Benefits Connection from Asperity 1

Issue no.3 - April 2008

Insight, strategy and best practice in voluntary benefits from Asperity

The Information Issue

The business case for benefitsWhy Fat Diamonds are an employer’s best friend

What can we learn from our peers? Key results from VB Excellence 2007

What MI should you be looking for and what

can we learn from the behaviour of over a million user logins to inform benefits

scheme design?

02 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk

WelcomeThe science of good information is to get the balance right between having enough data to aid decision-making and not so much it impedes understanding.

A structural engineer thinking of knocking a wall down will need accurate, detailed information on the specific wall to make a decision – background information on walls in general won’t be enough. For a benefits professional, the opposite is true. Concentrating on the

specific needs of one employee won’t be the right approach, although designing a package to enable individual employees to concentrate on their own specific needs will be part of the consideration.

In this Information Issue of Benefits Connection, we take a hard look at finding the right balance between quantity and ease of comprehension. More information can sometimes lead to less understanding, although in the last year we’ve found more benefits professionals working in an information vacuum than an information swamp. Why is this? Is it because the information is genuinely hard to come by, or is it because providers are hiding behind excuses to cover up poor engagement? In the “information age” it’s unacceptable to expect employers to invest in benefit programmes that promise the earth but provide few or inadequate methods of checking, demonstrating and measuring performance.

So what does ‘good MIS’ look like in the context of information about voluntary benefits? We set out our stall on this on page 4 . If you don’t agree, want more or less – or even if you think we’ve got it just right – let us know.

Best wishes

Glenn Elliott

MD, Asperity Employee Benefits

glenn@asperity.co.uk

Register now at http://vip.rewardgateway.co.uk to see for yourself what your scheme could look like.

Contents02. Editorial

03. The Care Question

04. Standing on the shoulders of Giants - a look at the results from our VB Excellence ‘07 research study

08. Information Inspiration - What does “good” look like in MIS?

12. The Business Case for benefits - Why Fat Diamonds are an employer’s best friend.

14. Defining the benefits proposition.

15. Employee Assistance - a look at Asperity’s employee helpdesk

Could the Childcare Voucher model be extended to work for employees with different caring responsibilities?

There are at least two parts to this question: 1) is it likely that the government will be willing to provide the tax breaks that extending a salary sacrifice scheme would entail; 2) if so, how would a voucher scheme for carers of adult relatives or dependents work?

It’s hard to predict the answer to the first part. Politicians across the spectrum are likely to consider that a tax break for carers is, in principle, a good idea. It could ultimately – in the long term - save the taxpayer money by enabling adults who need care to stay at home longer. It could be politically very popular because a large number of voters are directly or indirectly affected – 15.2% of the population of England and Wales provide some level of care to others¹ and probably at least double that number are affected indirectly by caring responsibilities. It could improve the quality of life for carers and the cared-for.

An economic analysis in July 2007² looked at the cost to the public purse of vouchers for care for older people (rather than all adults) under a salary sacrifice arrangement. The report cites a number of limitations and does not factor back the potential savings or enabling cared-for adults to remain at home longer, but even without this, the cost to the taxpayer are not prohibitive. 3 scenarios were considered and the costs range from £22-120 million a year, depending on take-up. In the scheme of public expenditure, this is a bullet that the government could bite.

Take-up nationally of salary sacrifice arrangements for Childcare Vouchers is not high, perhaps running at around 1-2% of employees in participating organisations - lots of employers haven’t got a scheme in place and lots of potentially eligible employees don’t register for CCV for a number of reasons. But those that do can save over £1000 a year per parent and this makes a significant difference to disposable income. If tax breaks for carers of older dependents make it through the political hurdles, it’s interesting to consider what can be learnt from CCV schemes and how the current model could be adapted.

It’s tempting to start with the difficulties because there are many, but perhaps more helpful to look at the plus factors, although these are not clear cut. Assistance with care provision would be likely to lead to a reduction in carers’ stress and ill-health and there is evidence to suggest that this would extend to relatives of the carer³. It is to be hoped that the recipient of the services would benefit overall, although it is inevitable that some may prefer not to have their current arrangements upset or diluted. The economy should benefit by less absenteeism by carers and by more people becoming economically active. The overall social, economic and emotional balance should be positive.

The Care Question?

The drawbacks and hurdles will be both personal and administrative. The key difference between Childcare vouchers and vouchers for the care of adults is precisely that the end recipient of the care is an adult.Parents may make such arrangements for childcare as they see fit without consulting the child, but an adult relative and an adult care recipient may not be agreed as to the necessity or type of care. While a parent is responsible for the cost and provision of care to a child, the same is not true for adult care.

Further, because employees must use a registered childcare provider to be eligible for the salary sacrifice, there is little scope for misuse. But if an older person needs care which takes the form of help with ironing or gardening, there is clear scope for this to be misappropriated. A registration scheme might capture some of the individuals or agencies who would be eligible to receive vouchers, but it would certainly disenfranchise many. Data protection issues would abound – what details would need to be collected by who and given to who to ensure the integrity of the benefit?

