Return on benefit spend has been described as one of the most elusive goals for HR departments, but finding ways to even assess the evidence and measure results can present real problems. Seán Flynn investigates
“Then the finance director comes along and says: ‘Why have we got this expensive pension scheme that nobody appreciates?’ You can understand their frustration. Correspondingly, if you take life cover, it has a high perceived value.
“People think that this is anything up to £5,000 – but in reality, this is a very competitive market and it actually comes in at around £300.” High perceived value can be a fickle benchmark but it is not without its attractions, particularly as a tool to draw employees into engaging with their company benefits platform.
“If you went back ten years, most employees would perhaps value free company car parking more highly than the pension because they didn’t realise at that time how important the company pension scheme was,” says Cotton.
However, while Brown believes offering things high on presentation and in perceived value – such as cinema tickets or shopping vouchers – does bring staff to the benefits section of the company websites, Chadwick is less sanguine about the attraction of what he dubs the “fluffy side” of benefits.
He says: “The other, fluffier stuff, like bikes, retail discounts and cinema tickets, is great if you have the time but you have to ask yourself – how much time do you want to devote to those benefits? Because if you are talking about ROI, from an HR perspective, are you talking about recruiting someone or stopping them from leaving – will they do that for a bike or cinema tickets?”
In the current, rather fraught economic climate, it should come as no surprise that, even aside from salary and benefits, HR professionals are currently reporting that job security and corporate culture have risen significantly in the priorities of potential recruits.
Brown explains: “A company in the current climate should be able to say, ‘Look, we are not the most attractive on pay, but we are really going to look after you and your family,’ or, ‘We offer the best training programmes out there’.”
Different packages
Brown adds: “There is quite a lot of scope to offer a different package. Tech start-ups are a good example in this instance. “Tech start-ups as a rule have no cash – there may be a dream of stock, but they can sell themselves as cool places to work. And companies come to people like us and say: ‘What’s everyone else doing?’”
The complexity of the task facing HR, benefit and finance directors who wish to implement a more empirical and less aspirational rationale to justifying benefit spend can sometimes be daunting. However, there are a number of considerations that can be taken into account regardless of what type of company or reward may be under scrutiny.
When first embarking on this difficult task, four ideas to consider – and questions to ask – are as follows:
- Set reward objectives and criteria. What is the company trying to achieve with its benefits scheme? What is important to the organisation and how can it be measured?
- Evaluate the effectiveness of the current benefit scheme. What is the company trying to achieve with this programme and how is it working? Ask if they have evidence to support this.
- How is the proposed benefits scheme likely to affect the delivery of desired outcomes?
- What is the best way to implement the improved scheme and how best can the efficacy of the scheme be demonstrated?
