Reward June 2010

Compensation & Benefits

by Fluid

June 2010

Contents3-4 Introduction to Fluid5-7 Evolution in strategic reward

management8-16 Flexible benefits17-18 Childcare vouchers19-20 Corporate incentives21-22 Cycle to Work scheme23-24 Employee assistance

programmes (EAPs)25-26 Employee share schemes27-28 Private medical insurance29-30 Dealing with minimum wage

increases31-32 Perfect perks33-35 Benefits and allowances36-38 Negotiating with a motivation &

incentives supplier39-41 Rescuing motivation schemes

that are failing42-43 Exercise44-48 Pensions49-51 Salary reviews and surveys52-53 Conclusion and questions

Introduction

Introduction to Fluid• Fluid Consulting Limited (Fluid) is a specialist

human resources consultancy headed by Tim Holden MCIPD

• 10 years in banking• 10 years in Human Resources consultancy• Fluid trading since 2006• The core services provided by Fluid are:

- Retention- Selection- Attraction- Remuneration & Reward - Outplacement- Training & HR consultancy

Evolution in strategic reward management

Evolution in strategic reward management 1 of 2

• FROM business-driven TO aligning reward with business strategy, employee needs and environment

• FROM isolated initiatives TO integrated and balanced reward management

• FROM focus on cash TO focus on total reward and engagement

• FROM mechanistic and inflexible systems TO organic, simpler, variable process

• FROM pay progression based on individual performance/service TO pay progression based on contribution, skills and knowledge

Evolution in strategic reward management 2 of 2

• FROM planning TO practising• FROM design best practice TO process: best fit• FROM HR control TO line/employee ownership• FROM top-down telling TO communicate and

involve• FROM ‘big bang’ change TO evolutionary change• FROM guess work/faith TO evaluation of

initiatives• FROM ‘Elastoplast’ technology TO integrated HR

and reward information systems

Flexible benefits

Flexible benefits 1 of 8• PREPARATION• Existing benefits-policy decisions about what to

include and what to exclude• Breadth and design of scheme-years one and two

and beyond• Data-the quality, accessibility and its updating• Integration-HR and payroll• Administration-should it be internal or external?• Discrimination issues-for instance age and sex• Harmonisation or savings-never conceal what the

scheme might be changing• Technology-the fit, integration and capacity

Flexible benefits 2 of 8• TYPICAL FLEXIBLE BENEFITS• Pension• Private medical insurance• Childcare vouchers• Dental insurance• Holiday trading• Life assurance• Share incentive plan• Give-as-you-earn charitable donations• Health screening• Critical illness cover

Flexible benefits 3 of 8• TYPICAL FLEXIBLE BENEFITS• Share save plan/SAYE plan• Retail vouchers• Discounted services• Cycle to Work schemes• Optical care/vouchers• Gym membership• Healthcare cash plan• Company car• Personal accident insurance• Travel insurance

Flexible benefits 4 of 8• TYPICAL FLEXIBLE BENEFITS• Season ticket for travel• Mobile phone• Cash alternative to company car• Personal computer• Income protection• Financial planning• Cash alternative to other benefits• Home insurance• Concierge benefits• Home phone package

Flexible benefits 5 of 8• A SUCCESSFUL FLEX LAUNCH• Build a strong business case to obtain senior buy-

in• Select an experienced broker to negotiate

favourable terms• Choose a technology provider with a proven

record• Don’t be over-ambitious initially-much better to

enjoy the successful launch of a core flex package that you can build on in future years than being associated with a failed project

• Spend as long as it takes cleansing your benefits data

Flexible benefits 6 of 8• A SUCCESSFUL FLEX LAUNCH• Appoint a project team with at least one senior

champion• Choose a system with built-in rules that prevent

uninsured liabilities or additional administration burden

• Communicate clearly with employees at all stages, including focus groups initially and feedback surveys after launch

• Remember that flex is flexible-you can add benefits in future years to maintain interest and change any that don’t work

Flexible benefits 7 of 8• IMPLEMENTING A SCHEME• Pick people to do the planning• Assess feasibility• Get the numbers to add up• Build the scheme• Look to the law• Concentrate on clear communication• Integrate-whether system in in-house or

outsourced

Flexible benefits 8 of 8• SCHEMES FOR SMALLER EMPLOYERS• Consider the specific needs of the

organisation• Communicate ease of set up and use to

employees• Remind the workforce about the new

scheme

Childcare vouchers

Childcare vouchers

• WHAT TO LOOK FOR?• Paper and e-vouchers• Online transactions available-Mac and PC

compatible?• Can vouchers be used for ‘registered’ or ‘approved’

care?• Dedicated helpline• Services included• Standalone or part of flexible benefits online• Set-up time• Cost based on 100 employees taking their full

entitlement of £243 per month

Corporate incentives

Corporate incentives

• WHAT TO LOOK FOR?• Product range• Cost to employer• Delivery time• How scheme is administered• Support given• Particular selling points