There’s a lot to do to make vouchers for adult care workable in practice but the Childcare Voucher model is as good a place as any to start. An employer’s view:

“The introduction of carers leave into KCC was a step in the right direction for us as an employer with employees’ interests at heart. Matching this with a tax efficient scheme, such as that already available for Childcare Vouchers, would make a significant difference to the working lives of many carers. The introduction of a voucher system would also go a long way to publicly endorsing the importance of caring and would recognise the efforts of employees who are carers, many of whom feel it necessary to carry out care duties in ‘secret’. Childcare is now well established as a reason for flexibility, tax breaks and empathy from employers and colleagues. A carer voucher scheme would hopefully do that same for those people that care for adults. It is hard to know exactly how far “Care Vouchers” would go in addressing the changing demographics of today’s society, but employers do need to look at retaining older workers with aging dependents and Care Vouchers must be a front runner as an mechanism to assist this. It’s not only employers that need to think about the issue - society risks an increasing burden on the public purse if measures are not taken to enable carers to stay in or rejoin the workforce” Jane Vivier,Rewards Advisor,Kent County Council

By Helen Craik, Director of HR Policy, Asperity

Benefits Connection from Asperity 03

¹ Figure taken from 2000 GHS

² ‘Tax exemption on care vouchers for working carers. An economic analysis: July 2007

Snell, Fernandez and Bennetts at the London School of Economics

³ Yeandle, Crompton, Wigfield, Dennett Employed carers and family-friendly policies 2002

All information correct at the time of writing and subject to change without notice.Asperity Employee Benefits Ltd, 90 Westbourne Grove, London, W2 5RT. Tel 020 7229 0349www.asperity.co.uk email: benefits@asperity.co.uk© Asperity Employee Benefits Ltd 2008. All trademarks and registered trademarks and logos are the respected property of their owners.

04 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk Benefits Connection from Asperity 05

Standing on the shoulders of GiantsMore from our landmark VBExcellence 2007 researchBy Glenn Elliot, MD Asperity

In the Autumn of 2007, Asperity sponsored a major survey of UK Benefits and HR professionals, looking exclusively at voluntary benefits. We asked about communication, satisfaction, provision and in particular looked at how we could find and communicate best practice in delivering employer value. With thanks to everyone who responded, we are now ready to report on the findings. All Asperity clients will receive a full copy of the detailed report – if you would like a copy as well, please drop us an email.

Survey Methodology

With over 800 responses, VB Excellence was the largest study focussed on voluntary benefits in 2007. Respondents were all UK based and were responsible for deciding, influencing or delivering benefits strategy.

Decision maker on benefits 44%

Recommend or influence benefits 42%

Deliver or manage benefits 14%

Figure 1: spread of responsibilities in survey participants

Number of employees< 500.................................................................20%501 - 1,000..........................................................9%1,001 - 2,500...................................................26%2,501 - 5,000...................................................15%5,001 - 10,000...................................................7%10,001 - 50,000..............................................21%50,000+...............................................................3%Size of company

Which Voluntary Benefits did respondents offer?

The chart in Figure 1 shows which voluntary benefits employers offered and which they were and were not considering. Childcare Vouchers were the most commonly provided benefit with 86% of respondent organisations providing them, leaving only 9% of companies considering a scheme and a residual 4% who have decided against.Employee discounts were the second most used benefit with 55% of organisations providing a scheme, and a further 31% in the process of considering options.

Cycle2Work schemes were provided by less than a third of employers and were definitely not on the horizon for almost the same number. Quite a high percentage – 44% of respondents said they were considering Cycle2Work scheme. An analysis of the free format text responses for this question suggests that many employers in the “considering” group were struggling to balance a strong desire to deliver Cycle to Work against the onerous requirements and burdens of the legislation and scheme infrastructure. A commonly cited problem was the concern of employers about staff who leave mid-contract and the other financial burdens and compliance issues in the scheme.Mobile Phones via salary sacrifice were the least used voluntary benefit in our survey sample. Only 9% of respondents had such a scheme, 23% were considering one but a very high 68% of employers have ruled the benefit out. Again, looking at the notes, most employers thought that this tax advantage would be the next to be withdrawn and were concerned about the parallels with the defunct HCI scheme. Where salary sacrifice is concerned it does seem that an employer needs to feel that the benefit is worth doing from a corporate messaging perspective as well as a straightforward benefit to staff.

Childcare vouchers and Employee Discounts rated best with over 75% of employers choosing 1 or 2 (High Value) for both of these benefits. Employee Discount schemes received more votes at the top mark compared to childcare vouchers, presumably relating to the fact that these benefits are for all employees whereas childcare vouchers will only ever affect a portion of an employer’s staff base.

The results for employee discounts schemes were also more polarised than for childcare vouchers, with 24% of employers stating a below neutral response (low value) compared with only 3% for childcare vouchers. This suggests that there is more to play for in the value of getting employee discounts right, compared with childcare vouchers. Given that childcare vouchers are a regulated product this makes some sense – there is less flexibility in approach for childcare vouchers compared with employee discounts.

Of the other two benefits, 30% of respondents rated their Cycle2Work scheme as delivering high value, compared with only 18% for mobile phones via salary sacrifice. This was echoed at the

How significant was VB to the organisation’s approach to benefits?

We asked respondents to identify what contribution VB made to the organisation’s approach to benefits provision. Overall, over 75% of respondents stated that voluntary benefits made a significant or very significant contribution to their overall benefits strategy. A further 9% thought that VB made some contribution and only 3.4% believed there was no direct contribution made. A significant percentage (11.1%) did not know the contribution made, possibly suggesting gaps in management information or data.

