How can you ensure your employee benefits are fit for a hybrid workforce?
That is the question posed by Personnel Today in an interesting article which flags a number of challenges for HR and senior leadership teams. So, they say, where season ticket loans, company pensions and cycle-to-work schemes were once among the flagship features of an employee benefits package, these may no longer be enough, or even appropriate, for the hybrid workforce.
They say this new, flexible way of working is having a positive impact on employees’ health, wellbeing, and work-life balance; however, it does bring with it some challenges. So, with large numbers of staff rarely in the office and some team members only working on alternate days, it’s down to the HR team to find new ways of building a sense of inclusion and engagement. They cite research by McKinsey which shows how not feeling a sense of belonging was one of the most frequently cited reasons for employees leaving their job in the past six months, which shows just how important it is for companies to get this right.
One way to address that problem is, they say, to ‘rethink your benefits’. The challenge for businesses now is how to make the package relevant for all employees, no matter where they are working. They say the very best employee benefits programmes offer a degree of flexibility so that each employee can pick and choose their own portfolio of benefits that work perfectly for them. So, by allowing employees to build their own individual benefits package, they immediately feel valued, which in turn helps keep them engaged and motivated.
We agree with that, and it is one of the issues that our share plans team has been flagging with our clients. Lynette Jacobs has been fronting that work and she joined me by video-link from Manchester to discuss it. So, I asked, how can share plans make employees feel engaged and valued?
Lynette Jacobs: “So Joe, I think I would always have said, and would always say to companies, that the importance of having employee share schemes is there because of the opportunity for your employees to feel part of the wider group and I think even more so now as we're coming out, hopefully, of the Coronavirus pandemic, finally. For the majority of companies, employees will not be based in their offices full-time, some will be there 50% of their working week, some may be there for an even smaller part of their working week and, therefore, if you're sitting at home at your own desk, in your own office, the fact that you have shares in your company share plan will make you feel part of that company far more. You need to have ways to make your employees feel part of the group, albeit that they're not physically in the office, and just having the share plan and offering it to the employees, again, that's sort of a step in the right direction but what you need to do more, so it has the full impact, is to communicate those plans well to the employees so they understand the potential benefits to them of participating in them whilst, of course, not overselling, keeping away from any financial advice. Then if the employees are participating in the plans, don't only talk about the plans at the time there's a launch, but continually refer to them. So, if you can say what the share price is, from time to time, so that they can see that, all being well, the share price is going up and their value of their reward is going up. If there are performance conditions they need to meet, let's make it easy for them to understand the extent to which those performance conditions are being met as the award progresses throughout its life.”
Joe Glavina: “The article says very best employee benefits programmes offer a degree of flexibility so that each employee can pick and choose their own portfolio of benefits that work for them. Can share plans be tailored to individual needs in that way?”
Lynette Jacobs: “It probably depends on the type of plan, I’d say, Joe. So, if you have one of the tax-advantaged all-employee share plans, the company has to offer it to all employees who meet certain requirements. So, generally, as long as they haven’t worked there for more than five years, they have to be offered the opportunity and companies will tend to have a much shorter qualifying employment period, maybe 12 months, before the date of grant, six months or even just anyone who's employed at the date of grant. So, the company would definitely need to invite the employees to participate in those plans, they couldn't choose not to. I guess the employee to choose themselves not to but I think it would be really against the legislation, I would imagine, for those plans to say, you know, you pick (a) or (b). So I don’t think you could do that. Potentially the company may have decided that it would be willing to grant the employee an option under a discretionary plan the company could then say, well, you could choose to have an option under this plan. or an award under this plan or, alternatively, to have your gym membership. I think if you're going to think about doing something like that you should speak with a friendly lawyer, for example, Pinsent Masons, to just check how you're doing it to make sure you don't come up against any of those things and fail to meet the requirements of the tax legislation.”
Joe Glavina: “So I guess there’s an important communications exercise here for HR?”
Lynette Jacobs: “Yes, absolutely, communication is everything. Again, as I say, just being very careful if it's a tax-advantaged plan that you don't run into anything where the plan you're planning to give to your employees ends up not having the tax advantages you were hoping for because of something you've said or done. Also, just making sure that you're not committing the company to granting options under a plan where it becomes a contractual right and, again, we would always warn against the company against doing that. But, yes, definitely, communication is everything so that employees understand what's available to them and the potential benefits and also potential downsides of those plans.”
Finally, on the subject of share plans, you will be aware that in April we will see the 1.25% rise to NICs designed to support health and social care – the start of the Health & Social Care Levy – and it’s a significant extra cost of employees and employers alike. On Tuesday Lynette talked to this programme about that issue and how share plans will be affected. That is: ‘Share plans provide opportunity to mitigate NICs rates rise’ and it is available for viewing now from the Outlaw website.