Cycle to Work scheme

Cycle to Work scheme• WHAT TO LOOK FOR?• Brand of bike• Type of bike• Safety items available• Number of stores where available• How is scheme administered• Home delivery/delivery time• Order online/mail order• Marketing support• Software linked to client’s software• Helpline• Set-up time• Cost to client

Employee assistance progammes

Employee assistance programmes • WHAT TO LOOK FOR?• Cost per head• Set up time• Essentials of the scheme• Manager training• Support given• Particular selling points

Employee share schemes

Employee share schemes

• WHAT TO LOOK FOR?• Type of scheme• Discretionary share schemes?• Cost to employer• Set up time• How scheme is administered• Support given• Particular selling points

Private medical insurance

Private medical insurance• WHAT TO LOOK FOR?• Inpatient cover• Outpatient cover• Extras• Dependant cover• Tailored to fit individual groups• Cost containment• Telephone support• Online support• Internal marketing support• Set-up time• Cost’

Dealing with minimum wage increases

Dealing with minimum wage increases

• Do your research• Revisit your pay structure• Consider the costs of staff turnover and training• Involve the bean counters• Know the law• Use alternatives to retain people• Consult, test and review• Talk to your employees• Invest in management• Measure the results

Perfect perks

Perfect perks

• Once in a lifetime-Ford Motor Co• Pampering-Alexander Associates• Fun and friendly-NM Rothschild• Instant reward-Volvo• Prize variety-Carphone Warehouse• Cash bonus-KPMG

Benefits and allowances

Benefits and allowances 1 of 2

• Childcare vouchers• Long service awards• First aid payments• Call-out payments• Money-purchase pension schemes• Final-salary pension scheme• Stakeholder pension scheme• Standby allowances• Discounts on own organisation’s products or

services

Benefits and allowances 2 of 2• TRAVEL AND SUBSISTENCE• Mileage allowance• Car allowance• Subsistence allowance• Free car parking• Company car scheme• Interest-free season ticket loan• Subsidised staff canteen• Car leasing scheme• Subsidised car parking• Interest-free car park loan• Interest-free congestion charge loan

Negotiating with a motivation & incentives

supplier

Negotiating with a motivation & incentives supplier 1 of 2

• Can you demonstrate an ability to help me solve my business problem?

• What resources have you got to help me handle my account?

• How much of the solution you’re proposing is handled in-house and how much is outsourced?

• What service agreements can you out in place to ensure delivery?

• What sort of systems do you have in place to make sure that the management information I get from you is accurate, on time and reliable?

Negotiating with a motivation & incentives supplier 2 of 2

• How confident are you that you will still be around in a year’s time?

• How do you charge for your products and services?• What are your commission rates and what is your

mark-up on reward media that is brought in-for example vouchers, merchandise, travel and so on?

• How do you propose we measure the impact of your recommendations?

• Do you charge for advice upfront?

Rescuing motivation schemes that are

failing

Rescuing motivation schemes that are failing 1 of 2

• STEP ONE-identify the business objectives behind the initiative, for example: reducing absence, improving productivity or boosting customer service

• STEP TWO-decide whether the rewards are target based and if so take care to set achievable parameters

• STEP THREE-before selecting a programme or one-off gift research employees’ desires using tools such as email, the intranet, line manager interaction or focus groups

Rescuing motivation schemes that are failing 2 of 2

• POTENTIAL PITFALLS• The scheme design or reward offered is unsuitable for

employees’ age, sex or desires• The reward has a gimmicky quality that could be

perceived to insult the employees’ professionalism• The reward conflicts with the employees’ culture or

religion• The reward is offered for a target that is beyond the

employees’ reach• The gift is selected on the assumption that money is the

best motivator for everyone• The incentive is something that the employee already

has• The reward is not delivered in the way that it was

originally promised

Exercise

Pensions

Pensions 1 of 4

• TERMINOLOGY• DB• DC• CSIPP• Deficit• FRS17• GPP• Hybrid scheme• Rate of accrual• Trustees

Pensions 2 of 4

• COMMUNICATION• Beware giving financial advice• Take the initiative• Use your providers for additional support• Use a variety of media• Avoid jargon

Pensions 3 of 4

• COMMUNICATION• Engage your people• Use plain English• Communicate regularly• Measure their understanding• Use experts if appropriate

Pensions 4 of 4

• KEEPING THE PEACE• Inform employees about changes and why

they are happening• Create a handbook• Approach the matter sensitively• Look for options to find a balance between

defined benefit and defined contributions

Salary reviews and surveys

Salary reviews and surveys 1 of 2

• CONDUCT AN ANNUAL REVIEW• Work out your budget• Review reward principles• Analyse market pay data• Gain budget approval• Communicate the timetable• Support line managers• Fine-tune the process• Explain decisions to employees• Inform payroll

Salary reviews and surveys 2 of 2

• GET THE MOST OUT OF SURVEYS• Ask who produced the survey• Check out the methods of data collection• Make sure the sample size is large enough• Pay attention to all reward package elements• Understand the key statistics• Get the right match• Decide your market position• Use your judgement

Conclusion & Questions

Conclusion

• Summary• Questions

Reward June 2010

Business

Transcript of Reward June 2010