Benefits Connection: Issue 12, April 2011 by Asperity

benefits connection

Insight, strategy and best practice in employee benefits from Asperity

SURVIVAL OF THE FITTEST Which benefits are a passing fad & which stand the test of time?

ISSUE 12 / APRIL 2011 Also in this issue: • Evergreen benefits • The secret language of reward • Case study: Kent County Council

benefitsconnection

WELCOME

CONTENTS

What’s the world’s best loved animal?

Contents and Editorial

A panda. And it’s on its way out, if not to imminent extinction then certainly it’s not replacing itself fast enough to keep numbers stable. As demands by humans on land and habitat increase, there just isn’t enough bamboo to go round.

Embedding sustainability

Is our instant gratification culture bad for employee engagement?

What’s the world’s best loved benefit? A final salary pension scheme. And that is on the way out as well, with few, if any, new ones on the way in and beneficiaries of existing ones shrinking over the next few decades. As demands by an ageing population increase, there just isn’t enough funding to go round.

The secret language of reward

Evergreen benefits

The decline of both is mourned.

Benefits by payroll

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Pensions are reinventing themselves as best they can to fill in the very large gap left by final salary schemes. Other benefits must also adapt, fall into disuse or die.

Case study: Kent County Council

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Without wishing to stretch the metaphor too far, it’s important to make sure your benefits are resource-efficient and don’t end up in a cycle of decline. The good news is, they can be very popular as well.

Glenn Elliott MD, Asperity Employee Benef its glenn@asperity.co.uk

Visit www.asperity.co.uk for more information and free, fully functional demo access to Reward Gateway. All information correct at the time of writing and subject to change without notice. Asperity Employee Benef its Ltd, 90 Westbourne Grove, London, W2 5RT. Tel 020 7229 0349 www.asperity.co.uk email: benef its@asperity.co.uk © Asperity Employee Benef its Ltd 2011.

Embedding sustainability within the corporate culture By Graham Simmonds, Managing Director, Green Rewards

It is interesting that Employee Benefits magazine recently ran an article on ‘Going Green’ whilst HR Magazine did an in-depth look at how to put the HR into CSR as part of its Make A Difference Campaign. This focus on corporate responsibility in the media reflects my experience talking to companies, government agencies and charities, all who now want to find ways to embed sustainability more deeply within their corporate culture. We recently did some market research with HR managers and professionals as we wanted to gauge how important sustainability is in the workplace. As an environmentalist who has spent most of my career involved in green issues, I am very encouraged by the findings. 78% of respondents say it is very important or important to encourage employees to find ways of improving their organisation’s impact on the environment, and when asked about encouraging their staff to find ways to improve their own personal impact on the environment, both at work and outside of work, 71% likewise say this is very important or important. However when asked if they had used products or services in the area of green and ethical rewards, benefits, motivation or communication, only 24% said yes – and of this 24%, by far the highest activity cited was cycle to work followed by green car leasing.

These survey findings very much reflect what I am finding in my discussions with the corporate sector. Business managers are looking to inspire people to change their business processes from within and actually develop the next generation of sustainable solutions; they want to influence personal behaviour; they see it as vitally important to align their sustainability strategy and related initiatives across the business functions. There is a real desire from business managers to take practical steps to make their workplace genuinely sustainable, not just because they believe it’s a good thing to do but more importantly because they know it will make them more efficient and competitive; and many are doing excellent work, particularly on resource management (eg energy and waste), but I sense a frustration that managers want to do more but do not feel they have the right tools at their disposal. This is particularly true when it comes to engaging staff – all too often a lot of enthusiasm is generated around a particular moment or initiative (eg recycling at work), but then that enthusiasm falls away all too easily as staff move on to other priorities. As a Head of CSR recently said to me, “I’ve done all the low hanging fruit like energy and waste, but I just can’t seem to maintain the momentum across the company.”

I am delighted to announce that Green Rewards is currently developing a new suite of interventions that will enable employers to keep their people enthused and motivated when it comes to sustainability. All too often ‘green’, ‘sustainability’, ‘corporate responsibility’, ‘CSR’, etc can seem like worthy terms which are best left to specialists like the Head of CSR to take forward. Our aim is to make these issues relevant and accessible to all staff, and to provide a set of fun, credible and engaging activities that will maintain momentum on an ongoing basis and help to embed sustainability into the corporate culture. With my campaigning hat on, I am excited by the prospect of working with the corporate sector to meet its business objectives whilst also delivering positive change for society and our precious planet.

