Benefits: The Forgotten Strategy to Engage Employees and Boost Revenue

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Benefits: The Forgotten Strategy

Introduction

1. The Compliance Challenge

• Untangling the web of compliance

• Staying on the right side of the law

2. Meeting New Expectations: Managers and Employees

• Benefits for an age-diverse workforce

• Avoid administrative breakdowns and errors

• Providing openness and transparency

3. The Solution to Increase ROI

• Increase ROI by listening and communicating with employees

• Introducing a personalised and flexible rewards policy

• Employee engagement: Empowerment through self-service

Conclusion: Realise the Benefits

C-Suite Perspectives

Contents

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Benefits: The Forgotten Strategy

Benefits are a vital strategic tool that employers cannot afford to ignore. Organisations face many challenges in this area. The Top Employers Institute found that the “key to this is the need to improve the effectiveness of their approach to Compensation & Benefits without major budget increases, whilst ensuring that it attracts new talent and keeps the existing employees happy and motivated.”1

A “one size fits all” benefit model is no longer an option. The majority of UK employees (57%) say that improving their benefits package could motivate them to remain with their employer.2 They want flexible, self-service options, from employers who understand their needs. And if they don’t get them, they will vote with their feet.

Yet despite this new reality, most benefits strategies are not fit for purpose. Chances are, your business has the same problem. As companies continue to look for new ways to increase the impact that total reward spend has on their business results, it is getting harder to provide meaningful benefits in a cost reduction environment.3

Providing meaningful benefits and cost control

57% of employees would stay with their employer if their benefits improved2

As companies continue to look for new ways to increase the impact that total reward spend has on their business results, it is getting harder to provide meaningful benefits in a cost reduction environment.

1. Top Employers Institute Compensation & Benefits Research Report 20152. MetLife (2015), Employee Benefits Trends Survey3. Deloitte, 2014 Global Top Five Total Rewards Priorities Survey

Benefits: The Forgotten Strategy

It is a challenge for multi-national organisations to keep track of everything.

From increased retirement age to family-friendly perks, commission, increased workplace flexibility, remote working, child care payments, tax credits… the list goes on – managing benefits is an increasingly complex task, and things are made more complex when you consider the number of countries that Global Benefits professionals are responsible for. In Europe, there are four people of working age (20-64 years) for every pensioner. By 2040, this figure is expected to drop to just two, with significant consequences for compensation and pension schemes.4

Often, employers do not invest in effective tools to communicate benefits to their employees. Not having the correct information can lead to dissatisfaction when employees discover they’ve signed up for a plan that doesn’t meet their needs. It is up to employers to continually educate and inspire employees to make the most of their benefit plans through consistent messaging and support.5

In EMEA, more time is spent on implementing benefits packages than they do on communicating them: no surprise then that only 9% of employees claim that they fully understand the reward policy of their company.6 This has to change, and fast, for the sake of your company’s competitiveness.

Only 9% of employees fully understand the reward policy of their company6

Do your employees understand their benefits?

4. The RandstadSourceright 2015 Talent Trends Report5. HR Benefit Education Is the Key to Employee Comprehension, ADP Spark 20166. AON Hewitt (2014), EMEA Benefits Communication Survey

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1. The Compliance Challenge

HR teams are swamped by an ever-shifting regulatory landscape. They are buried under risk management demands and scrambling for local legislative support.

With each new business expansion, the reward and benefits tasks become more complex. Streamlining and integrating widely disparate systems seems impossible, while data-privacy standards to protect sensitive information are sorely needed.

Whether it’s the EU Posted Workers Enforcement Directive, pensions auto-enrolment in the UK, new tax rates for company cars, or Sarbannes-Oxley compliance with US partners, there is a steady flow of in-coming laws that benefits can fall foul of.

