Staff overwhelmingly prefer to choose their own rewards from a range of offerings. Peter Crush looks at how the flexible benefit has now become the reward platform of choice


There can be no doubting that flexible benefits has been the option du jour for the past few years. With the homogeneity of workforces long gone, given their multi-generational nature, the opportunity for staff to receive rewards according to their needs has been the standout tool for gaining much-needed and loyalty.

A survey conducted by Simply Health last June revealed more than half (51%) offer all their benefits on a flexible basis, and this very much fits into what employees want, too. The same research found that an overwhelming 91% of employees also preferred this approach.

While precise data is sketchy, overall Willis Towers Watson finds about a third of firms now offer some form of flex and, according to AON Hewitt, the reason is compelling: among those with a flex scheme, 80% report improved employee retention and recruitment, while 66% report better staff engagement.

So far so good: but if this is the picture of flexible benefits past – what does the future hold? Have the choices offered by flex reached a peak, what innovations can/will likely happen, or is wider adoption of what’s already there the best that can be hoped for?

The range of benefits has certainly increased – one survey finds 10% of firms offer 20 benefits or more via this option – and if there’s one fashion that’s going to stay hot, it’s still trying to find something new to add to the ever-growing mix.

“The big trend for 2016 is that if the days of salary sacrifice are numbered – as has been indicated by the recent Budget – we may actually see a return to flex as a tool for engagement, rather than being the tool for saving money it started to become,” says Jeff Fox, head of strategic benefit consultancy at Aon Employee Benefits.

“This means it’s not about chasing take-up rates as such, but offering staff a range of benefits they truly want.”

Balancing the options

There could be both positive and negative impacts to this. “Employers could be tempted into offering too many options,” adds Fox, and veering away from the culture they want to create. According to Jack Curzon, senior consultant at Thomsons Online Benefits, the onus should very much be on bosses to keep this in check.

“I think the real future has to be around personalisation,” he suggests. “This is different from more and more product additions. It’s also my view that flex is only actually as flexible as the technology behind it. While we’ve already seen a move to opening up flex choice windows, what providers should start recognising is that they can’t simply add more and more, and be something to everyone. Employees need to be able to bespoke their plans themselves.”

Thomsons’ solution to this has been to introduce a ‘reimbursement manager’ to its Darwin product. Launched last year, it enables staff to create a pot of money from their flex allowance, but spend it on products that might not be included on their actual benefits portal.

“If an employee would rather use £50 from their cash plan allowance to buy a pair of trainers and go running to improve their health this way, then why should staff be prevented from doing this?” he asks.

“By having a reimbursement fund, staff buy their trainers – or whatever – and then effectively ‘expense’ it back, with the fund topping up the employee’s pay for that month.”

Not only does the flexible benefit actually become flexible, Curzon says employers can still ring-fence funds they want to preserve, and maintain some minimum cover, while enabling staff to feel they have real choice.

The demand for more employee choice is reflected in the launch of a raft of products, such as Phonescheme – which helps employers offer discounted smartphones to staff – or Edenred’s salary sacrifice scheme TechSave, launched earlier this year, that gives employees savings of to 35% against technology purchases compared to high street prices.

Meanwhile, SimplyHealth developed its Everyday Health [cash] Plan specifically to work as part of a flexible benefits scheme, by offering not only the chance for staff to change their cover during specific windows, but also when people’s lives change – such as marriage or the birth of a child.

SimplyHealth director Raman Sankaran says: “Flexibility within systems will be more pertinent than ever, but this also includes other areas, too. One massive factor overlooked is single sign-on – the ability for staff to access their flexible benefits without having to remember additional passwords.

“More and more, I see that the future of flex isn’t just about getting products right, but the platform too.”

Jamie True, the chief executive of global employee engagement platform, LifeWorks, agrees: “If people enjoy interacting with an application, they are more likely to use it. From a millennial point of view – employees have simply come to expect a feature-rich environment.”

Adapting to a changing world

Flexible benefits were already beginning to be used more strategically by companies, and experts argue this will continue.

“There’s a growing bond between pension and flexible benefits, giving employees the opportunity to divert cash away from salary to things such as additional annual leave, a cash ISA or paying off student loans,” says Clare Sheridan, head of flexible benefits at Capita Employee Benefits.

“Already in 2016, we’ve seen flex technology be used to help administer and manage the recent changes to the annual allowance rules,” says Matt Nelson, consultant, Xerox HR Services.

“Employers don’t have to help with their staff’s personal tax affairs, but they are being pro-active when people are at risk of breaking through their allowance. One solution we recently implemented was introducing an additional pension benefit on to our flex platform with a fixed core value of £10,000, which can be selected as and when an employee feels necessary.

“Any contributions over this limit can then be re-directed back to the employee as additional salary, and they still have the option to make an additional voluntary contribution should they wish.”

If all of this sounds just a little orchestrated, it probably is, but it seems to be what employees want.

“Staff look for benefits that meet their needs and interests, and schemes that support and enhance both their personal and professional lives,” says Jamie Mackenzie, director at Sodexo Benefits and Rewards Services.

“Health and wellbeing is 2016’s hottest focus so far, with staff looking to prioritise their physical and mental health alongside an attainable work/life balance. This means that flexibility, fitness, and wellness are dominating the benefits sphere.”

And it could just be that the health space creates what some are saying is the next logical direction for flex: more interactivity. “Traditionally there’ve been benefits portals on desktops, but not much proper development with apps,” says AON’s Fox.

“This will change, there is demand for it; we’re looking at it now, and there could be some announcements in the next few months.” He adds: “The idea is that buying flexible benefits should be like buying things from other shopping apps.”

Adds Sankaran: “What could be really interesting in the next phase of flexible benefits is the inevitable merging of different technologies – especially in the health and wellbeing space.”

He adds: “I can see how wearable devices, like Fit Bits – which track activity – could be linked to flexible benefits portals, where people can demonstrate how their lifestyles are changing.

“Someone who’s able to demonstrate being much healthier in this real-time way might even be able to buy cheaper health cover with their available cash pots.”

Interesting times really are ahead.

Flex in action

What we have:

At media agency Golin, its flex focus is wellbeing allowances.

The firm recently launched ‘Life Time’ – a policy aimed at improving health and wellbeing. Included is a £600 wellbeing allowance that can be spent on a variety of ways – from yoga to gym membership.

According to Golin’s managing director Bibi Hilton, the firm is responding to the need to keep offerings fresh: “Staff want flexibility and personalisation in the way they work,” she said. “We’re responding to these cultural changes in the workplace. We believe the ‘one size fits all’ concept of everyone being in the office nine to five and having the same holiday allowance is outdated.”

What we want:

Fletchers Solicitors’ headcount has grown from 90 to 320 in just two years, and Sara Duxby, its head of people, is now looking at adding flexible benefits. The firm already has a flexi-time scheme, whereby overtime hours can be saved up and used to take days off.”

Duxby says: “Staff can take up to 12 of these extra days a year, so any system would have to accommodate this. If we did make the move, we’d want more of a total rewards offering – people are motivated by very different things. For some it’s money to take qualifications, for others it’s a car. Here, 70% are under 30, and two-thirds are women. Our culture here is recognition, so we’d also want a tool that enabled people to built up points.”