Key FindingsWhich voluntary benefits offer employer value?

We asked respondents to rate the employer value that each of 4 voluntary benefits had on their organisation on a scale of 1 (High value) to 5 (Low value).Results are shown in figures 3.1 to 3.4

other end of the scale with 36% of respondents choosing a negative response for bikes, compared with a very high 55% stating that their mobile phone salary sacrifice benefit offered low value. The poor results for mobile phone benefits are perhaps unsurprising given that intense competition in the mobile phone market constantly drives down prices of both handsets and tariffs therefore potentially

reducing the net benefit to staff of choosing from a more limited range from (usually) a single network in a salary sacrifice scheme.

Cycle2Work’s poor score is perhaps more concerning for benefits professionals on two counts. Firstly the scheme is the most complex to administer of all four benefits and this creates a barrier for many employers,

therefore we would have hoped for higher employer value to offset this. Secondly, encouraging staff to consider a bike as a mode of transport is not only a key strand of a sustainable transport policy, but also often a part of an organisation’s wellbeing strategy. There is clearly some work to be done from Cycle2Work providers in increasing the value to employers from these schemes.

Respondent’s role

3.1 Childcare Vouchers 3.2 Employee Discounts 3.2 Bike to Work 3.2 Mobile Phone salary sacrifice

High value Neutral Low value

“There seems more to play for in the value of

getting employee discounts right.”

06 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk Benefits Connection from Asperity 0706 Abbreviated from Helen Craik’s White Paper; download full copy at http://www.asperity.co.uk Benefits Connection from Asperity 07

In your own wordsThere are lots of research projects that produce thousands of graphs and pie charts that don’t really tell you very much, although they do look nice. We really wanted VB Excellence to facilitate the sharing of experience and best practice, so we briefed the research agency to ask as many open questions as possible. It makes analysis a little harder and flies in the face of convention, but we’re used to that at Asperity.

We asked:

“What, in your experience, are the biggest barriers to the takeup of Voluntary Benefits?”

“Salary sacrifice schemes received the most comments in terms of employee lack of understanding suggesting there is still much work to be done in explaining these valuable benefits simply.”

Over 600 respondents entered a free text response to the question, yet amazingly almost all (537) comments centred around two central concepts – communications and a lack of understanding and sometimes even distrust amongst the workers who most need. Salary sacrifice schemes received the most comments in terms of employee lack of understanding suggesting there is still much work to be done in explaining these valuable benefits simply. Perhaps the second point is actually a symptom of failing in the first point, but nevertheless some extremely consistent themes came across.

Communications Problems•“We don’t have time to communicate”“Apathy from staff and poor communications”“Employees are not aware of what is on offer”“Lack of means to communicate benefits effectively.”“Employee awareness; accessibility; targeted communications to groups of employee”“Communication with staff who don’t have access to emails”

Lack of understanding or even trust • “Lack of employee awareness”

“Employee distrust - ‘there must be a catch’.”“Lack of employee understanding”“Lack of understanding or mis-understanding”“Employees don’t think the schemes will save them money”“Lack of understanding of the Issues - poor communications etc”“Lack of understanding - particularly in relation to salary sacrifice. Perception that childcare “vouchers are for ladies only!”“Ignorance”“Suspicion, especially of salary sacrifice”“Staff apathy”“Lack of employee understanding about salary sacrifice”“Understanding of benefit”

Our question:

What single improvement could your providers deliver that would help you the most?

Respondents were asked this straightforward question and given a free format text box to let us know their answer. Over 70% of employees using a provider answered this question suggesting that clients have no shortage of ideas for what their providers could be doing. Over 90% of these suggestions easily fell into 4 groups – these are shown below and we’ve included just a few of the comments received under each.

Improved Scheme Design•“More and better offers”“More choice”“More competitive offers”“More exclusive offers”“More discounts available on high street without having to purchase vouchers”“Visibly impressive discounts”“Higher discounts”

Improved Communications•“More regular communication”“Better communication of scheme”“Better targeted communication”

Better uptake and engagement•“Higher engagement”“Higher uptake”

Better Infrastructure & Management Reporting•“Integration with childcare vouchers”“Effective management reporting”“Minimal /easier administration”“Single log on from flex scheme”“Integrated and expanded scheme”“Ability for us to monitor usage so we could actually see what benefit the employees are taking from the scheme.”“Larger number and broader range of discounts ““Greater promotion and access to info”

We found that

“...clients have no shortage of ideas for what their providers could be doing.”

Alan Vayle, researcher.

Key Question : ‘What advice would you share with colleagues and peers involved in the provision of VB?’

Answers to this question broadly covered 5 areas : Below we’ve put a selection of direct quotes from the research that represent the hundreds of comments received. The points are in order of priority – with the most frequently mentioned at the top.

