Engage to Perform How to deliver business results from reward strategy in 2013

ContentsIntroduction 3

Driving employee engagement to support business performance 4

Personalisation and participation 6

Making a difference with innovation 9

Tackling benefits communication 11

Bringing education into the benefits mix 13

Conclusion 15

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What are the new ideas which should shape benefits and reward strategy for organisations in the coming year?

When we spoke to our clients and prospects at the beginning of this year about the insight they would most like us to share, this was the question they wanted us to answer.

So for our first whitepaper of 2013 we have done exactly that. In the pages which follow we have brought together for you both the priorities for the year ahead and how they will be addressed, as told to us by our ‘Edenred Practitioner Panel’, a group of people whose job it is to ensure benefits contribute to people performance.

What emerges is a recognition that while benefits have the potential to play a critical role in supporting our businesses, we need to work harder than ever to make that investment pay off in five areas:

• Contributing to business performance by aligning benefits and reward to employee engagement

• Making reward relevant through personalisation

• Using innovation to improve the employee benefits experience

• Increasing benefits uptake through communication

• Adopting financial education as a core benefit

Although budgets look set to remain tight in the year ahead it is clear that these ideas are being backed up with action as just under half of organisations (41%) take the opportunity to fully review benefits strategy in 2013.

In a year when many organisations are either implementing or preparing for auto-enrolment, this represents a significant movement to ensure that benefits play to their potential in supporting business performance.

Whether you are planning wholesale change to your benefits or simply looking for ideas which can improve the performance of what you have in place, I hope this report will help provide a catalyst for changes which help your organisation and your people thrive in the year ahead.

Introduction

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Employee engagement is increasingly recognised as the glue which binds people to organisational goals, making a critical difference to business performance.

Having made its way to the top of the agenda at the end of 2012 with the launch of ‘Engage for Success’, a campaigning organisation championing its benefits, employee engagement is set to be one of the big themes for business in 2013.

Our research found a near unanimous belief not only that benefits and reward have a role to play in improving employee engagement for employers but that in the current environment it plays a more important role than ever in achieving that goal.

“It releases the discretionary effort which employees give freely and which is extremely valuable – especially during the economic downturn and pressure on pay,” says Sean Morris, reward manager of Buro Happold. “It also has the ability to recruit, motivate and retain employees as well as increasing business performance and the bottom line.”

Yet although many employers are awake to the business benefits of employee engagement, it is clear that those of us responsible for benefits and reward have an important role to play in ensuring organisations approach this in an effective way.

The first challenge lies in influencing the leaders and managers who don’t understand the role benefits and reward play in supporting engagement and performance. With 73% of those we spoke to saying this was the case in their organisation, clarifying this link is a clear priority if efforts to link engagement and business performance are to succeed.

As Rachel Abbot, Reward Manager of John Lewis Partnership points out, at its most basic level, the task is to draw a line between engagement and outcomes for the business.

“Employees work to earn money and it is therefore critical reward supports an engagement strategy aligned to and in support of the business strategy,” she saysThe second challenge comes in ensuring that when reward and benefits are used to drive employee engagement that they remain consistent with the strategy, culture, style and behaviour of organisations.

1 Driving employee engagement to support business performance

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“The challenge that organisations have is to ensure that benefits and reward are positioned as part of an overall employee engagement approach including other key areas such as, leadership and culture, processes and approaches to business, quality of work and environment, development and training as well as other things. Benefits should not be seen as simply a short cut to drive engagement”, says Alistair Denton, Managing Director of employee benefits at Edenred. “Pay, benefits and recognition all need to align to the way an organisation does business.”

The third challenge is in ensuring that organisations do a good job of understanding the link between new investment in reward and any potential business outcomes.

“Many organisations already track engagement so it makes sense where possible to use these surveys to understand what is driving it and what employees feel about their reward and benefit packages” says Ant Donaldson senior specialist, employee benefits at E.ON.

So while there are significant gains to be made through a focus on employee engagement, it is a mistake for organisations to think this comes for free. There is a job to be done not only in aligning reward and benefits and employee engagement to business performance but also ensuring our organisations understand the ongoing investments in management and communication which need to support this. Our job should be to take a strategic lead in the year ahead.

Benefits and reward - key findings

86% of employers believe benefits and reward improve employee engagement

68% say it contributes directly to employee performance

73% of organisations say their leaders and managers don’t understand their contribution to performance

Key action areas

• Take a lead in ensuring organisations understand the link between reward, engagement and business performance

• Ensure reward strategy is aligned to company culture, values, customer needs and leadership behaviour

• Track the impact of any changes you make through qualitative and quantitative measures so you can establish what is working and what isn’t

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6

When it comes to making changes to improve the return on investment of reward and benefits, delivering more personalised benefits for employees is the top priority for the year ahead.

