third type is voluntary flexible benefits, a flexible benefits (flex) scheme where financial benefits, such as PMI, and dental insurance, are combined with lifestyle benefits.
Voluntary flex programmes, with voluntary benefits attached, are becoming increasingly popular as they are easy and low-cost to implement and have tax and NICs advantages for both employers and employees. On their own, flexible benefits programmes may only be accessed once a year when an employee makes their benefits choices, but VBs may be viewed at any time via a web portal, ensuring staff log in regularly, thus helping with employee engagement.
But increasingly employers are using VB as a plaster, to cover up pay freezes or staffing problems, instead of using them as a genuine enhancement of the employer’s offerings to the employee. It is particularly common in industries hiring transient or lower paid staff.
If ‘sticking on a plaster’ is the only reason to provide a new VB plan, the employer can pretty much count on it falling flat. Employees see through thinly veiled attempts to buy favour, so it is vital to show that the employer is doing all they can to provide genuinely good deals to help net pay go further.
So what can the employer do to increase staff interest and enrolment when 30% uptake is considered pretty good?
When communicating advantages to staff, employers must emphasise that VBs are not necessarily a replacement for salary increases. The HR department must try to generate enthusiasm for the benefits amongst staff, by explaining the motivations behind them, and so earn the trust of employees.
One way of doing this is to ask employees, before the VB plan is implemented, what they want and expect from the scheme. As most schemes are run online these days, it is straightforward to communicate with staff through websites linked to the company’s intranet, or by email. If access to the scheme is easy, using the benefits will also be easy. Those employees who do not have internet access must not be forgotten, however, so paper-based, telephone, or point of sale methods may also need to be used.
Second, HR professionals should engage with all functions that will need to be involved in the implementation of a successful policy as early as possible: senior management for leadership; finance for payroll administration; IT for the web portal and communications to help with the clear explanation to employees. This will help employees feel they are part of a management-driven initiative that is aligned to the overall business strategy.
Third, a sound communication strategy is matchless, to both explain and promote the benefits of the scheme, erase staff suspicion and increase their confidence in VBs. This means that informing staff exactly what discounts are up for grabs and how to access them must be an ongoing process, before, during and after launch. HR staff need to remember that old maxim: the more you put in to the scheme, the more you get out of it.
Fourth, employees should be asked for their feedback at all stages of the VB plan’s implementation – straight after launch and during their use of the scheme – to find out what works for them and what does not. Their opinions should be acted on.
Last, but not least, the choice of VB provider needs careful consideration before launch as it is vital to choose an appropriate, experienced partner to provide and manage the VBs scheme from start to finish. A good provider will be able to give sound advice on increasing employee take-up, such as which deals to offer that both fit well with your staff and their lifestyles and also offer significant discounts and ease of access.
If all the above steps are followed, and a few ground rules, such as not overselling the programme and making sure what you are offering covers the interests of the vast majority of your staff, are obeyed, the responsible employer will be in a win-win situation. Employees will be very happy with the good deals and services they are receiving without having to waste time finding them themselves. As long as voluntary benefits are offered for the right reasons, and implemented and communicated well, both employer and employees will benefit hugely by having a more enthused and loyal workforce.
Matt Duffy is Partnerships Manager at Lorica Consulting (www.lorica.com)