IS OUR INSTANT GRATIFICATION CULTURE BAD FOR EMPLOYEE ENGAGEMENT? By Helen Craik, Asperity’s Operations Director and HR professional for 20+ years

“THE IDEA OF WAITING FOR SOMETHING MAKES IT MORE EXCITING.” Andy Warhol

WAS ANDY WARHOL RIGHT? Sometimes the idea of waiting for something definitely does make it more exciting. The convenience of digital photos is stunning but doesn’t have the thrill of the Truprint envelope - remember those? We’ve got used to generations XYZ and their desire for everything now, now, now. If they’re talking with friends and can’t remember the name of a film, it’s a case of looking it up on the internet on a mobile phone to check; no more mulling it over for hours and the satisfaction as you remember, let alone looking it up in a book when you get home. Things are more available, more transient, more disposable (Primark, you have a lot to answer for) than ever before. Technology, and the immediacy it enables, are life-enhancing but not without downsides in every day life - for sustainability, for relationships, and in employment terms.

The psychological contract - that unwritten set of perceived obligations between employer and employee - has its roots in the expectation of a long-lasting employment relationship. It is much harder to develop and sustain the bond of mutual trust and confidence (which of course doesn’t necessarily mean satisfaction or agreement) where there is no starting expectation that the employment will be long-lasting. As long as employers work hard at alternative routes for ensuring employee engagement with the organisation’s objectives, this may not matter, or it may even be a good thing. But in lots of cases, perhaps especially vocational occupations, as patients, passengers and customers we have seen and suffered from the lack of deep-seated connection between employer and employee. More prosaically, how does the desire for instant gratification affect employee benefits? Who’s to know how much of our looming pensions crisis is directly attributable to a ‘spend today’ culture, borne in part out of students so used to being in debt that a bit more makes no difference and provisioning for the future just a remote possibility? As employees, many of us want disposable income now rather than cutting back on non-essentials to fund retirement. NEST may force attention on to this area but it’s unlikely to have anything like the required impact. Employers largely collude in the rush to close or restrict final salary schemes, without enough thought being given to alternatives. A welcome ray of light in this area could be O2 where members have voted to increase contributions to prevent their scheme from closing1.

As providers of salary sacrifice schemes, at Asperity we often find that parents don’t register for childcare vouchers because ‘it takes too long’. We make it really easy so it takes less than 10 minutes and they can save nearly £1,000 a year. Surely £1,000 is worth 10 minutes of their time! Employees and employers do, of course, benefit from ‘instant gratification’ technology. Reward and recognition schemes are greatly enhanced by the recipient’s ability to choose literally any award they want from anywhere delivered immediately. If you’ve waited 25 years for a long service award, you don’t want to wait another 6 weeks for a gift not of your choosing. SMS vouchers for discounts which arrive while the shopper is at the checkout are another good example. In this case, the idea of waiting for something might make it more exciting but much less useful. Savvy employers need to try and harness the best of both worlds. Instant gratification and deep-rooted commitment may sound mutually exclusive but they needn’t be. It is possible to take advantage of the efficiencies and excitement of technologies and not lose the human touch, the vital employment connection. For many employers, it probably means a significant shift in thinking, new angles on reward and engagement strategies and investment in different ways of communicating with the workforce. But employee engagement is so important in organisation success, we need to harness – not repress - the ‘now, now, now’ culture for the future.

http://www.employeebenefits.co.uk/item/12336/23/5/3

HAVE A NICE KNICK-KNACK:

The secret language of reward By Lizzie Tinley, Employee About Town

There’s a reason that anthropologists study gift giving. It’s because a gift is more than a thing given by one person to another. Much more. It’s a feeling embodied in an object. It’s a piece of communication, and as such speaks volumes about the gift giver, whether they’re from somewhere deep in Amazon country or a more corporate kind of jungle. A case in point: A family friend of mine spent 25 years working his way to the top of a wellknown global FMCG company. To mark the occasion, he was presented with a catalogue jam-packed with the usual gold watches and crystal knick-knacks.