Get others in the organisation on board•“get management buy-in or don’t bother”“don’t introduce it until you’ve pinned down your key managers to support you”“don’t have it as a piecemeal offering, take a strategic approach and that means others are with you”“help senior management teams understand where VB schemes fit in the larger picture”“believe in what you’re offering and get ambassadors to believe it too”

Communicate relevant info to relevant employees•“Communicate, then communicate again and then communicate regularly”“talk it up”“focus on employee accessibility”“KISS”“communication is the number one priority for our benefits scheme”“keep selling the message all the time”

Choice•“one-size does not fit all, choice, choice, choice”“have something of interest to every employee”“multiple communication methods are needed and then your provider has to have something for everyone”“you can’t please all employees all the time but you have to try and please all of them some of the time”

Don’t let your benefits be taken for granted •“if they don’t know what they’ve got till it’s gone, you haven’t communicated well or you’ve let the benefits go stale”“don’t assume employees will know the value of their VB – they often won’t unless you tell them”“use satisfaction surveys or get your provider to do it for you – it makes employees think about what they have got”“innovate”

Put your brand behind your benefits•“if you believe in it, brand it”“make it highly visible and definitely part of the plus of working for your organisation”“tailor the communication to the overall brand”

More Info? If you’d like to receive a full copy of the research results then drop us an email with your name and address to benefits@asperity.co.uk

08 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk

When we launched Reward Gateway we had the most advanced MIS in the VB market – allowing employers to login to a secure website hours per day, 7 days per week and see information on staff engagement, registrations and scheme usage live and in real time. It’s no secret that a few of our clients are self-confessed “statistics geeks” and have been known to login and keep clicking refresh on their web browser just to watch the numbers go up and change live!

Well over a year on, we’ve just launched MIS V2 which includes a whole host of new graphs, charts and ways of viewing, extracting and drilling down into data on the usage and engagement in your voluntary benefits programme. It allows employers to compare information between departments and divisions and even drill down into locations or sites.

When you’re one of our clients you can see all of the data for your own benefits scheme. But you can also see a macro-analysis of data across all 100+ voluntary benefits schemes that we run – so you can see how your staff usage and engagement performs compared to the norm.

Things you didn’t know – from data across all of our employer schemes.

For the purposes of this article, we’ve taken a look at just a couple of slices of MIS to gain some insight into what employees actually use. Naturally, when we’re working with our clients we get right into the nitty-gritty of engagement and uptake across divisions and departments and really start crunching data on how staff are using the programme and how we can encourage more people to use the scheme more.

Where is this data from?This data is a macro-analysis of 3 months of Reward Gateway

usage across 50 of our established programmes. Almost a million user

logins and half a million purchases and transactions form the basis of the data, which makes it pretty

Benefits Connection from Asperity 09

Chris Whitcombe : Product Development Director, Asperity

robust and solid.

What type of offers do staff use most?

When we are looking at what type of discounts staff use the most, we need to consider two different axis. The first is the mode of access, i.e how the employee gets the discount. In essence there are four modes of access available in a well rounded discounts scheme:

Online Cashback Offers •

Online Discount Offers, including gift vouchers•

Telephone Discount Offers, including gift vouchers•

High Street Offers•

The second axis to look at is what products and services your staff are interested in. As you would expect, the most effective benefit schemes with the highest employee engagement need to offer staff both the range of products and services they are looking for and the modes of access that they want. Programmes that offer restrictions in either of these will not engage with the maximum number of staff and this will therefore reduce employer value and your return on investment.

Part 1 : Mode of Access - Which is used most?

Mode of access is heavily affected by the makeup of your workforce, and in particular how many of them are comfortable using the internet. In organisations where we know that the majority of staff do not use the internet as part of their job, such as hospitality, retail and manufacturing, employer attitudes vary widely as to what that really means for the internet accessibility of the employee. Some employers assume almost all of their staff can access the internet from home, others almost the opposite. Age and demographics will play a role but not always as obviously as you might think – according to the Office for National Statistics 61% of households have internet access (15 million)1 and the average age of internet users is actually increasing2, thanks to the growing online presence of the over-55’s group. Looking at online shopping in particular, total UK online shopping sales were £17.6bn

3 for the last three months of 2007, up 82% on the

What are Cashback offers?Cashback offers are a type of discount where the employee pays for the goods or services as normal and then receives a Cashback payment for the value of the discount. In a scheme like Reward Gateway, the employee’s Cashback payments collect in their individual Cashback account and can then be withdrawn at any time as a cheque or bank transfer.

Cashback offers are important to have in a programme as they create loyalty and regular use – staff are motivated by seeing their Cashback balance increase just by shopping through the employer branded portal.

Importantly Cashback is not a “points currency” – it is straight Cash. This means everyone knows the real value of the reward and no one gets disappointed when their 500,000 “Happy Points” only redeem for a cheap toaster!

In a well balanced benefits programme Cashback discounts should sit alongside straightforward discounts in a single, searchable and easy to use website. This ensures that you and your staff get the benefit of the immediacy of a discount on the price you pay, alongside the longer term loyalty and motivation to come back that higher value Cashback deals provide.

The key benefit of course is the wide range of top brands that cashback brings us with retailers like John Lewis, M&S, BT and Debenhams participating you can be sure that staff will love it.

When we look at mode of access data at Asperity, we group benefits programmes together based on the level of internet use within the organisation. Figure 1 shows how staff typically access offers when we are looking at a workforce where more than 70% of staff use the internet as part of their job (Group A). This doesn’t necessarily mean that they use the benefits programme from work, but it is reasonable to assume that someone who uses the internet at work is also more likely to have a PC at home because the employee will necessarily have a level of PC literacy.

