Voluntary benefits: helping you improve your employees' financial wellbeing
Traditionally voluntary benefits have been an additional perk offered to employees, but more and more employers now realise that voluntary benefits can be used in a strategic way to help motivate employees, and recruit and retain top talent.
Employers are now making voluntary benefits part of their core offering with open enrolment periods and the ability to change options at any time. There are many reasons behind this change but perhaps the main one is that voluntary benefits are extremely effective at improving employee financial wellbeing.
Research from Xerox has shown that over half (55%) of companies are either working on implementing financial wellbeing strategies, or plan to within the next three years, while 38% have a program already in place.
The strategic role of voluntary employee benefits
Voluntary benefits play an increasingly important part of an employees overall reward package, and as such organisations are looking at them in a more strategic way. They help employers strengthen the reward package they are able to offer employees while keeping costs down, making them extremely cost-effective. And because voluntary benefits enable employees to choose the benefits that are most relevant to them, choice encourages participation, and participation improves employee engagement.
According to the Xerox research the main reason for integrating voluntary benefits with core benefits is to address employee financial stress that can lead to health issues.
Other benefits of this approach also include:
- Reducing absence
- Increasing productivity
- Reducing employee grievances
- Providing awareness and education about the need for financial protection
Encouraging employees to sign up to voluntary benefits
How do you encourage your employees to sign up to voluntary benefits? Encouraging participation is often a challenge for HR and reward professionals.
Our four-step process will help you boost your participation rates and improve employee engagement. To encourage your employees to participate in your voluntary employee benefits you simply need to get to know your employees, understand what they want and what would make their lives better and, most importantly, tell them about your benefit programme.
1) Segment your workforce
Before you offer voluntary benefits you need to get to know your employees, and the demographics of your employees are important. Employees don’t fit into one big homogenous group; people at different life stages will want different things from their benefits package. For example, older employees approaching retirement will be interested in different benefits to those just entering the workplace or those with young families.
Marketers can teach their HR colleagues a lot about segmentation, they will segment their audiences by needs and lifestyle and they same principles can be applied to your workforce. Learning about your employees will help you deliver a voluntary benefits scheme that motivates employees and helps you communicate with them.
Your action: Segment your employees by grouping them together, options include by age, lifestyle or generation.
2) Get feedback – what do your employees want?
If you want to use voluntary employee benefits to improve engagement then you need to offer the right benefits for your workforce, which means understanding what your employees’ want and what would make their lives better.
Maslow’s Hierarchy of Needs can also provide some insight into what your employees want from their employee benefits. It highlights how you can provide benefits to your employees that satisfy their biological and physiological needs (level 1) and their safety needs (level 2) then you’re enabling them to perform better. As an example, it’s difficult to motivate people to perform if financial problems are causing stress and worry outside of work.
Your employee benefits strategy should include regular feedback sessions as the needs of individuals constantly change and they benefits that they needed last year won’t necessarily help them next year.
Your action: Ask your employees what voluntary benefits they would like to access using surveys, focus groups and staff meetings, and don’t forget to include questions that help you identify what employee segment they belong to.
3) Offer a wide variety of benefits
Once you know what your employees want then it’s time to tie that information in to your employee segments, group people by their needs and to look for trends. This will help you identify the types of voluntary benefits that will appeal to different segments.
There is an extensive a range of products that you can offer through a voluntary benefits programme. As a result you can appeal to a diverse, multi-generational workforce. Benefits such as income protection and healthcare benefits are usually offered as standard to senior management, but they can be offered to all employees as part of a voluntary benefits scheme. These types of benefits have a high perceived value and provide employees with a safety net if the worst should happen.
You can also offer employees benefits using a salary sacrifice scheme. This can help them manage their finances by spreading the cost for things such as an annual car-parking pass, computers and holiday over 12 months or more.
But perhaps the most popular of all voluntary benefits are those that help employees manage their finances, such as cashback cards and discounted high-street retail voucers. They can instantly make a difference to employees’ finances and budgeting which is why they are so popular.
Your action: Ensure you offer an extensive range voluntary benefits based on the needs of your workforce.
Employee benefits communication is the key to success. Employees not only need to know your programme exists and what options there are, but they also need information so that they have the knowledge and confidence to make use of the benefits that suit their own personal situation.
You’ll need to have a multi-pronged communication strategy in order to reach all your employees. Use the segmentation and needs analysis you’ve done in the previous three steps to decide what messages each audience needs to hear about each benefit you offer. You should also use your segmentation analysis to understand how your employees like to receive their communications.
Your messages shouldn’t be about, “Aren’t our benefits wonderful!” it’s about letting your employees know how the benefits you are offering them can improve their lifestyle, for example “Save up to £500 a year with our staff cashback card!” Demonstrate how the benefits are relevant to them and the positive effect they can have on their lives with real-life examples and case studies.
You will need to use multiple channels of communication to ensure all employees can access the information. Posters, presentations, emails, online staff portals, management information packs, SMS messages, benefits leaflets, and staff handbooks are all good ways to communicate and engage with your employees.
Your action: Think about your workforce – how do they like to be communicated with? Is there already an intranet or such like where you could promote their extra benefits?
Voluntary benefits are now part of a wider approach to employee engagement with many employees expecting to be offered voluntary benefits as a standard part of their total rewards package. They play a strategic role, supporting your organisation in achieving its business goals, and all importantly they help your employees improve their financial wellbeing and reduce stress (a great impact on happiness and productivity)
This article was provided by Sodexo.
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