Deflated, he chose a signet ring, which arrived some months later with his initials engraved the wrong way round.

from a manager to a junior to a customer can purchase an award to acknowledge the hard work of an individual or a whole team.

What was his gift trying to say? Probably something like this: ‘Your hard work and loyalty have been invaluable and we wanted to say so.’ But somewhere in the wrangler of overstretched administration and remote execution, the message was lost. What he heard was more akin to ‘Are you still here? Have a generic trinket and be on your way.’

Why the wake-up call? Because I’d put really good money on it being the case that that employees whose loyalty, commitment and hard work are rewarded, produce better work and stay longer in their employment. In fact studies have shown that they value feeling valued over anything else, including monetary reward. The good news is that HR bosses in companies of any size don’t have to employ a personal shopper to offer staff their heart’s desire. A reward and recognition scheme means giving them the luxury of choosing whatever they want from wherever they want.

Fortunately, reward-gone-awry anecdotes are on the wane as more and more companies prick up their ears to the importance of reward and recognition. Vodafone, IBM and Camelot all run successful schemes. At BT, loyal employees are given a Long Service Reward Card that they can redeem anywhere that takes Mastercard, while at Tesco, anyone

It means putting the battered catalogue in the paper shredder where it belongs, and saying a thousand thank yous in a thousand personal ways.

GARDENER’S WORLD:

EVERGREEN BENEFITS

By George Farrow, Client Services Director at Asperity Employee Benefits

When we think of voluntary benefits we think evergreen. Benefits that are available to your employees day in and day out on every day of the year. We believe that benefits should not be viewed like the rare and nasally offensive Amorphophallus titanum (from Ancient Greek amorphos, “without form, misshapen” also known as a carrion or corpse flower), whereby flexible benefits providers feast on your overstressed budgets creating a hoo-ha once a year and then disappear without trace until the next annual election. Sometimes, just like the good old corpse flower, they even create a stink because many of your employees will find flex benefits inaccessible (e.g. premiums too high or pre-existing medical conditions obstruct them). Most people are aware that shopping discount schemes for employees are available 24/7. But what about other benefits, sometimes regarded as within the province of flex? If you’ll forgive the play on acronyms, we use the expression “FIR” to describe a meaningful evergreen benefit. FIR means it is likely to be:

FREE: • Certainly the case for Cycle to Work. • An admin fee is charged for Childcare Vouchers (CCV) but a good provider will also allocate a CCV uptake specialist to your account, free of charge. So you get more engagement, more voucher take up and that means more secondary National Insurance savings – far outweighing the administration costs. • Employers can now sign up to Gymflex, a national salary sacrifice service – Asperity is currently the only employee benefits provider to offer such a service - which offers employees deeply discounted access to over 2500 gyms. No charges are passed to employers.

• An employee-paid healthcare Cashplan is a viable solution for employers wanting to offer their staff the chance to supplement their PMI, or at least smooth their basic medicare-costs. For no cost to the employer, a good Cashplan will deliver at least £300 of real no-quibble benefit for £240 worth of premiums over two years. And that’s not including scans and complementary therapies. • Holiday Trading gives employees an added level of flexibility and is often a highly valued component in their benefits package. Look for a voluntary or flexible benefits scheme that offers Holiday Trading as a free add-on to their existing programme.

INTERESTING: In our opinion, evergreen benefits should be interesting. They should cover the here and now, not consume scarce employee cash in return for assurance (not always wellfounded in respect of benefits such as critical illness cover) against events that may never happen. At least not within the average job tenure of most employees these days. OK, I admit it would be stretching a point to say that Childcare Vouchers are interesting but savings of over £900 on CCV for basic rate taxpayers can be put to astoundingly interesting use! Gym membership can provide access to new and interesting social networks. Gone are the days of sweaty exercise mats and medicine balls. Most clubs have a thriving entertainment scene including comedy, dancing and themed occasions. The heavily discounted cost of membership through salary sacrifice will offer a great incentive for employees to sign up, get fit, make friends and correct the all-important work-life balance.

