Flexible Benefits
Employee Rewards and Benefits
We've all heard that benefits are becoming more and more pivotal to attracting candidates. So what are job-hunters demanding – and are employers responding?
Author: Penny Cottee
Issue date: 19 April 2007
Source: People Managment - Guide to Recruitment Consultancies
Article: Central Perk
Page: 26
Several words characterise the current landscape of employee benefits. The first is “flexibility”. Candidates are seeking a degree of choice both in the ways in which they are rewarded for their labours and the ways in which they work. It’s clear that, for many, salary alone is no longer sufficient recompense. Consequently, “package” is also a term with growing currency.
Another word one could apply is “upheaval” – this appearing in the shape of the national pensions crisis, which has caused seismic rifts for workers and organisations alike.
Other descriptors would include the now-familiar “candidate-led”. Experts in the recruitment consultancy sector agree that in a market with a finite – and inadequate – level of talent, such as HR, the pressure is on employers to offer innovative ways of attracting, retaining and engaging those elusive, talented individuals.
“Employees are demanding flexibility and choice,” says Mark Richardson, editor of the Incomes Data Services reports, HR Studies. “They have different priorities and lifestyles which change over time, and employers are now recognising this by developing an element of choice in the benefits they offer.”
This extends to how and where people work, he adds. “Employers are increasingly prepared to accommodate working from home and flexible working, as they appreciate the value that employees place on work-life balance. Flexible working, for example, is now often considered integral to attracting and retaining staff.”
Trudy Searle agrees. As senior consultant at Sterling Selection, she has witnessed this growing trend. “Work-life balance is an important issue and candidates are comfortable asking questions about flexible working options, whereas even five years ago that wasn’t the case,” she says. “Forward-thinking organisations realise that employing staff who work from home can increase their talent pool. This not only reduces overheads but also allows them to cast their net much wider than their local area, which may not offer the skills they need.”
Given that candidates are seeking choice and control, flexible benefits remain in demand. “Flexible benefits continue to be popular,” says Matt Brooks, manager at Frazer Jones. “For larger firms, they have been very successful. Most organisations we deal with are looking to implement a flexible offering in one way or another.”
Many recruitment consultancies are seeing more flexible benefits on offer. “In 2005, around 10 per cent of firms we dealt with offered flexible schemes; now that’s nearer 25 per cent,” says Carole Bodell, managing director of HRi. “New software means implementing and administering schemes is easier and cheaper, and it has allowed medium-sized firms to enter the market.”
Although they are popular and give employers an opportunity to differentiate their reward offering from that of competitors, flexible benefits are not as widespread as may be expected. “More organisations are looking at them but few have adopted them,” says Charles Cotton, CIPD adviser, reward. “But that may change this year. Our latest annual Reward Management survey shows that the number of firms offering them is set to almost double. Currently, 32 per cent have them and 28 per cent are planning to introduce them.”
The top-three benefits being introduced, according to the CIPD survey, are childcare vouchers, bicycle loans and dental insurance. Other offerings include extra holidays (or cash instead of holidays), pension payments and a variety of insurance and assurance provision covering life, income, private medical and critical illness.
The biggest change in benefits has been the fundamental, and much feared, shake-up of pension provision – the move away from final-salary policies. “Most final-salary schemes in the private sector are now closed to new entrants, and many are being closed to current staff too,” explains Cotton. “There has been a move away from defined benefit schemes to defined contribution, or money-purchase, schemes.”
The CIPD survey shows that 20 per cent of employers are planning changes to their pension arrangements in 2007, with the most popular options being to increase employee and employer contributions and introduce salary sacrifice arrangements.
If defined contribution schemes are well funded, Cotton sees no problem with them. Evidence suggests this is not happening, however. “Employers are taking the opportunity of transferring to new systems to cut contributions and reduce costs, leaving a gap. If employees don’t make up that shortfall, then in 20 to 30 years’ time we will have people who will not be able to afford to retire,” he says.
So what are the other trends in the benefits arena? Company cars, it seems, are waning in popularity, taxed out of favour in successive budgets. Organisations are now more likely to offer car allowances and pool schemes.
More and more organisations are offering enhanced training and development opportunities to attract and retain staff. The CIPD survey shows that 80 per cent of employers offer training and development as an employment benefit. And it’s popular with candidates.
The CIPD survey also records that 41 per cent of those employers questioned offer total reward packages, while 32 per cent are planning to adopt them. The report also notes a significant increase in cash-based bonus schemes and incentives, more commonly in the private sector.
Consultancies are noticing a greater trend linking these bonuses to performance, even for HR staff at management level. One recruiter reports that most permanent HR appointments they handle now have some component linked to performance. Cotton concurs. “More HR people are being rewarded according to contribution, even in the public sector. It is trickling down slowly to line managers, rather than being exclusively for senior staff,” he says.
And the kennel fees…?
Being a nation of dog-lovers, it’s perhaps not surprising that many of the more unusual requests from candidates regarding extra benefit provision focus on canine care. One woman asked a prospective employer if they would pay for a daily dog walker (they wouldn’t), another wanted to bring his mutt to work, while another candidate turned down a high-powered job because the car on offer was too small for her two large pooches. Yet another put in an expenses claim for kennel fees incurred during a business trip.
Aside from animal care, candidates have reportedly asked for relocation fees for a harp and grand piano, insisted on being given underground car parking and requested a full-time chauffeur (declined). Trailblazing employers keen to keep staff are offering free tickets to football and rugby matches, subsidised haircuts, driving lessons, free drinks sessions and personal coaches.
One firm allows kids to join parents in the staff canteen at lunchtime; one offers carbon credits in its menu of flexible benefits; and another gave every employee a bicycle for Christmas.