As you would expect, there is a difference – in Group A, 90% of offer redemption was online (72% Cashback offers and a further 18% were online discounts). In Group B this fell to 45% with the balance being taken up by significantly increased spend on discounted High Street Gift Vouchers, which can be ordered by phone (up from 4% to 23%) and also significantly more usage of “telephone offers” where staff telephone the retailer and quote a special code printed in their benefits book. There are a number of conclusions we can draw from this :

In workforces where internet use is not prevalent, the 1. “Benefits Book” of offers plays a useful role in communicating with staff and directing them to telephone and high street discounts.

However even in these workforces, discounts accessed 2. purely online still account for almost 50% of total scheme usage. We suggest that this is due to staff having internet access from home or elsewhere and also the strength of many of the online and in-particular Cashback offers which are highly attractive to users.

Information InspirationWhat MIS should you be looking for and what can we learn from the behaviour of over a million user logins to inform benefits scheme design?

Fig 1: Offer Access Method(Group A: More than 70% Internet users at work)

Figure 2 shows results on how staff access benefits from organisations where less than 70% of staff use the internet at work (Group B).

Fig 2: Offer Access Method(Group A: More than 70% Internet users at work)

1. Office for National Statistics, July 2007

2. Nielsen via E-consultancy Blog, December 2007.

3 The Interactive Media in Retail Group, January 2008.

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Asperity’s Advice

Our advice to clients is consistent : using a broad range of communications channels is always better than a narrow range. Even in organisations where 100% of staff are online, we still recommend considering some printed benefits literature as part of the communications plan. Where internet penetration is lower, it is important to expand to be a bigger part of the overall print media communications plan. Asperity has many clients where internet use at work is very low, such as in retail environments, hospitality and catering and some public sector organisations. In these cases we recommend a sizable benefits brochure detailing offers and discounts that staff can obtain without using the internet. This ensures accessibility for all, but does have to be balanced with printing costs and impact on the environment. Ultimately, like everything, the final decision rests with employers who know their workforce best.

Part 2: Types of offers – what do staff look for and what do they actually use?

As well as providing the range of access method that your staff want, we need to provide them with discounts on products and services that they actually want. This is an area where there has been much misinformation over the years, most of it accidental.

A typical first generation employee discount scheme will include a range of negotiated offers on holidays and travel, days out, CD’s and other recreational activities. Therefore it is not uncommon to find data suggesting that discounts on days out are amongst the most popular benefits This is, unfortunately, not strictly true. When faced with a benefits scheme that has a relatively narrow focus, data will naturally show that these are popular – as there is nothing else to compare with. But in a well developed scheme with a broad range of offers covering all possible shopping and services we get quite a different picture.

Figure 3 shows the top 10 Categories in Asperity’s Reward Gateway discounts scheme for the three months to end January 2008. We’re showing these by a measure called “Offer Views” which means these are the top offers looked at by employees, but not necessarily the top offers taken up.

Three key levels of tracking keep us informed to employees’ needs

Tracking searches tells our supplier team what your staff are looking for – so we know which deals to negotiate next

Tracking offers viewed tells us which offers look interesting to staff – but if they are not taken up we deduce the deal was not good enough, so we need to renegotiate

When an employee actually takes up an offer and spends on it from their own net pay we know the brand was good, the offer was good and the product was what they wanted – Offer Engagement is the key measure we look for.

As shown above, Offer Engagement is the key metric of offers and benefits. Once an employee has actually engaged with an offer and spent their own net pay on that offer through the benefit scheme, they are demonstrating that they have:

heard about the benefits programme and engaged with it1.

understood the benefits on offer and how to use them2.

found the brand or retailer desirable3.

found the offer negotiated attractive4.

Figure 4 shows the top 10 retailer offers by employee spend across the whole Reward Gateway employee population for the same quarter. In this key measure of offer engagement, top high street retail brands dominate with John Lewis, Dixons, Next and M&S accounting for a of total 21.8% of employee spend between them. These figures encompass online (Cashback) spend and high street (discounted gift vouchers) but in all cases employee spend between 5 and 10 times more through online Cashback deals when compared to gift vouchers. The lower performance of gift vouchers when compared to the immediacy of online shopping is to be expected – staff need to order gift vouchers in advance and be in to accept delivery of them so all in all one-click online shopping, for those that are internet savvy, is always going to be easier.

In figure 5 we can see the effect that Offer Engagement has on our view of the top categories. If we look at the top performing categories in terms of employee spend, rather than offer views, we get a very similar chart to that in Figure 3 – which is in some ways surprising. Conventional wisdom would suggest that Holidays & Travel, which are big ticket items sometimes costing thousands of pounds, should be the most popular category by spend. But actually, the order and size of categories in this chart broadly matches the order and size in Figure 3.

It is only by examining the number of actual shopping transactions per category that we start to see why. This is shown in Figure 6 and presents a radically different picture. When we look at number of transactions actually completed, Clothing & Fashion, Home, Garden & Pets and Electrical actually dominate the spending mix with a total of 68% of the total transactions completed. Holidays & Travel reduce to just over 1% of total transactions – very simply the number of instances of employee engagement on holidays is dwarfed by the sheer volume of transactions from employees in general shopping for homewares and clothes. Not a surprise when you consider the potential number of shopping opportunities per year greatly outweighs the number of holidays that we go on.

ConclusionsIn terms of the types of shops and services that should be included in an employee discount scheme, the data clearly shows a broad range of well known, established brands in clothing, fashion, homewares and electrical should form the bedrock of a scheme. These have the shopping patterns that create regular

Is your voluntary benefit scheme cutting it?