1. The Compliance Challenge

With each new business expansion, the reward and benefits tasks become more complex

Untangling the web of compliance

7. Maintaining Compliance and Mitigating Future Risk, ADP 2014

33% of midsized firms were fined or penalised in 20127

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“Employers need to stay compliant which is hard to do without expert help and support.”Manuela Montagnana, ADP VP Human Resources EMEA

1. The Compliance Challenge

According to Manuela Montagnana, ADP VP Human Resources EMEA, “The continuing rollout of legislative changes in payroll and benefits – for example DSN or BSI in France, and auto-enrolment/shared parental leave and RIT in the UK – brings not just a greater focus on compliance, but also fines that can apply for noncompliance. Employers need to stay compliant which is hard to do without expert help and support.”

Offering the right benefits can “attract and retain the best talent in a tough marketplace,” advises Manuela Montagnana, “but there are legal stipulations on what you can and cannot do. Not having the right benefits offerings can be costly for you and your business.”

Staying on the right side of the law

“Offering the right benefits can attract and retain the best talent in a tough marketplace.”

Manuela Montagnana ADP VP Human Resources EMEA

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2. Meeting New Expectations: Managers and Employees

2. Managers and Employees

To make things even more complicated, employees increasingly want to take control of their benefits. They want a menu of benefits options tailored to meet their needs and life stages, and they want to be able to access them on the mobile and tablet, wherever they are, whenever they need to.

One of the most daunting challenges employers face is how to manage an age-diverse workforce. As the number of Generation Z (born 1995 or later) employees entering the workforce grows and Millennials (born 1981-1995) move into leadership roles, employers must offer benefits that suit differing needs.8 According to Gallup, Baby Boomers (born 1946-1964) have the lowest level of engagement and the highest level of active disengagement of all the generations in the US workforce with nearly one in four actively disengaged: “Millennials are generally more upbeat about all aspects of engagement than are Baby Boomers or members of Generation X (born 1965-1980), but Millennials are specifically more positive about growth and development opportunities”, finds Gallup, and they “are particularly prone to job hopping”.9

1 in 4 of the Baby Boomers are actively disengaged9

Engagement levels by generation:

Benefits for an age-diverse workforce

8. The RandstadSourceright 2015 Talent Trends Report9. Gallup (2013), Generation Gaps in Engagement

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2. Managers and Employees

Every successful company needs to create an effective benefit policy with economy of scale wherever possible; yet employees and managers are demanding a more personalised benefits structure that meets their needs as an individual. With Millennials and talent war and mobility, a good benefits policy can make the difference.

The juggling act employers have to perform, therefore, is to offer benefits that are both flexible and harmonised. Simply providing a long list of options to try and please everybody means that you’re setting yourself up for an administrative nightmare, especially if you don’t have the software and logistical support to back it up. Many employers are risking administrative breakdowns with a mix of manual processes and in-house software, some even using excel spreadsheets. Instead, you need to automate and integrate your benefits administration within a safe and centralised digital environment.

Take commission-based pay. It is one of the easiest benefits to understand – if you meet your targets, you are rewarded accordingly. However, a survey of sales directors found that companies are losing large sums of money due to inadequate in-house processes. Almost a quarter of companies surveyed said they regularly saw errors of over 10% of the total commission paid, 20% said they didn’t know what errors occurred when paying out sales commissions, and over 52% admitted they regularly had to deal with queries and complaints from the sales force.10 In such cases, a benefit that is supposed to incentivise good performance ends up doing the exact opposite.

With Millennials and talent war and mobility, a good benefits policy can make the difference

Avoid administrative breakdowns and errors

10. Vanson Bourne OpenSymmetry (2014), Commission Survey

2. Managers and Employees

A harmonised benefits process that looks the same, works the same, and can be easily accessed across your whole business by employees and managers, has become an absolute necessity.

A single software solution is needed that can streamline employee eligibility, benefit calculation, communication, and workflow management, within a safe and centralised digital environment.