REVOLUTIONARY: It’s true that benefits programmes should be useful, convenient and rewarding for employees. But wouldn’t it be great if employers could also offer engaging, exciting and even revolutionary benefits that suit – and exceed – the needs of both employees and employers? For instance: • Exclusive double-discount savings across some of the biggest retail names on the high street at the start of every month. • Extra double savings on specially selected, relevant retail offers for employees who sign up to Childcare Vouchers and Cycle to Work. • Employee communications branded to suit your brand and workforce. • ISO 27001 Data security compliance in all processes • Friendly, dedicated Helpdesk available for employees to call 7 days per week. • A dedicated Childcare Voucher uptake specialist who will do the hard work for you when it comes to increasing scheme uptake with your employees.

So, if you don’t want the leaves to fall off your benefits programme every year, make sure your provider adheres to the characteristics of FIR. And you’ll soon reap the rewards of evergreen benefits.

Haven’t we all got enough to do?

Benefits by payroll

Why it’s worth asking your payroll department to get involved. By Charlie Murphy, Finance Director at Asperity Employee Benefits

Few employees in any HR or internal service department are sitting behind their desks wondering how to fill the day. Most staff are very aware of pressures on headcount, which brings pressure to individuals to do more with less. Getting through what has to be done can be difficult enough without asking for extra-curricular activities. And working in payroll is not always the most appreciated function. Satisfied employees don’t drop by the payroll office every payday and say ‘Thanks very much, I got paid the right amount on time again’. They will jump on the phone or rush down a corridor if they didn’t get paid the right amount on time, and may often see this as payroll’s fault even - especially - when it’s not. So maybe payroll departments across the nation have got a good set of reasons to just pay people on time every payday and stick with that, not worry about adding a set of benefits that need payroll involvement. Except that there are some very good reasons why they absolutely should get more involved in benefits – many of which require surprisingly little effort and expense.

GOOD REASONS FOR INTRODUCING OR INCREASING PAYROLL-LED BENEFITS 1.The admin isn’t as bad as you think. Tax efficient salary sacrifice benefits, such as pensions, childcare vouchers and cycle to work are well-established and the majority of employers do offer one or more of these. As technology has enabled easier administration, the burden on payroll departments has lifted. Recent clarifications from HMRC on legislation has given employers much-needed certainty and confidence around scheme rules and this, together with the imperative to get eligible higher rate taxpayers signed up now to childcare vouchers, has resulted in a lot of activity in these benefits. A welcome by-product of the need to make

salary sacrifice more efficient and payrollfriendly is the advent of benefits by payroll deduction (so from net, not gross, pay). Once available only within a full, and usually very expensive, flex scheme, benefits by payroll are now accessible - with the help of payroll - to all employees as voluntary benefits. Secure, web-based control panels mean that payroll can administer non-core benefits easily. 2. These benefits make a real difference to employees’ disposable income It’s long been clear that tax efficient salary sacrifice benefits increase an employee’s take-home pay, and those that use childcare vouchers, for example, were very vocal and successful last year in defending the scheme from proposed government action. The challenge for employers is to harness the power of their childcare voucher provider’s expertise and resources to persuade as many eligible employees as possible to sign up; too many parents still place childcare vouchers in the ‘too difficult’ or ‘not worth it’ or ‘don’t understand it’ category. As for other, more universally relevant benefits available by payroll, discounted gym memberships or retail vouchers make a real and positive impact on employees’ pay. 3. A range of benefits is a good thing Good employers look to maximise the range of cost-effective benefits they can provide to employees. It enhances the employer brand. A rounded portfolio of payroll-led benefits turns an uninspiring benefits scheme into

an interesting one, leading to increased engagement across the range by crosspollenation - an employee goes to join cycle to work and realises that there’s a fantastic deal to be had on gym membership. And if, as an employer, you can enable employees to save, especially in times of rising inflation and downward pressure on wages, surely you should give it your best shot? Nice news can be thin on the ground, so make the most of what you’ve got.

A rounded portfolio of payroll-led benefits turns an uninspiring benefits scheme into an interesting one 4. Savings on your pay bill Childcare vouchers and cycle to work save employer’s NI. And if you have a contributory pension scheme but aren’t already running it through salary sacrifice, that should go right to the very top of your to-do list. A holiday purchase scheme saves on the direct cost of wages.