This is just a small sample of some of the information that Asperity’s clients have access to. Analysis of this data and using it to tune the design of your scheme and its communications is the key to driving employee engagement and then employer value.If your voluntary benefits programme doesn’t have the range of offers we show here, the different types of access, the ability to serve your online workers and your offline workers and the ability to measure it all, then give us a call at Asperity. We can help re-invigorate your employee comms, provide you with a new employee discount scheme and integrate childcare vouchers and cycle to work.

Call Nigel, Nick or Craig on 020 7229 0349 or email benefits@asperity.co.uk

Share Total Spending

1 John Lewis 5.7%

2 Play.com 53%

3 Dixons 4.5%

4 Next 4.3%

5 Empire Direct 4.2%

6 Dell 4.1%

7 Expedia 3.4%

8 Virgin Holidays 3.3%

9 Marks & Spencer 3.2%

10 Sky 3.2%

use and that is what employers are looking for – every time an employee uses the scheme they make a positive association with your company or benefits brand and, after all, this is what we are here to make happen.

“... we have seen a sea-change in employer demands for precise and meaningful MIS in order to make every penny of benefits spend count. It’s no longer sufficient to talk about rules of thumb or to justify provision on the basis of employee benefits popularity polls. At an overall level, employers want to know how their spend compares against the past, against budget, against competitors etc and demand empirical evidence to show that employees use and value those benefits. At a segmented level, employers want to know which parts of their organisation are engaged and the degree to which engagement occurs across different product sets.”

George Farrow,Senior Product Manager

Equiniti

Fig 3: Top 10 Categories - Offers Viewed

Fig 5: Top Categories by share of spend

Fig 6: Top Categories by number of transactions

Fig 4: Top 10 Retailers: Quarter to 30th Jan 08

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If we’ve got to grips with the language of employee benefits as the first step to building the business case – deconstruct then reconstruct – we’re on the way to making a sound, dispassionate case for rewarding employees with more than just their salary.

Let’s not drive up our own exhaust here: benefits, even the most highly desirable benefits, don’t pay the rent, salaries do.But a good employer aspires to offer an employment package and not just a straight wage, to make the worker engage with the organisation in a positive way over and above the all-important but soon taken for granted bread and butter of the payslip.

This needs a rounded approach to employment relations and reward, as well as aspiration on the part of the employer to rise above the transactional nature of some employment relationships. It needs benefits.And the benefits with the best cost/return ratio are Fat Diamonds.

The business case for employee benefits: Part 2 – Why Fat Diamonds are an employer’s best friend.By Helen Craik, Director of HR Policy, Asperity.

The model

Let’s consider benefits against 4 continua: cost •hassle factor •value to employer •value to employee •

It becomes clear that a benefit which is low cost, low hassle and has high employer and high employee value is a must-have, the no-brainer benefit employers should include in their employment package as standard, for everybody, from day 1.

Equally, a benefit characterised by high cost, high hassle, low employer and low employee value should give any organisation pause for thought and might be labelled a ‘dustbin’ benefit. It is easier to make decisions about whether or not to include these two types in a benefits package; more difficulty comes with the high value, high cost benefits or low hassle, low value ones.So, of course, some questions have to be addressed before the plotting takes place.

The questions

What is ‘low cost’? How much admin is enough to take an employer over the ‘low hassle’ threshold? How much hassle is too much hassle? And how do you arbitrate on employer v. employee value? If very few employees value a benefit very highly, how does that stack up against lots of employees valuing a benefit only somewhat?The table identifying Benefits Additional To Salary from Part 1 of this discussion is a good starting point to quantify these attributes and is adapted below. Some of the findings are straightforward and broadly non-contentious and some are more complex. Salary sacrifice benefits (except possibly salary sacrifice pensions) for example are low-cost. But not everyone will agree that a final salary pension scheme, necessarily has a high value to employers. HR professionals, employers and employees may have their own view on where certain benefits sit on the continua.

Benefit

Employer-funded pension Total reward/remuneration statement Employee discounts Company car Car allowance Childcare vouchers Cycle to work Mobile phone salary sacrifice Season ticket loan Staff party Independent financial information Private medical insurance Life assurance Permanent health/critical illness Insurance EAP Dental/optical insurance

Cost

High Low Low High High Low Low Low Low Low Low High Low High Low High

Hassle

High High Low High Low Low Low Low Low Low High Low Low High Low Low

Employer Value

High High High High High High High Low High High Low High High Low High Low

Employee Value

High Low High High High High High Low High Low High High High High High High

Grouping

Thin Diamond Question Mark Fat Diamond Thin Diamond Thin Diamond Fat Diamond Fat Diamond

Question Mark Fat Diamond

Question Mark Question Mark Question Mark Fat Diamond

Question Mark Fat Diamond

Question Mark

Thin Diamonds and Question MarksHighly desirable benefits – Thin Diamonds - come at a considerable cost and will be right for some organisations and either prohibitively expensive or not right for others. The cost takes them well out of the must-have, all-employee benefit and makes them either specific to a role or level of seniority, or, in the case of employer-funded pensions a major investment beyond the means or spending inclinations of many organisations. That said, employers need to consider now the impact of compulsory contributions to employees’ pensions which will come into force in 2012. This will move employer-funded pensions from being an optional benefit to a core benefit, similar to holiday, in as much as the law dictates a certain amount must be provided but enhancing this entitlement is up to individual organisations. Question marks need careful consideration but in essence, to be a good employer with a desire to retain and cherish your staff, if you can afford them, do. While the maths is not as straightforward as for Fat Diamonds, the message a good benefits package sends to employees is very valuable in itself.Fat Diamonds which really are an employer’s best friend.