According to Chris Bruce of Thomsons Online Benefits, “European employees are continuing to push for more openness and transparency when it comes to HR administration. They are demanding increased access to benefits and rewards information, which will place benefits management software at the forefront of HR discussions. Engaging employees in all parts of the world can be an overwhelming task for HR teams, especially when faced with varying laws and regulations, not to mention cultural differences. Employers are also looking to SaaS-based solutions to provide employees with a user-friendly HR portal where they can easily manage their benefits packages online. In response to the demand for mobility, organisations will also look to implement solutions that are optimised for tablet and/or smartphone use. Europe will also continue to see a shift in companies running decentralised HR processes and moving to centralised HR processes with automated benefits administration.”11

Using the cloud to centralise benefits and drive employee engagement is now a business priority. A recent Talent Trends Survey found that HR leaders want to share information better through online communities and social networks, with 50% saying they plan to invest resources in the next 12-24 months.12 If you’re not planning to invest, then you need to do so and fast, before your competitors do.

Providing openness and transparency

50% of HR Leaders will use more online communities and social networks to communicate their benefits policy12

11. SHRM, Global HR Tech Trends for 201512. The RandstadSourceright 2015 Talent Trends Report

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3. The Solution to Increase ROI

3. The Solution

Increase ROI by listening and communicating with employeesEmployers that communicate benefits effectively and take employee wishes into account when determining which benefits to offer, see higher value in return. They can actually transfer HR costs to employees through the use of flexible benefits, voluntary benefits and salary sacrifice, and at the same time boost engagement by meeting individual needs.

Research by MetLife backs this up. The more employees value their benefits, the more engaged they are in their work: “We also saw similar results when we asked questions about an employee’s level of commitment to their employer – the more the employees valued their benefits, the more committed they were to the employer. If an employer increases an employee’s perceived value of benefits by 1 point on the 5 point agreement scale, it increases the employer’s sense of engagement to the employee by 12%.”13

The more the employees valued their benefits, the more committed they were to the employer

By increasing the perceived value of employee benefits by 1 point on the 5 point agreement scale, the employee’s engagementimproves by 12%13

13. MetLife (2015), Employee Benefits Trends Survey

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The way to offer benefits that appeal to all members of the workforce is through flexible benefits packages. If you offer a broad range of choices that can be mixed-and-matched, and changed at different life stages, then there is truly something for everyone.

Research by Employee Benefits Magazine into flexible benefits finds that 54% of HR respondents believe that flexible benefits improve the image of their organisation, and around the same number suggest that their benefits plan has improved recruitment and retention of talent.14

The Reward & Employee Benefits Association (REBA) also reports a growing trend for increasing personalisation in reward and benefits packages offered by the top employers.15 Benefits are reflecting big changes in working practices towards individual responsibility, which is expected to translate in a huge rise in home technology (laptops, tablets) offered through the workplace.

According to the REBA survey, reward and benefits managers project a 42% increase in home technology offerings appearing in employee benefits packages in 2016. The provision of financial education and advice is also rising, with a 28.6% rise in employers planning to introduce it in 2016 compared to 2015.16

54% of HR respondents believe flexible benefits improve the image of their organisation14

Introducing a personalised and flexible rewards policy

3. The Solution

14. Towers Watson (2014), Flexible Benefits Research 15. REBA/JLT (2016), Employee Benefits Shifts Research 201616. The HR Director, Reward and benefits more personalised in 2016

Empowering employees to manage their own benefits solutions leads to increased employee engagement and workplace performance.

Kevin Close, a Senior Vice President Global Compensation and Benefits at EMC, the global business and service provider, has first-hand experience of introducing employee-friendly benefits software. “The user experience surpassed employees’ expectations,” says Close. “They said it allowed them to complete the enrolment process efficiently, in one 10-minute visit. Our employees also liked the new contemporary, consumer-grade look and feel of the environment.”

A centralised global benefits solution supported by deep local expertise can free employers with the time and insight to focus attention where it’s needed most. Manuela Montagnana, recommends that you “streamline your employee eligibility, benefits calculation, employee communication, and workflow management into one tool, supported by experts. Employees in EMEA are demanding increased access to benefits and rewards information – this puts benefits management software at the centre of any HR strategy.”