BENEFITS AVAILABLE FROM NET PAY Start with Payroll Giving, or Give As You Earn (GAYE). This enables employees to donate to charity regularly, directly from their wages. An employee can choose the charity, make a donation affordable to them and the charity gets the benefit of automatically reclaiming the tax, making the donation worth even more.

Supported by HMRC, there’s lots of help available to set up a scheme and once in place, it runs itself. The benefit to the employee is that if they give £8 a month, the charity gets £10, and it supports your CSR agenda. The majority of employees go online or ring up to buy discounted retail vouchers through their voluntary benefits scheme as and when they want to make a purchase in a particular store, or they use instant discounts via SMS or reloadable cards. The big advantage of enabling employees to purchase by payroll means that John Lewis and Waitrose vouchers are available. Discounts on vouchers for JL are only available where the employee signs up for at least 12 months1 and the payment is made through payroll. If your employee population are regular JL or Waitrose customers, then this is a great benefit to have. Most organisations look to support and invest in the health and wellbeing of their employees. GymFlex lets employees have the advantage of an annual gym membership fee but pay it monthly, from payroll. The savings are significant, frequently around 40% and

many employees can’t afford to front the cost of annual membership as an individual. With GymFlex, the employer pays the annual membership fee and the individual employee pays it back over 12 months via payroll; it is like cycle to work except it is not tax efficient. But it will appeal to a much wider audience of employees. The range of participating gyms is excellent. Exclusive to Asperity’s Reward Gateway, GymFlex is operated by payroll through the same online control panel as salary sacrifice and other payroll benefits. I it’s easy and popular.

GymFlex lets employees have the advantage of an annual gym membership fee but pay it monthly, from payroll. The savings are significant, frequently around 40% And what about holiday trading? Control over your own time is a well-recognised alleviator of stress and enabling employees to buy extra holiday means they can plan

for big trips overseas, caring responsibilities or just time off. Different from unpaid leave, it allows the cost of the extra days holiday to be smoothed across the year and lets employees and managers plan rather than face ad hoc, possibly disruptive means of taking time off. Employees aren’t paid for these extra days and so there is a saving on wages costs. Dorset County Council is consulting on taking this one step further and forcing employees to take 12 days unpaid leave in 2012 and again in 2013 to save money on its wage bill. More positively, Hertfordshire-based engineering firm McNicholas is on to a winner with its holiday trading scheme; its annual survey found buying and selling leave was the most popular benefit2. If costs are an issue, employers can restrict the benefit to employees buying holiday, not allowing the sale of extra days. So if you can get your payroll department onside, you can enhance your benefits scheme at very little, if any, cost using your discounts service as the employee-facing platform and a dedicated admin console for the pay professionals.

1 Except in the case of a life event 2 www.employeebenefits.co.uk/cgi-bin/item.cgi?id=2757

FEELING THE BENEFIT AT

KENT COUNTY COUNCIL It may well be the ‘Garden of England’ but it is also home to the largest County Council in England; one that is responsible for the public services and welfare of over 1.4 million residents. As such, Kent County Council (KCC) employs a wide and diverse workforce of approximately 44,000 employees whose jobs vary enormously; not only in terms of their roles and skill sets, but also geographically across more than 850 locations. This size and diversity has understandably created an obvious challenge for the Council in providing and communicating a benefits package to its employees. However, the Council’s Reward team, led by KCC’s Reward Manager, Colin Miller, has made it a key objective to deliver a programme that is appreciated by all employees and has, therefore, invested significant time and effort in developing KCC’s approach to reward. A significant part of this is to generate opportunities without impacting the tax

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payer. This is done by using the size of the authority to capitalise on buying power and establishing ways where employees can receive more from spending their own money.

INTEGRATING BENEFITS An important factor in KCC’s benefits strategy has been to take a broad approach by including all non-financial and financial elements within the wider employment offering. In October 2007, the Council replaced its previous voluntary benefits scheme - which consisted of approximately 100 employee discounts - with a bespoke plan provided by Asperity Employee Benefits, called Kent Rewards. The new scheme not only has a much wider range of employee discounts (over 1500 at launch and now nearing 3000) but also enables the Council to integrate other elements of its benefits strategy - such as salary sacrifice programmes and also employee focused policies including the ability to buy/sell annual leave and work flexibly - consolidating all of this into a ‘onestop-shop’ for employees.