But what is the case for organisations to place such emphasis on this area of benefits?

The first argument is driven by budget. Elizabeth McVeigh, HR Manager of Kwik Fit says personalisation allows her organisation to ensure that the money invested in benefits is being used as effectively as possible by ensuring employees get the benefits that are relevant to them.

Another reason, says Rachel Abbott of John Lewis Partnership, is that for employers, personalisation allows organisations to improve engagement in benefits and reflect the diverse needs of the workforce. This also helps the recruitment and retention of the right people.

The last driver behind personalisation is the need to meet expectations around communications and choice that employees bring to the workplace from their lives as consumers.

“People increasingly expect personalised and relevant experiences outside of work – in terms of what they buy, when they buy and how they receive information. Those expectations don’t disappear when they enter a work environment and that is what is setting the bar as to how we go about personalising reward and benefits,” says Andy Philpott, Sales and Marketing Director at Edenred.

So how do organisations put personalisation to work effectively in the year ahead?

The foundation of personalisation is giving employees the choices in the benefits and reward they can choose from.

While the concept of choice sounds straightforward, the challenge is for organisations to ensure they make the process of accessing the benefits and choosing the benefits easy so employees engage in the process and begin to use the benefits on offer , says Edenred’s Alistair Denton

“Employers need to carefully consider what level of benefits they include in their benefits scheme because if there is too much choice there is a chance that employees switch off and don’t participate and also the ongoing admin and support of the scheme can become cumbersome,” he says. “A sensible approach is to ensure you are covering the key areas of health, long term financial well-being and on-going savings and target a total of between 6-10 benefits.”

2 Personalisation and participation

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To get these choices right, organisations need to ensure they have the right insight around what their employees want so they can build up the right range of benefits and communicate them effectively.

“We are seeing a better understanding among employers that techniques which are common in marketing – research, segmentation according to needs and interests – should be used to create the right range of benefits and reward,” says Edenred’s Andy Philpott.

“From a communications perspective it has its benefits too. Asking the right questions of employees is engaging in itself and gives a sense that employers are concerned about their needs. This in turn helps you understand the kind of issues you need to talk about and the employee groups who will be interested in order to communicate certain benefits.”

E.ON’s Ant Donaldson says that for the many organisations who don’t have the right data on their employees to start personalising benefits in a meaningful way, this approach is important but one which must be approached with care.

“Of course we can learn from consumer marketing and it is useful in improving participation and engagement with benefits,” he says. “But you have to be careful what you copy and don’t overdo it. Bear in mind employees come to work to work and get paid, they won’t necessarily see themselves as customers and you have to be careful not to cross that line.”

In fact, for many the most sensible step to personalisation is likely to be putting in place systems like total reward which can start the process of tracking benefits take up across the organisation while delivering regular tailored information to the employees about what they receive so they are reminded of the choices they have already made.

While for many organisations this may seem like hard work, our research found a firm belief that any improvements to reward and benefits reinforced the perception among employees that their organisation was looking after them – an opportunity which few employers interested in employee engagement can afford to miss.

Key fact

80% say improving benefits and reward is important as it shows organisations are looking after their employees

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Key action areas

• Personalisationbenefitsthebusinessbyincreasingparticipation in benefits and reward and so improving ROI

• Insightintotheneedsandprioritiesofdifferentemployeegroups is the foundation of personalised benefits programmes

• Choiceisimportantinensuringemployeesgetaccessto the benefits they need but too much choice can be counterproductive

• Personalisedbenefitscommunicationintheformoftotalreward statements should be a priority for organisations wishing to tailor benefits and reward provision

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Organisations are recognising that doing things differently can improve the impact of benefits and reward in a way which benefits business performance.

Whether it is a symptom of the “more for less” environment or a growing recognition that incremental improvement of what you already do often provides bigger gains than wholesale change, driving innovation in reward and benefits is the third big theme which emerged from our research as a priority for the year.

The first major opportunity here is the use of HR policy to supplement core benefits programmes – something which our research identified as the second biggest driver of return on investment.

One Edenred client which stands out in this area is a financial services business who used this approach to improve the way the organisation supports working parents. “We combined several of our existing benefits and added some new elements into a programme specifically designed for working parents,” says one of their team. “The programme is not just to support women going on maternity leave, although that is one element, but it also includes elements that can apply to all types of family constructs and includes support for managers dealing with team members who have parental commitments and responsibilities. The programme is flexible, so individuals can take part in the elements that apply to them.”