There won’t be universal agreement on how much trouble, in the overall scheme of a year’s workload, it is to organise a staff party; in some organisations it’s the nightmare that no-one wants and in others it’s fun and a welcome break from less exciting tasks. Recent research shows that employees won’t necessarily thank their employer for a do anyway, with 63% of workers apparently preferring not to go to their work’s Christmas party¹. Death-in-service benefit is likely to have a much higher value to employees with dependents that those without – and will likely have high value to any HR professional or senior manager who has faced the distressing task of advising the dependents of an employee who died in service that outstanding wages are the only monies due.

But in quantifying BATS, just as in any ‘soft’ measure, the fact that it is tricky and open to debate should not stop the process - you have to start somewhere, so here goes.

The Groups

Interestingly, none of the benefits come out as a ‘dustbin’ – nothing is high cost, high hassle, low employer and low employee value, meaning it would rarely have a place in a benefits scheme and, without a compelling historical or person-specific reason for retention, would be consigned to the benefits bin by a logical employer.

That leaves 3 groups:Fat Diamonds• - low cost, low hassle,

high employer value, high employee value: every organisation should offer these benefits

Thin Diamonds• – valued but expensive, have them if you can afford them

Questions marks• – exactly that, you need to give these careful thought

Fat Diamonds

Benefits which an employer can add to employees’ salaries or wages for little cost and administration, and which have a positive impact disproportionate to the low cost of the benefit, are ‘fat diamonds’. Take-up levels of some of these benefits may not sound impressive but the barriers to providing them are so low that employers should include them anyway. In addition to the considerable value of each of these benefits to people who do use them, even employees who don’t will see them as being a desirable add-on to their employment – if a colleague dies in service and all the employer has to offer is the remains of the weekly wage, the PR is dreadful and the simple human cost more so. If employees don’t want to cycle to work personally, they will see the sense in encouraging others to do so and will probably like the idea that they might, one day when it isn’t raining, decide to cycle in themselves on a tax-efficient bike. And most employees expect their employer to offer access to discounts on various goods and services.

From the table opposite and the diagram below, it can be seen that the Fat Diamonds are:

A discounts scheme•Childcare vouchers•Cycle to work scheme•Season ticket loan•Life assurance•Employee assistance programme•

Different xxxxxxx makes the benefits low cost This might be because of collective buying power (e.g. discounts or death-in-service) or legislation (e.g. childcare vouchers or cycle to work schemes) but whatever the underlying cause of the advantage, employers need to pro-actively consider offering these to staff. Reasons for not doing so range from ‘never thought of it’ via ‘too complicated’ to ‘we don’t do benefits’ but employers need to get over these imaginary hurdles and raise the level of the psychological contract with employees by adding Fat Diamonds as standard.

For well under £50 per employee per year, an employer can have nearly all of the benefits in the ‘Fat Diamonds’ group and the return on this investment is significant.

A benefits offering with at least these components turns a wage into a package and raises the employer above the run-of-the-mill. Get the Fat Diamonds.

Employer value

EmployeevalueHigh High

Low Hassle

Low Cost

Benefits Connection from Asperity 15

Building the business case for employee benefits:Part 1 – defining the proposition.By Helen Craik, Director of HR Policy Asperity

Employee Assistance? A look under the covers at what happens when your staff need a helping hand.By Tim Cross, Helpdesk Manager, Asperity.

14 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk

With a busy and well used rewards programme running at over 100 UK based organisations, you can imagine that the Reward Gateway helpdesk sees its fair share of the action. Asperity differs from many VB providers by providing a multi channel employee helpdesk run in-house with Asperity’s own staff. With extended opening hours from 9am to 7pm Monday to Friday and 10am – 2pm on a Saturday, employees get plenty of chances to find a friendly voice on the end of a phone. The phones are on everyone’s hand – there is rarely a call queue or delay in answering, whether that means the Finance Director or Communications Managers picking up – everyone is trained in helpdesk call handling. Even website and email feedback has an SLA of a single working day for a proper human response.Chris French, works the evening shift at Asperity’s helpdesk, he says:

“The helpdesk is one of the most interesting parts of Asperity to work in. We can have any query from not being able to log in, which is just a simple case of resetting a password, or ordering of gift vouchers, to more complex issues dealing with Cashback queries, discount hiccups and occasional misunderstandings with retailers. Of course 99% of discount transactions run very smoothly but when you have the volume of activity that Asperity has across all schemes you do get occasional things that we need to intervene with and sort out. As well as problems we take a lot of employee suggestions which we pass straight to the development team, for product improvements or across to supplier management if it’s an idea for a new discount or supplier. Also we sometimes get hiccups with an employer’s own systems and we need to liaise with their IT departments to

sort things out – it all makes the job more interesting and

varied.

HELP DESK0845 299 0908mon-fri.9am-7pm sat.10am-2pmWhat do we mean by ‘employee

benefits’?

The case for employee benefits requires the audience to understand the terminology. This means a shift in language, away from terms which are confused and confusing. The term ‘voluntary benefits’ is used differently by industry specialists, HR professionals and employers. It’s in the interests of employers that the workforce appreciates the value of their remuneration, and this needs clarity of terminology.

