Strategic HR Review

Creating engagement through employee benefits

Terry Pegg

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Terry Pegg, (2009),"Creating engagement through employee benefits", Strategic HR Review, Vol. 8 Iss 2 pp. 5 - 12
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Creating engagement through employee

benefits
Terry Pegg

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Abstract
Purpose The potential impact of employee benefits on individuals and their dependants is significant
and growing as new products and solutions come on to the market. The aim of this paper is to investigate
how benefits impact on employees and the organization as a whole, and how organizations are
choosing to inform their people about the type of benefits on offer.

Terry Pegg is based at AIG

UK Benefits, London, UK.

Design/methodology/approach Research conducted by AIG UK Benefits seeks to provide an

insight into the current employee benefits environment and in particular to the areas highlighted above.
The research consisted of a two-stage study undertaken by the AIG UK corporate research and
development team between November 2007 and January 2008.
Findings The study highlights the differences between the perceptions of employers/HR
professionals and employees when it comes to the awareness and understanding of the benefits on
offer and asks whether employees are really to blame if they fail to appreciate the true value of their
employers voluntary employee benefits.
Originality/value There is an opportunity for HR to improve benefits communications. The study looks
at how one UK retailer has successfully implemented a strong communications program and presents
steps that employers and reward professionals can take to improve their own benefits communications.
Keywords Benefits, Communications, Incentive schemes, Employee behaviour
Paper type Case study

he range and scope of employee benefits are growing rapidly and the products that
are available in todays and tomorrows benefits market have the potential to
impact on nearly every aspect of an employees life. To manage the positive impact of
employee benefits within an organization, the effective delivery of benefits solutions needs to
be a virtuous circle. For benefits to make a positive impact on an individual, the individual
first needs to be aware of and understand the benefits their employer currently offers.
However, to communicate the advantages, scope and potential impact of employee benefits
successfully, organizations themselves need to understand their people, what they want
from individual products and their motivation to acquire them.

Successfully communicating the advantages, scope and potential impact of benefits

presents a real opportunity for employers. Research undertaken by the Chartered Institute
for Personnel and Development (CIPD, 2007) shows that the better benefits are
communicated, the more staff appreciate their employer and, even when employees dont
take up benefits offers, engagement with the organization is increased.
Research recently undertaken by AIG UK Benefits reviews company and employee
views about the provision and communication of voluntary employee benefits (VEBs) to
understand how these offerings can create engagement with a workforce and the
findings further highlighted the importance of the communication surrounding benefits
packages.

DOI 10.1108/14754390910937521

VOL. 8 NO. 2 2009, pp. 5-12, Q Emerald Group Publishing Limited, ISSN 1475-4398

STRATEGIC HR REVIEW

PAGE 5

About the AIG UK Benefits study

The research incorporates findings from a two-staged study undertaken by the AIG UK
corporate research and development team between November 2007 and January 2008.
VEBs are defined as benefits employees have access to through their employer. Employees
are required to pay for these benefits themselves and they are available to staff in addition to
core benefits, such as company pensions and healthcare cover.
Stage one of the research included a qualitative study comprised of 10 interviews with HR
managers and two focus groups of employees, exploring current themes and issues relating
to the awareness, perception, selection and communication of employee benefits offerings.
Stage two was a quantitative online survey with HR managers and individual employees to
verify the issues emerging from the qualitative stage. The research sample included 150 HR
managers, all of whom are involved in the selection and communication of employee
benefits in the workplace, and 500 individual employees, all working for companies offering
standard (core) and voluntary employee benefits.

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Respondents in both stages of the study work with organizations employing over 250 people
and offering both core and voluntary benefits. Over one quarter of respondents in the
quantitative stage worked in organizations employing over 5,000 people.

Benefits provision: is it possible to please everyone?

The reasons behind an organizations decision to offer VEBs are varied, as is evident in AIG
UK Benefits research findings see Figure 1. The wide-ranging reasons why organizations
offer benefits can be linked closely to the culture of an organization; for example, to support
other HR policies and initiatives, such as employee well-being and fitness within the
workplace. However, regardless of the reasons why benefits are offered, it is fair to say that
the selection of which benefits to offer is complicated and time-consuming and that, to be
done effectively, cannot be rushed or undertaken without consultation throughout the
business.
This position is complicated by the fact that many HR and reward professionals do not have
an up-to-date picture of their employees interest in VEBs. HRs perception of employee
interest does not match employees actual usage of benefits see Figure 2. The clear
disconnection demonstrated in Figure 2 between employers perception of employee
interest and employees actual take-up of benefits underlines the opportunity HR
Figure 1 Reasons for offering benefits

