Spoilt for choice

“If we ask HR directors what is the biggest challenge they face, it is attracting and retaining good people,” he says. “There’s a skills shortage, and talented people are in a fortunate position, so employers need to keep them happy. A well thought out benefits program, properly delivered, will be very helpful in achieving this. While super remains a key component of any such program, it is becoming more standard, so it’s not as powerful a differentiator as it once was. Organisations need to look at a broader base of benefits.”

Aon’s Commitment@Work study last year showed the importance that Australian employees place on benefits. Some 82 per cent of respondents said their organisation’s benefits were a key factor in keeping them from looking for a job elsewhere. However, the survey also showed that Australian employers have some work to do in this area, 25 per cent of the employees surveyed saying their pay and benefits package failed to meet their needs, and 40 per cent saying it failed to encourage a sense of ownership and loyalty to the company. About 28 per cent were not satisfied with their benefits choices, and a similar proportion said communications about their benefits did not meet their expectations.

The first step for employers, says Fotheringham, is to do a full audit of the benefits they offer and ascertain which ones their employees find valuable. It is not unusual to discover that staff are using some longstanding benefits very little, and there may be others that they are simply unaware of. Benefits that foster a better work-life balance, such as childcare access and financial planning tools, are becoming increasingly popular with employees, but working out which benefits suit your organisation will depend partly on the type of workforce.

“Some benefits don’t have to be expensive to the employer. The important thing is that they recognise your employees’ needs,” says Fotheringham. “Employees are becoming more demanding in seeking benefits that will benefit both themselves and their families.”

But surveys and other forms of questioning to find out what type of benefits workers desire and value can raise expectations that an organisation is unable to meet, warns Ingrid Selene, Aon’s communications practice leader. Instead, employers can investigate which benefits are well-used and conduct research into what people know about their benefits and their attitudes towards them.

“You may want to ask your managers to talk to staff, then channel that feedback,” says Selene. “One of our clients had project teams that worked on different parts of a benefits review, with consultants providing their expertise.” Those involved don’t need to be management level, but they do need to be specially selected, she says.

With benefits such as superannuation, there is a legal imperative to review your offerings to ensure that they are not just attractive but also comply with legislation. In preparing for the introduction of Choice of Fund, some employers have discovered anomalies that could potentially lead to staff confusion, dissatisfaction and even industrial relations problems if they are not addressed promptly.

One company with 1,200 employees found that 32 different awards and enterprise bargaining agreements (EBAs) applied to it. Some of the EBAs didn’t have a clause on super, so an award applied instead, and the award made the employees ineligible for choice. Because of the omission in the EBA, the super contributions for a small number of employees were being paid into the corporate fund rather than the industry fund specified by the award.

“To transfer them out of the corporate fund will mean a reduction in their benefits,” says a company spokesperson.

“We are approaching this by explaining that employees have the choice to transfer to the industry fund specified in the award or to stay in the corporate fund.”

That is where communication is important. “I don’t think we are unique. It stems from the fact that the EBAs and awards were written before the choice legislation came through. I feel that the whole exercise was put forward as being very straightforward, and we are discovering that it’s not,” they said.

Selene says other organisations found similar problems as they trawled through awards and agreements in preparing for choice. “It makes you wonder if there are other mistakes or other elements of awards not being complied with. I would say a lot of companies haven’t looked at the rest of their awards or agreements, especially if their staff are covered by many different ones.”

Communications strategy

During benefit reviews or changes, it takes good communications to ensure that employees understand what is occurring and why. Incorrect perceptions or misinformation can cause confusion and dissatisfaction. Selene advises that employers first determine their objectives and key messages, and then devise a plan to ensure their communications are effective.

“That has to be done alongside the employee benefits review and you may need to modify it as you go along. Your communications strategy is not undertaken when everything is decided, but must be introduced right at the start of the review. People will know that something is going on and you don’t want them to panic. There is nothing people are more sensitive about than their benefits.”

Selene says it is important to analyse the work environment, identifying groups that will be affected by any changes and taking into account different areas of the business, different levels of employees, and geographical issues that may be relevant to some special benefits. It is also necessary to understand the history surrounding benefit offerings and any sensitivities or angst that may have been created by previous decisions. Failure to communicate effectively can mean an organisation doesn’t realise the benefits of a rewards review and is left with a climate of uncertainty and lower morale. “People will see the negatives but not the positives, or they won’t know what has changed,” says Selene.

Along with clear explanations of value, industry comparisons can be a good way of showing staff how their benefits rate.

Assessing competitiveness

Cadbury Schweppes started by reviewing superannuation and employee health insurance, and it is looking at other benefits as part of what Wendy Moore, managers of remuneration and benefits, says is a continual process. Although the super review was partly driven by legislative changes, she says the company is also assessing the market competitiveness and cost efficiencies of its benefits policies and practices.

“In terms of attracting and retaining staff, we are looking at the practices of organisations we compete with for staff,” says Moore. “We are also looking at our internal experience to see what the employees find beneficial.”

When Cadbury Schweppes ran focus groups on super and health insurance, a need to improve communications became apparent. From employees’questions, a lot of assumptions and misconceptions emerged, especially with regard to senior staff’s perceptions of the benefits they received.

“We also found that employees want choice and benefits to suit their individual needs,” says Moore. “Our health insurance is fully comprehensive hospital and extras cover, but a lot of people didn’t want those extras. You can’t come up with everything that everyone wants, but you can tailor some products to offer benefits that meet the needs of the majority of employees.

“I think employers do a variable job of making employees aware of the value of benefits – many just look at salary. We as employers should becommunicating the value of other benefits.”

Next on the company’s employee benefits review agenda are motor vehicle benefits and salary sacrifice, the value of which has changed as a result of new tax scales. A wellbeing benefit, including part reimbursement for gym membership, is being redesigned. Each year the company puts out an easily understood statement quantifying the value of specific benefits.

Suzanne Keen is a freelance writer