Whether it’s a one-off reward, year-long recognition, or a more ‘standard’ benefit, employers have to know that their offering is demonstrating return on investment. Kavitha Sivasubramaniam considers how they can measure employee engagement, and the wider effects of a benefits strategy on the workplace
Organisations today are spending a significant sum on employee benefits, with many investing as much as an average of 20% of their payroll costs in this area according to research by Willis Towers Watson, it makes good business sense to ensure that staff value their package. And, arguably, more importantly, it is also crucial that the business is getting a good return on investment (ROI) from its benefits spend.
“If they [employers] can’t show that their benefits are driving engagement it begs a fundamental question – why are they investing that money?” says Mark Ramsook, head of sales and marketing for the health and benefits business at Willis Towers Watson. “A lot of organisations have evolved their benefit package over time, albeit opportunistically through salary sacrifice. There’s not been much governance around what they do, but they need to see how it links to employee health, reducing absence, etc. In essence, they need to justify what return they get.”
With this in mind, just how can employers go about measuring engagement and ROI when it comes to workplace benefits?
A STRATEGY FOR SUCCESS
Businesses regularly measure engagement in other areas, but benefits is one that seems to fall through the cracks – perhaps because it’s the hardest to evidence, according to Ramsook.
“Employers often introduce benefits on a whim but do not always have a very clear idea about how they align with their business strategy. If you don’t have any clear measures of success it’s hard to get an idea of their value,” he says.
Typically organisations will have certain aims and objectives in mind when looking at their HR strategy. In terms of engagement, there are many elements at play. For example, it could be about increasing motivation, which can then affect productivity, or the focus might be on attracting a different demographic to the workforce in order to keep current employees engaged. Another issue could be that a lack of engagement has ramped up staff turnover. By breaking down engagement into these specific aims, it’ll be clear what a good ROI looks like. In essence, it will help determine if an employer has achieved its goal, or at least made some headway.
James Malia, director of employee benefits at Sodexo Benefits, believes benefits need to be measured in more than one way: by looking at the data, the sentiment and the real business benefits. Together, HR can create a picture of the real impact a benefit has had on a workforce.
“Benefits, no matter the size, type or cost, provide a window into the lives of employees and their sentiment towards the business. It’s this sentiment which ultimately determines engagement,” he explains. “By tracking the ROI of a benefit, a business should be able to see how engagement is changing among different teams or individuals.”
THE RIGHT MEASURING TOOLS
Businesses that host benefits online or via apps can immediately access the data needed to assess their usage, allowing HR teams to look at a number of things including how often the platform is logged into and whether people are logging in and spending time on the app or moving away from it after a short period. They can also see how any available search functions are being used and if the platform delivers, and whether users leave the site without redeeming any benefit.
“Organisations are becoming more sophisticated in terms of their approach to measuring engagement and there’s a huge body of support available now,” says Ramsook. “We can go beyond just basic segmentation of the workforce and can use technology to drive personalised messaging to people. We should take advantage of that.”
Although there are many advantages to hosting such sites online, technology can never fully replace human contact – which also has the benefit of being free of charge. While digital is all well and good, employees respond best to multiple channels. HR should take the opportunity to speak to managers and employees themselves about the range of perks available. From these conversations, they can get an idea of their thoughts about the benefits and the functionality. They will gain an understanding of whether their workforce is aware of the benefit, if it’s too complicated, if they are biased against a particular segment of the workforce and whether they are generally well received.
Surveys can be a great way of gaining anonymised feedback, turning honest discussions into quantifiable results, and there are numerous free resources that will host them. One approach could be to use a conjoint analysis, which is similar to a psychometric test, to work out what employees value more. People are asked the same question in multiple ways and that can provide quantifiable results to measure spend. But while these tests can be useful as part of the ROI analysis process, they alone should not be depended upon for the full picture.
A combination of engagement surveys, different feedback mechanisms and a variety of communications channels is likely to provide a broader overall outlook.
Employee engagement, whether this is with benefits in particular or another area, can be tracked very easily and with very little financial investment. This could be through conversations, free surveys and employee interviews – all of which cost nothing.
Other areas, such as staff turnover and productivity, are likely to be tracked already, so it’s more important to apply the HR mindset to measuring engagement than to roll out a number of new measurement tools.
For those looking at benefits in particular, there is huge range of options on offer and the cost structures can suit small budgets or larger ones. There is always an option to suit every budget.
Ramsook believes there is often a fear among senior leaders that looking at benefits in this way will result in more spend, but another important factor that employers should bear in mind is that investing in measuring engagement and ROI can actually highlight areas of opportunity for savings. For example, if their research suggests certain benefits are not being utilised, this spend could be diverted elsewhere.
“It’s about shifting the lens to see the value in their investment rather than the return on investment,” he says.
Moxham agrees that the financials shouldn’t be the main focus for businesses.
“My main advice to employers is to not just consider the monetary return on your investment. Look at the reasons why you bought the benefit in the first place,” she says. “Stand back and consider the broader picture. Have a look at what all the benefit do together and how they interact.”
Most often a lack of engagement with a benefit is often because employees don’t understand it or because they don’t think they need it. For this reason, it can be a good idea to step in and highlight why they do need it, for example when offering financial protection products.
“Everyone needs to protect their financial interests,” Moxham explains. “Likewise, it’s often the case that younger people don’t think about financial consequences of their death on mortgages/rental payments/funeral costs. A basic level of protection is a must for everyone.”
She suggests that if employers get a result that shows a particular benefit isn’t understood or used, they should look closely at that benefit and also the communications around it. They should decide whether there is something they can do to make it more accessible or user friendly, and often providers can help with that.
Once engagement has been measured, employers should consider the employee feedback carefully and look at what they are going to do about it. They may decide to use in-house champions or third parties to highlight particular benefits, but there has to be a consistent, ongoing programme rather than a one-off promotional event where momentum is lost very quickly.
It’s all about connecting with the workforce, and doing this well means understanding what an individual wants and needs, says Malia.
“Work is a huge part of our lives but the other aspects need our attention too. So, if a manager can enhance the life of someone outside of work, their connection towards the business will strengthen,” he explains. “The options here are endless, but the importance is sky high.”
Malia cites examples such as helping with someone’s childcare needs or an unwell parent, sending someone away for a weekend, or giving them the opportunity to take friends to the cinema as ways employers can support staff.
He concludes: “By enhancing an employee’s life, that person will associate good times, empathy, understanding or enjoyment with the business and ultimately improve their loyalty, motivation and engagement.”