Do employees value their benefits?

Ten heads of Compensation & Benefits from a cross-section of FTSE 250 companies gathered for tea at the Ritz in July to discuss the business case for Flex. I was one of the fortunate few to get in through the gates to help organise the event and thought that you might be interested in some of the findings. There were some amazing insights I gained from the forum as a whole, but the key finding for me was the enormous gap between the HR department's need to demonstrate the value they offer through the benefit package and the rude reality that is life.

Participants were asked to score the importance of certain criterion and then rate their own companies on a scale of 1-5. Across the attendees, the importance of employees understanding their benefit package stood at 98%, but the feeling was that delivery is at a paltry 30%. The importance of reporting on benefit costs and take-up stood at 98%, but the reality stood at 40%. In fact, the group felt that their rating of how well they deliver on awareness of employees of all elements of their benefits package stands at a low of 48%.

Given the vast steps technology has taken over the last ten years, it is a shame that we should still be in this position. There are more than enough options available to meet these requirements and I believe that four simple steps can help organisations move a long way in terms of meeting these goals.

Demonstrate value
One of the key drivers for best-of-breed benefits administration solutions is the flexible way in which they can place a value on the benefits received by your employees and present them in an interesting manner. Comparative charts can include market value, tax and NI savings, as well as group discounts. Every organisation has a different set of benefits, eligibility criterion, valuation methodologies and presentation benchmarks. Organisations who are managing to demonstrate the value of their benefits are the ones who realise this and stop trying to shoe horn their complex requirements into a rigid out-of-the-box solution.

Amalgamate benefits
My wife works for a leading UK bank and while doing my annual accounts we decided to create a Total Reward statement for her to get a full picture of our financial health. She was absolutely amazed when she realised how much she had gained through her stock option plan and via commission. This is a frequent situation I bump into at Client offices. Salary, parking, shares, and commission are rarely stored on the same software. As a result, it is the rare organisation, who can manage to amalgamate all of this information and therefore demonstrate the `Total Value' of the compensation and benefit package to an individual employee.

Automate updates
Total Reward is becoming more common in large organisations, though I am sure that you will agree that these statements, more often than not, miss out certain key benefits (canteen, parking and training are almost always going to be missed out). These statements are then printed out on statements that look more like black & white ATM advice slips than a presentation of your annual reward. What is worse is that they are out-of-date even before you have received them. It is a rare company that has invested in the ability to both amalgamate the data across sources, as well as enable the automation of the update process to ensure that the `Total Value' statement stays abreast with share price changes and commission payments.

The issue of course with both amalgamation and automation is the cost of change. The amount of time and cost that it takes to design and implement the initial solution is thrown to the wind when the payroll system changes the following year or you change your PMI provider. However, I think we all know that flexible systems do already exist and are able to meet these demands. It is not fair on your company or your shareholders if best efforts are not made to invest in these systems.

Communicate highlights
Finally, the key to highlighting `Total Value' to employees is to communicate. Having an online `Total Value' statement that stays up-to-date with employees financial status will go a long way to increasing employee understanding of the value of their benefits. But focused communication on the fringe benefits of training spends, employer awards and work culture can re-emphasise the HR departments focus on the individual employee. It is simple enough then to link back this communication with the "Total Value' position.

The marketplace certainly seems to believe that change is required if we are to meet this basic vision of being able to demonstrate the value of their benefits to employees and I am sure that I am personally committed to this goal as well.

If you would like to be put on the Tea @ the Ritz list, receive more information about the findings of the forum, or learn more about options in the area of `Total Value' statements, contact me at GirishMenezes@hotmail.com.