Another added benefit is that this also frees up HR teams from the burden of complex administration. When employees take control of their benefits they are actually doing the boring admin work for you, and at the same time feeling empowered to directly engage with their benefits in their own time, using the same technology that they have at home. While offering choice and control send the message to employees that the company listens to them and recognises their needs.

Empowering employees to manage their own benefits solutions leads to increased employee engagement and workplace performance

Employee engagement: Empowerment through self-service

3. The Solution

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Conclusion: Realise the Benefits

Conclusion: Realise the Benefits

Benefits can be a hugely beneficial strategic tool. It can unlock employee engagement and at the same time relieve your HR team from the day-to-day management of tedious benefits admin processes.

However, employers attempting in-house solutions typically fall foul of employment law regulation and the IT nightmare of keeping on top of it all.

As Debi O’Donovan, partner at REBA, says, it is a challenge that all organisations need to tackle. “Ensuring engagement with pay and benefits is something many have failed to do,” she says. “For some it’s the challenge of outside influences, for others simply poor internal communications. But it’s a challenge that must be overcome. By ensuring they place it top of their agendas… reward and benefits professionals have a better chance of succeeding.”17

Turn your employee benefits into a business asset

The path to success is a relatively easy one to take. Outsourcing with an expert partner allows your business to bundle everything into a centralised digital environment that’s safe and secure, giving you access to global and local 24/7 support. Benefits can transform from an HR and admin headache, into a major recruitment, engagement and employer brand strategy. Cloud-based consolidation is the industry standard for HR administration now. It offers consistent user interfaces, well-protected data, reliable auditing and reporting – all delivered through a single solution and a point of contact. It’s time to turn your employee benefits into a business benefit.

Global benefits solutions paired with deep local support delivers:

Economies of scale

Global consistency

Better employee experience

Consistent localised schemes across all countries

17. REBA/JLT (2016), Employee Benefits Shifts Research 201618. Gallup (2013), ‘How Employee Engagement Drives Growth’

Companies with engaged workforces can have up to 147% higher earnings than their competitors18

CEOs Every CEO needs to ensure an effective benefits policy is executed - one that incentivises employees to live by the values, and carry out the business strategy. However, employees are demanding ever more personalised benefits that meet their needs as individuals – or else companies risk key talent leaving. With Millennials, talent war and mobility, a good benefits policy – which is not necessarily more expensive – can make the difference between staying ahead of the competition, or being overtaken by them.

CFOs A good Chief Financial Officer knows the burdens with administrative nightmares from a mix of manual processes, some often still using excel spreadsheets. They also value outsourcing the admin and support to an expert, a global partner able to make sure that the company is always compliant with the latest local regulations. The risk of not to be may have significant legal and financial consequences that the informed CFO is happy to avoid. A truly accessible online benefits system, instantly updated and supported by the outsourced partner, will open up a range of tax-efficient benefits, such as pension contributions, childcare vouchers and additional annual leave, all while promoting employee engagement and productivity.

C-Suite Perspectives

CHROsHR is in a unique position to continually educate and inspire employees to make the most of their benefits plans through consistent messaging and support. Yet HR teams are swamped by an ever-shifting regulatory landscape and the demands of an age-diverse workforce, which they try to keep up with using desperate ageing technology that is not flexible. Not having the correct rewards information or ease of access can lead to dissatisfaction. However, employee self-service, accessible on mobile devices, provided by global experts, can turn benefits into a powerful engagement driver.

CIOsCIOs are burdened with information systems nightmares from a mix of manual processes and inconsistent software programs that do not speak together. So, CIOs of leading companies are now automating and integrating benefits administration within a safe and centralised digital environment allowing employees to access their benefits online wherever they want. Using the Cloud to centralise benefits and drive employee engagement is now a business priority.

Employee benefits policies affect everyone but what does it mean for the CEO, CFO, CHRO and CIO?

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