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Figure 2 Interest in and usage of VEBs

professionals have to communicate better; both their reasons behind benefits offerings and
the advantages of benefits take-up for individuals.
This position is further supported by figures suggesting that although 80 percent of
employees report they find the concept of VEBs appealing, 38 percent said they had no
interest in taking out the VEBs offered by their employer in the near future. This signals that
although employees welcome the provision of benefits (and are keen to learn more and
become involved in the selection process), what is on offer is not compelling, engaging or
relevant. Or, more importantly, is not being communicated clearly enough to prompt action
and take-up on the part of employees.

Using consultation to engage with employees

The research also highlights a mismatch between HR and employee perceptions of the
degree to which employees are involved in the process of selecting benefits. Figure 3
illustrates this contrasting picture when it comes to employee participation in the
consultation process; 86 percent of employers claim to consult with employees, as well as
union representatives (80 percent) and employee feedback committees (87 percent).
However, only 23 percent of employees claim to be consulted in benefits selection, although
82 percent of employees agree that all staff should be consulted.
These findings underline the opportunities open to HR and reward professionals to ensure
consultation takes place and employees are involved. While HR may think they are already
doing this, the fact that employees so significantly contradict this position shows positive
action needs to be taken.

Meeting the challenge of benefits communication

The AIG UK Benefits research confirms the communication of benefits remains an ongoing
challenge for organizations. The differences between the perceptions of HR professionals
and employees about the awareness and understanding of the benefits on offer are clear.
The research illustrates the disparity between employers perceptions that they are
communicating effectively and employees contrasting position (see Figure 4). The general

VOL. 8 NO. 2 2009 STRATEGIC HR REVIEW PAGE 7

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Figure 3 Employer and employee engagement in benefits selection

Figure 4 Perceived ability to communicate benefits effectively

confusion and misunderstanding surrounding benefits communication extends to the

awareness and effectiveness of channels used by employers to communicate benefits.
The research confirms how easy it can be for employers to misinterpret the effectiveness of
communication channels when it comes to talking about benefits. Figure 5 compares
employee awareness of communication channels against those used by employers.
The findings show that employers use a wide range of channels to communicate the
information employees need about company benefits schemes. However, there seem to be
some inconsistencies between which channels employers and employees consider to be
the most effective at communicating benefits see Figure 6. Both employers and
employees tend to agree that the use of company Intranet, company benefits booklets and
communications in pay slips increases awareness. But communications through the
employers most favored channel employee induction is seen as one of the least
effective by employers.

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Figure 5 Communications channels usage and awareness

Figure 6 Effectiveness of communications by channel

The qualitative research uncovered a tendency for employers to rely on the channels that are
most effective at reaching employees quickly and easily. When prompted on the efficacy of
communicating messages, HR managers in the qualitative stage stated the channels most
effective at reaching employees were not necessarily the best at getting the message
across. When the time and cost constraints of marketing company benefits are taken into
consideration it is clear employers veer towards an information push approach.

VOL. 8 NO. 2 2009 STRATEGIC HR REVIEW PAGE 9

 HRs perception of employee interest does not match

employees actual usage of benefits.

However, the quantitative findings also indicate that an information push approach using
channels that reach the maximum number of employees will not maximize awareness and
understanding of the benefits on offer. As a result the importance companies place on
boosting employee loyalty and motivation through benefits is not fully realized; clearly a
different approach is necessary if employers want to improve benefits take-up and increase
employee engagement with the benefits on offer.

The value of getting communication right

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UK retailer Marks & Spencer is an example of an organization that utilizes a variety of

communication channels to engage employees in the selection, delivery and review of
employee benefits. According to Alastair Cooper, rewards manager, the organization places
a high value on getting the communication of employee benefits right. He explains:
Employee benefits are a key priority for the business and they offer us the opportunity to
support employee recruitment and retention and enable us to let our workforce know we are
concerned about, for example, their health and well-being, and that they are valued. In terms
of financial reward, benefits represent an opportunity to offer staff more than just a salary.
He continues: We formally review the benefits offered to employees on an annual basis and,
in consultation with our external partners, we are able to assess the take-up of specific
products and offers and edit the selection accordingly. During the review process we are
keen to balance the priorities of the business with those of the workforce. For example, last
year we were able to offer green energy benefits, which raised awareness of environmental
issues among our people and also supported our corporate Plan A corporate social
responsibility objective.
Employees are encouraged to offer their opinions on the benefits offered throughout the
year and were fortunate that individuals are engaged and motivated to do this. The
company runs business involvement groups (BIGs) and has representatives in each store
who encourage staff to feedback experiences of applying for and using specific benefits, as
well as reporting benefits they would like to see offered in the future. BIG representatives are
invited to attend our annual benefits review meeting to ensure that views from across the
business are included in our planning.