Ant Donaldson of E.ON says that to make this approach work, making connections and cross-working with other members of other teams is critical like Occupational Health, Pensions, HR Policy, Internal Comms and so on, is critical – as is recognising the need to ensure it is a priority for all of them in order to keep it going.

The other common area where organisations are looking for innovation is in the area of benefits delivery – this is the second ranking priority for action in the year ahead for the organisations we surveyed.

Here, Sean Morris of Buro Happold is one of many who see a role of better use of technology to solve some of the problems which impact on access and awareness of benefits they are receiving.

“We’re interested in making it far more straightforward for employees to have immediate access to information and data wherever they are in the world 24/7,” he says. “Total Reward Statements, pensions modellers, single logons so that your main logon accesses many other systems rather than having to register and set up separate accounts: these are all things which can help improve benefits performance.”

Elizabeth McVeigh, HR Manager of Kwik Fit adds that technology is critical in supporting the journey towards personalisation of benefits.

3 Making a difference with innovation

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E.ON’s Ant Donaldson says that bringing innovation into the organisation is as much about looking outwards as well as having your own ideas about what you want to improve.

“I strongly advocate looking closely at what benefits providers are doing, looking at the press and getting out to events,” he says. “As well as looking outside of your organisation you need to look outside of your sector to find out what’s working. All of this is very important when it comes to understanding how you can improve offerings through innovation.”

So in the year ahead, taking a step back and asking yourself what you can simplify and how can you can work more effectively with the tools you have will be an important element in ensuring reward and benefits support business performance.

Key fact

Just over three-quarters (76%) of employers say they will have the same or less to invest than last year

Key action areas

• UnderstandinghowexistingbenefitsandHRpolicycanbeputtogether to address specific employee needs is an important channel of innovation in benefits

• Betteruseoftechnologyallowsorganisationstoimprovecommunications and access to benefits

• Lookingfornewideasfromoutsidetheorganisationamongcompetitors, suppliers and employers outside of your sector can fuel innovation

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Getting employees to sit up and engage with benefits is critical in making a difference to business performance – and it is about more than social media.

The importance of benefits communication in the year ahead is a theme that cuts through every aspect of planning for the year ahead. With low levels of uptake a perennial barrier preventing benefits from fulfilling their potential to support employee engagement and performance, it is understandable that communications is seen to hold the key to improvement.

“While initiatives which focus on choice, personalisation and changes we make to benefits delivery, the fact remains that we still need employees to be aware of what we are offering in the first place,” says Edenred’s Andy Philpott. “No organisation can afford to stop thinking about improving communication.”

E.ON’s Ant Donaldson says that in confronting this task, organisations face two common challenges.

“The first is making sure benefits communication competes with all the other messages employees are constantly subjected to,” he says. “The second is to strike a balance between targeting communications, while ensuring what you have to say is impossible to miss by the vast majority of colleagues.”

So how should your organisation be thinking about tackling this in the year ahead? Based on our research and follow-up conversations with practitioners, five dominant themes emerged.

1. Smart engagement – data is important in informing benefits and reward propositions but so too is talking and listening to employees about what they want and why they want it. These conversations are the starting point for better engagement in reward and need be core to benefits delivery.

2. Working with managers – many benefits can help managers support employees in their teams when problems arise. The problem is that while organisations take time to communicate benefits to employees, they fail to talk to managers about how they can be used to resolve these problems. Organisations should focus on ways of ensuring managers act as a key channel for signposting benefits support available.

3. Peer-to-peer communication – The most powerful advocates for your benefits and reward are the employees who use them. They can point out how they work and play role in demystifying new benefits when you introduce them. Think about how you can use employee champions to strengthen benefits communication.

4 Tackling benefits communication

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4. Simplifying communication – Perhaps the quickest win for many organisations in benefits communication is to move from policy-based communication to giving a more simple explanation of what is available. Illustrations, infographics and interactive tools can be used to support benefits communications and move away from wordy, text based approaches.

5. Get the timing right – Well-timed campaigns which tie into seasonal themes or national awareness weeks ensure that benefits activity links to the agenda in the outside world. They can also provide much-needed platforms to talk about benefits like eyecare which often get forgotten.

Interestingly, the message from the practitioners around improving benefits communication is to focus less on trying to perfect the right channels to communicate – something which E.ON’s Ant Donaldson believes organisations will never get completely right – but more in ensuring the style of communication is one which will engage employees in the message.