Drawing the picture

A picture speaks a thousand words and model helps a set of variables make sense.The “Fat Diamond” model for benefit evaluation maps:

cost•hassle•value to employer •value to employee •

resulting in a structured view of benefits.

The benefits depicted as “fat diamonds” in the model are ‘givens’ for any organisation that aspires to offer an employment package as distinct from a wage. These benefits are low cost, low hassle, with high value to employers and employees. Fat diamonds are cheap, easy and popular.

The others need to be considered carefully because a decision will be right for some companies but not for all. For the Diamond model to work as a decision-making tool, the language of Benefits Additional To Salary (BATS) needs an overhaul.

Glossary

The following terms are in common use:voluntary benefits•core benefits•salary sacrifice schemes•

To lots of employees they won’t mean much. Even amongst HR professionals and reward specialists there won’t be total commonality of understanding. Employee Rewards Watch 2007¹ highlights the confusion, with many respondents unclear which benefits are flexible, voluntary and/or core.

As a start point for change here’s a few working definitions:

Voluntary Benefits

‘Voluntary benefits’ is used to describe a benefit for which an employee chooses to pay – ‘volunteered’. The CIPD defines ‘voluntary benefits’ as “where employers arrange bulk discounts with external providers”. In addition Cycle to Work and Childcare Vouchers are voluntary benefits, but they are not discounted - the benefit to staff comes from legislation: so the CIPD’s definition is not comprehensive.There are benefits which an employer funds but an employee chooses not to take, for example PMI. Are these ‘voluntary benefits’? Regardless of who pays, these are Benefits Additional To Salary.

A mobile phone paid by the employee out of gross pay under a salary sacrifice arrangement is a voluntary benefit, as is employee-paid PMI. Unlike a phone bought under a salary sacrifice arrangement, PMI comes out of net income if it’s employee-funded. Funding apart, these are both Benefits Additional To Salary. It’s clear how the language disengages employees and contributes to the low take up in some areas.

Core Benefits

The core benefits are those that a best-practice employer might be expected to provide and which, though the employee might adjust them, “may not be entirely removed from the package”.² Thomsons Online defines a core benefit as “a benefit that the company insists all employees must take a minimum level of”.

There is agreement here that for a benefit to be ‘core’ an employee cannot opt-out of it – but the confusion amongst employers is well illustrated in Thomson’s survey when, for example, 10.7% of employers describe discounted shopping as a core benefit and 1.8% describe childcare vouchers in this way. Employers are not prescribing that employees must do shopping or take childcare vouchers! The confusion comes because employers are providing the service to all employees, but use of the benefit is clearly voluntary.

Salary Sacrifice ‘Salary sacrifice’ benefits are paid from gross salary with tax and NI advantages. The clumsy term is not surprisingly poorly understood by employees.

Where does that take the argument?

Having sorted out the imposters, real BATS fall into neat categories:

pensions•cars •health-related •low-cost – employee discounts, •

childcare vouchers, cycle-to-work, mobile phone, season ticket loan, independent financial information, life assurance.

It is in the low-cost category that employers will find their ‘fat diamonds’.

The point in demystifying benefits language is to make it accessible. It won’t take away the need to communicate but it should encourage take-up. Whereas talking about ‘salary sacrifice’ may be an accurate description of a tax concession, it’s unhelpful to use this technical phrase to employees.Describing all non-cash elements of remuneration as Benefits Additional To Salary, BATS, is simple way to define these. And having defined the language, the way is clear to build the business case.

One of the great things about working on the Asperity employee helpdesk is that we are right in the middle of the office – next to development, corporate sales, supplier management and finance. Being in a single open plan office means it’s really easy to communicate and get problems solved quickly – everyone is together and we work really well as a team.

Investigation forms a big part of the process, and occasionally have to pretend to be a shopper to check retailer websites to see if the discount they should be providing is clear, visible and current. Email and online queries make up about 85% of the contacts we receive but we are still available at the end of a phone for those who prefer to call. This is great for guiding people through processes whilst they are on the phone with you, and helps to resolve their issues at the first point of contact. Sometimes people just need talking through the service and just want a friendly voice to help - this goes towards making us better in our service to you. After all, we are here to help.”

Asperity’s Helpdesk Team: Craig, Kat, Tim and Lea.

This is a précis of an article which first appeared in a previous Benefits ConnectionYou can download a copy from our website at www.asperity.co.uk/whitepapers

016 Free, fully functional demo of Reward Gateway for all readers at http://vip.rewardgateway.co.uk

Now voluntary benefits

have earned their

place at the core of your

Total Reward package

Your annual remuneration package

Your current basic salary

£20,500.00

Your last annual bonus £2,500.00

Your last profit related pay £1,500.00

Benefits being funded by your employer £10,350.38

Benefits you are funding through salary exchange contributions £1,500.00

Estimated tax and NI savings as a result of salary exchange contributions £471.00

Savings being made as a result of purchasing discounted vouchers £355.00

Savings made through the myshopping discount scheme £1803.46

Total: £38979.46

Make sure your staff see the value of your voluntary

benefits with myshopping powered by Reward Gateway

from Jelf Group plc and Asperity Employee Benefits.

Total Reward Statement for Tom Smith

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ERB RG August Advert.indd 1 23/8/07 08:32:33