“Kent Rewards enables the Council to achieve the underlying aims of its wider benefits strategy,” explained KCC’s Colin Miller. “We want to be inclusive by providing something for everyone and to be exclusive by offering a tailor-made package unique to Kent County Council that offers flexibility, relevance and choice for our hugely diverse employee base.”

TOTAL REWARD The provision of a voluntary benefits programme has been enhanced by the introduction of a unique interactive communication tool, Reward Viewer, developed by Asperity. The tool provides information about the wider benefits offering and enables individual employees to summarise both tangible and intangible benefits on a personal total reward statement. It encompasses reward and recognition, pensions, Additional Voluntary Contributions (AVCs), tax efficient benefits, health cover options, allowances and employee relations policies. Integrated feedback mechanisms within Reward Viewer produce management information and bespoke survey results enabling employee opinion to act as a powerful driver for developing the benefits strategy.

Reward Viewer is unique in engaging staff with the rewards and benefits on offer, by displaying further information based only on the responses from users. For example, when an employee is asked whether they pay for childcare - such as a nanny, childminder, nursery, after school club or holiday clubs - if the user responds ‘yes’ an additional information box is created which includes details about the Childcare Voucher scheme, its advantages and how to apply. This means that throughout the Reward Viewer, the user is being educated in a non intrusive manner on rewards and benefits that really apply to them. By taking part in the Reward Viewer, the user is given a completely individualised demonstration on how the Kent Rewards package can be of maximum benefit to them. Furthermore, Reward Viewer puts the onus on the employee to enter personal data, thereby avoiding complex IT-interfacing issues and removing the potential for errors and subsequent lack of confidence in the system. Set-up and administrative costs are minimised because employees enter their own data and all that is needed for an employee to access the system is information which is provided on their payslip. “With Kent Rewards and Reward Viewer,” commented Miller, “we’ve brought together a number of provisions and effectively unified all of our benefits within a total reward framework. Furthermore, this interactive, online approach to total reward communicates the depth and breadth of the wider employment package, takes into account personal circumstances, invites individuals to put their own value on the employment package and uses the results

to drive the future direction of the reward strategy.” The strategy is underpinned by an innovative communications approach with digital video footage, web-based case studies and face-toface road shows promoting key messages and benefits to users.

EVALUATING EFFECTIVENESS This total reward framework is a keystone of the KCC approach to differentiate itself from other employers in the region; to be seen as an ‘employer of choice’ in the strongest possible position to attract, retain and motivate staff. By communicating the value of the overall employment package - especially the nonfinancial elements of it - the Council aims to help its employees understand, use and engage with its unique employment benefit package. Reward Viewer also enables KCC to analyse feedback from employees who use a simple star rating system to place a value on the wide range of benefits listed; something that KCC finds especially useful for analysing the less quantifiable aspects such as flexible working, carer’s leave and training and development. This results in a personalised Total Reward Statement that can be printed and retained for future reference and, of course, this inherent flexibility enables KCC to develop its reward strategy on a continuous basis.

RECORD ENGAGEMENT LEVELS “The implementation of our total reward strategy has been an outstanding success,” said Colin Miller, “and has accelerated integration between the various elements of the Council’s reward offering. For example,

our partner organisations, such as Prudential, the Consumer Financial Education Body and Asperity, have an extremely close working relationship and all of their services are seen as part of the total employment package.” Over 24,000 employees have registered on Kent Rewards so far and use the scheme to spend their money more wisely on everyday purchases. This covers a wide range of items such as groceries, petrol, gifts and utility services through a combination of discounts, vouchers and cash back offers. Over £11million has been spent through the site since launch (£9m in the last year alone), indicating a huge and increasing level of regular usage. Of the initial pilot group of 2000 employees that used Reward Viewer, 66% of the respondees said they found KCC’s approach to reward valuable. 93% found Reward Viewer easy to use.

The success of the Council’s reward strategy has been well documented and the KCC reward and HR team has won a significant number of industry awards. “Of course it’s great to have our work recognised and to win awards,” concluded KCC’s Colin Miller. “However, of far more importance to the team is the fact that the success of our reward strategy is measured through the uptake and usage by our employees. In this respect, it has been a huge success.”

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