Key fact

Using social and mobile channels to improve benefits communication is the lowest priority for organisations in 2013 with only 22% of organisations rating it as one of their top priorities

Key action areas

• Addressingtheeffectivenessofbenefitscommunicationiscritical for organisations who want to increase employee participation in benefits and reward

• Employersmustacceptthatimprovingbenefitscommunicationstarts with a dialogue with employees around their needs – there is a close link to personalisation and effective communication

• Asthereislimitedscopetochangethechannelswhichwillreach employees, employers need to place an emphasis in improving the targeting, content and style of communications

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Organisations are increasingly seeing financial education as a core element of the benefits mix.

Not so long ago, the idea that employers should facilitate learning and education only extended to ensuring their employees had the right skills to do their jobs.

Now, one of the major trends in benefits is the provision of education – particularly financial education – something confirmed by our research which found 59% of organisations had the implementation of some sort of financial education programme planned for the year ahead.

Sean Morris of Kwik Fit says it is one those organisations committed to supporting its employees with this benefit.

“The essential aspect of financial education for our business is it gives employees a better understanding of the impact of their chosen benefits on their financial and tax position,” he says. “It is also becoming an important issue which impacts on wellbeing, as the stress of financial constraints pervade all aspects of work and home for many people at present.”

Another benefit of financial education, says Rachel Abbott of John Lewis Partnership, is the role it plays in helping employees make the best decisions that suite their own circumstances when it comes to thinking about reward and benefits that are right for them.

“Learning empowers, supports and helps employees stay engaged and in control,” she says.

One last benefit of incorporating financial education into the benefits mix is the role it can play in underpinning benefits communication and driving uptake of the benefits that are available.

“A lot of benefits communication focuses on awareness but then falls short in showing how benefits can play a part in improving an individual employees’ financial wellbeing,” says Andy Philpott of Edenred. “By moving people from awareness of benefits to understanding what they do and how they work, financial education can be seen as an important activity in benefits communication.”

At a time when time and budgets are tight in organisations, E.ON’s Ant Donaldson says employers need to be creative about how they bring financial education into the benefits mix and this need has been highlighted by pensions auto-enrolment.

5 Bringing education into the benefits mix

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“It is difficult for organisations to commit to comprehensive programmes of financial education,” he says. “But there is still a lot that can be done. We have been using online modules from the Money Advice Service which are provided free of charge. There is also a growing sense that benefits providers should be looking to bundle financial education elements in with their products.”

So whether it is to extend existing employee wellbeing initiatives, improve benefits communication or drive participation in benefits programmes, the clear messages from our research is that every organisation should consider what financial education can do to improve engagement and performance.

Key action areas

• Financial education is a tool for empowering employees to make the best decisions about the reward and benefits they are offered

• As many employees face pressure from stagnating salaries and the increased cost of living, organisations are also recognising financial wellbeing is an important element of employee wellbeing

• Financial education can also support benefits communication and has the potential to improve benefits uptake in organisations

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Key fact

Using financial education as a tool for benefits communication ranks as one of the top three priorities for organisations in 2013

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Conclusion There is no doubt that organisations face a full agenda in the year ahead in trying to ensure employees get behind the goals of their business and perform to their full potential.

Despite this our research shows significant opportunity for reward and benefits to shape the performance of organisations.

On a practical level, with salaries remaining depressed, reward and benefits can play a big role, helping to diminish the impact of pay packets which are eroded by inflation.

From a strategic perspective, they can be deployed to drive employee engagement and support specific business objectives while retaining and attracting the right people.

Getting this right requires resourcefulness, creativity and a close eye on how benefits and reward can support business objectives by working smarter with the limited time and budgets available.

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About Edenred

Edenred helps organisations engage and motivate people to achieve enhanced performance.

This is achieved through provision of unique and unrivalled total reward and recognition solutions, including the widest range of incentives, rewards and benefits solutions, individually designed to fit your audience, your goals and your budget.

We do this through vouchers, prepaid cards, online platforms and digital & SMS products to help engage and motivate your employees, customers and business partners. Over 20 different solutions last time we checked.

• Employee Benefits solutions that encompass the management of your flexible and voluntary benefits, employee discounts and salary sacrifice schemes, that can be deployed to drive engagement at a company-wide level or focused around specific segments of your workforce.

• Incentives and Rewards solutions that can motivate, create behavioural change and improve performance, centred around the widest choice of reward platforms and mechanisms that offer the recipient the widest choice of redemption options.

• Expense Management solutions that help streamline and simplify your routine payment processes, reducing administrative burden, saving money and helping make life easier for everyone.

• Communications Services that ensure your investment in incentives, rewards and benefits are understood, valued and appreciated, delivering maximum return for your business.

To find out more, visit edenred.co.uk, call us on 0843 453 0053or email sales@edenred.co.uk

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