Utilizing a range of communications channels

Cooper explains that the various communication channels work together: The core method
of communicating employee benefits for us is the Benefits Book that is sent to every
member of staff each May. From time to time we also use face-to-face meetings between
individual members of staff and AIG UK Benefits, our benefits partner, to inform staff about
products and services in the Benefits Book.
We supplement and support the products and offers in the Benefits Book with our website,
articles in our employee magazine and payslip messaging. Benefits are also introduced to
new employees during their induction sessions. In addition HR teams within stores are a
great benefits communication channel. Were able to use the Intranet to highlight specific
and new offers for particular groups of employees or segment them to certain areas of the
country. This keeps benefits fresh and enables us to maintain ongoing communications with
employees.
Developments in technology are offering new ways of communicating with employees
about benefits and I am keen to learn more about how, as a business, we can utilize options

PAGE 10 STRATEGIC HR REVIEW VOL. 8 NO. 2 2009

such as text messaging and social networking sites. However, regardless of which new
communication channels we introduce, it remains the case that variety is key for continuing
to successfully consult and engage with our people about benefits.

Steps to effective benefits communication

There are a series of steps organizations can take to ensure benefits communication is
working to the best advantage of employees and therefore engaging with people in a
positive way. The following steps have been compiled based on AIGs experience of working
with a range of public and private sector clients over the last 50 years.
1. Review your benefits portfolio
Investing time to review your benefits offering is an essential first step; its no good investing
in and communicating benefits that are out of date or not relevant to your workforce. Ask if or
how current benefits add value and which rewards are most valued by employees.

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2. Define what you want to say

Once you are confident your benefits portfolio matches the needs of employees, clarify
exactly what you want to say about them and to whom. For employees to make informed
choices about the benefits that suit them best, they need to be aware of the available
choices. Therefore, communications needs to be focused on the actual benefits as well as
their financial and non-financial value.
3. Ask your provider for assistance
Benefits providers will often offer marketing and communications material to support your
in-house benefits communications. They may also be willing to develop material that is
tailored to your business. After all, it is in their interest that employees have the necessary
information to support any purchasing decisions.
4. Seek help from line managers
Line managers have a unique role to play in communicating benefits; the direct relationship
they have with employees (compared to the often more removed relationship of HR or senior
managers, for example), gives them the opportunity to speak more openly and build on their
already established relationship.
5. Consider a variety of communication channels
In selecting communication channels organizations should be open to considering and
experimenting with a range of communication methods to find the solution that works best for
their people, their organization and the benefits on offer. Approaching communication in this
way ensures a greater number of employees are reached and engaged and that they have
access to up-to-date and relevant information.
6. Maintain regular communication
Regular communication with employees is essential; without it they will be unaware of the
range of benefits on offer. By communicating proactively with employees, organizations can
begin to build employee engagement and trust, which in turn can impact on retention,
motivation and productivity levels.

. . . the individual first needs to be aware of and understand

the benefits their employer currently offers.

VOL. 8 NO. 2 2009 STRATEGIC HR REVIEW PAGE 11

7. Step back and review what youre doing

Taking time to review your offering and asking others for their opinion is a key step in the
process of offering the right benefits and communicating them in the right way. This
opportunity to refresh key messages about available benefits will ensure they remain
targeted and applicable to your changing workforce and their evolving needs.

Reference
CIPD (2007), Employee benefits: an overview, CIPD Factsheet, Chartered Institute of Personnel and
Development, London, February.

About the author

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Terry Pegg is head of sales at AIG UK and joined the company 12 months ago from a major
UK bank, where he held the position of regional sales director. He currently manages a field
force of over 50 people across the UK and is responsible for the design and installation of
voluntary benefit programs in UK companies. Terry Pegg can be contacted at:
employeecare.uk@aig.com

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This article has been cited by:

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1. 2010. Employee benefits provision. Human Resource Management International Digest 18:3, 10-12. [Abstract] [Full Text]
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