Weighing up the pros and cons of personalised reward


It’s clear that employees’ needs are continually changing and not all employees will have the same priorities when it comes to workplace benefits. Therefore, their employer’s overarching reward strategy should ideally reflect this and move towards a more fluid approach. Employers should aim to treat their employee experience in the same way as their customer experience and personalisation of reward is one way that they can reach out to their workforce.  

stones on scale

Many forward thinking workplaces are already personalising their reward offering, moving away from a one-size-fits all package and creating reward packages that encompass lifestyle philosophies such as wellbeing and social responsibility. This all sounds like a good idea, but let’s consider what the advantages and potential drawbacks of the personalisation route are.

Employees feel more valued
The package employers offer their workforce is a great way to boost employee engagement – however, it can often miss the mark by not being relevant to all employees.  Having the right mix of benefits, available when employees need them, can lead to a workforce that feels valued and will boost the overall motivation and morale of employees. The benefits of opting for the personalised route will mean that the many interests and priorities of the workforce can be catered for. Employers who have done this successfully will often use:

  • Employee data to understand current trends and usage of the overall benefits package, e.g. around pay day or by demographic and geographical location  
  • Continual “nudges” to remind employees how their package can benefit them at various stages of cyclical change during the year, e.g. pay reviews, bonus time or personal lifestyle driven changes.

The optimal method to find out what employees really want is via small focus groups. However, if time or resources are limited, a firmwide survey is another option – though this will deliver quantity in responses – the tick box survey will not give a true insight into what people really value and want, when compared to a focus group. 

Employers who analyse employee trends and data as well as obtaining feedback can better understand the gaps within their current offering and revaluate their spend to offer benefits that their people need.  If they have something which REALLY suits their workforce, employers can reap the rewards of a happy and motivated workforce that feels that their employer is taking their personal needs and priorities seriously. 

What about the downsides?
Whilst everyone seems to be on the personalisation bandwagon there are wider issues here to consider. First, building trust with employees when handling their data. Secondly, having the time and resource to deliver an updated benefits offering and thirdly, having the necessary budget to achieve a personalised approach to their reward offering. 

Employers hold huge amounts of employee data. For example, an employer knows when someone joins their organisation, receives a pay rise and how this is used (e.g. left as part of their monthly salary or diverted to other benefits or additional pension contributions), has children, turns 30 years old etc.  Whilst this data can help employers segment and target their people to take timely action, issues can arise regarding how that sensitive information is handled. For example, if assumptions are made based on demographic information as opposed to their employees’ actual needs and whether this data is shared with third parties, such as benefits providers or advisors.  

GDPR is another important factor to consider. A data mining exercise into employees’ preferences multiplies the amount of personal data on file, therefore multiplying the risk. Be sure to have robust processes in place such as using an online benefits platform with a reputable provider and make sure that any data held on employees is stored in a GDPR-compliant manner. 

There is a huge time commitment associated with collecting the relevant data relating to employees’ benefit priorities, which will vary depending on the size of an organisation and whether surveys or focus groups are used to gather data. The right technology can help lessen this time commitment and is a must when trying to scale personalised benefits, to help overcome the challenge of understanding potentially thousands of employees. But, we know from our own research with the CIPD that less than half of the HR teams that responded to our survey have the right technology in place.

Finally, depending on the sorts of benefit choices that come out of data gathering and feedback exercises, HR budgets could become rapidly depleted, for example, if all employees opt for an expensive gym membership as one of their benefits of choice. The key here is to put on offer a wide range of options that employees can pick from, but ensure that the potential cost implication of employees opting for benefits which are funded or part funded by the employer, plus tax and NI, is factored in.  

The future of personalisation… 
Our recent joint survey with the CIPD revealed that while personalisation is increasingly important,  there is minimal focus on personalisation of benefits – at least for the next two years. Perhaps the downsides are still outweighing the positives for many organisations. 

It is clear that a motivated and engaged workforce is what all good employers strive for and in the future personalisation of benefits packages could help to achieve this longer term strategic objective.   

The author is Dipa Mistry Kandola, Head of Flexible Benefit Services at LCP. 

This article is provided by LCP. 


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