What the science says: Do voluntary benefits attract employees?

I often get the chance to ask an existential question of companies I work with – “why do you offer employee benefits to your employees?”

Ask any company, and alongside “I don’t know”, “we offer benefits???”, and “because we have to”, you’ll often hear an HR Director or Reward Manager reply, “to attract and retain the best talent”.

We throw the phrase around like it’s an obvious truth – benefits get us the best staff, dummy! But did we really take a look to see if that’s true?

We know that some benefits are simply a hygiene factor when recruiting talent – a good medical plan and a sensible pension contribution, for instance, are essential for many industries.

Equally, we know that some companies are able to offer unique and/or highly valuable benefits that help seal the deal – Google’s free canteen, or free entertainment packages for Sky employees, are some well-known examples.

For most employers this is dreamland, however. The money simply isn’t there to provide three square meals a day to all employees, and we don’t all offer such exciting products to our clients as sports and movie channels!

Yet companies spend a fortune sourcing and delivering a plethora of different voluntary benefits to employees in the hope that they will be attractive to recruits.

We wanted to test whether this money is well spent when it comes to attraction” If a benefits package is designed to attract people to come and work for us, then surely new joiners will be piling into the voluntary benefits like its Black Friday?

Well no, actually.

Recently we worked with a UK-based multinational and uncovered evidence that pointed towards it all being a big waste of effort. Across the particular sample we were studying (about 100,000 employees across 50 firms), 56% of new joiners (service less than one year) selected no voluntary benefits at all, with a further 29% of employees selected just one benefit. If these benefit packages have been designed to attract, then why the awful take-up amongst new employees?

Voluntary benefits, like all retail products and services, rely on two things – (1) advertising – or communication as we tend to call it – and (2) accessibility – a shop. If an employee is going to part with their own money they need a place to part with the money, and a good deal of convincing that parting with it is a good idea.

But in our industry these two things are a rarity for new recruits.

Let’s start with advertising. Many new joiners might get a paper pack telling them about their benefits and some may be shown the intranet where information about the benefits are held. But how many know about the voluntary package before they sign their contract, so that they are primed customers when they walk through the door?

And then there’s accessibility - or shop opening times, if you prefer. In the world of voluntary benefits that means election windows.

Do we expect our employees to buy benefits when the shop is only open for three weeks of the year?

So we know that many firms struggle in keeping the shop open, and advertising the goods, but there is something more fundamental at play here. A shop will only be successful if it’s selling stuff that people want to buy.

This is a big problem – 60% of firms in the sample offer private health screens to their employees on a voluntary basis, but take up of this benefit is less than 2% across the board. Why is the health screen taking up shelf space and advertising inches?

Of course, it’s more complex than that – there are reasons behind pushing certain types of products at employees beyond purely offering them a good deal – but ultimately we don’t want our shop filled up with products that sit on the shelves getting dusty.

Man in supermarket

So it is good to now see that some employers are beginning to get smarter about this - applying consumer and behavioural analytics to voluntary benefits in order to better understand if the benefits being offered are right fit for the particular demographic breakdown of the workforce. This can tell us so much about the success or otherwise of our benefits programmes, and help us understand where to change our products, and target our advertising to drive up sales.

By looking at actual behaviour we are better able to see which benefits are resonating with which people.

In some ways this is a learning process: what may be popular with one set of employees may simply not resonate with another bunch. But we can get to a good starting point by analysing behaviour from similar groups of people, then refining this over time. And remember, people’s preferences and circumstances are continually changing and benefits offerings need to better reflect this. It’s exactly the same with a shop that brings in a new product – it won’t quite know the success of this until it’s actually out there on the shop floor.

So – do voluntary benefits attract employees?

Yes, they certainly can do. But simply offering a whole host of benefits without properly understanding who they’re aimed at will likely fall short.

Why wouldn’t I be more inclined to apply for a job or sign a contract if I knew I could protect my family, work more flexibly, or save money on products I would normally buy elsewhere? But as I look across the market place, it’s clear to me that many of us could do a much better job at this attraction business.

We need to start thinking more like shop keepers – have products relevant to your customers, keep a tidy window, keep the shop open, and tell people it’s there.

David Tourle is senior benefits & reward consultant at Capita.
This article was provided by Capita Employee Benefits.

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