A golden anniversary wristwatch is a smybol of the benefits of the Old Economy. Does this sit well with the new ways of working? How does digitalization affect the provision of benefits? What changes can be seen in the benefits portfolio of companies? hkp.com talks to the hkp/// group experts Andrea Sattelmayer and Dr. Stephan Schmid.
Mrs. Sattelmayer, Dr. Schmid, are the ever-present trends such as digitalization, agile organizational structures, etc. also shown when it comes to benefits?
Dr. Stephan Schmid: Even if most companies still operate in the traditional way, major trends such as transparency, personalization and work flexibility are starting to have a noticeable effect on the form of benefits. Who would have guessed five to ten years ago that employees would share their remuneration on online platforms or that cafeteria systems would undergo a revival and that digitalization would finally allow for a breakthrough? Or would it have been more likely that employees in collective labor agreements would be able to choose between a salary increase and more annual leave – and that most would ultimately choose additional days of leave?
Times have changed indeed. But is that New Play already?
Dr. Stephan Schmid: It is the beginning. These are the first stages of companies addressing a wider range of employee expectations when it comes to remuneration.
... and to remove the infamous golden anniversary wristwatch from the benefits portfolio?
Dr. Stephan Schmid: Yes of course. Many companies still offer some benefits, of which the effects nobody knows or appreciates. At the same time, there is no leeway for benefits which really inspire employees and have an impact on personnel management.
Andrea Sattelmayer: If Comp&Ben managers not only want benefits to be more than just a cost factor, but rather to have a positive impact as an HR tool, then, above all, it is important to determine which benefits offers help to find digital talents on the labor market, reinforce employee engagement and reduce undesired fluctuation – especially in times when the economy is going through a downturn.
You recently published a study analyzing the main trends in the management of benefits. What developments do you foresee for the future?
Andrea Sattelmayer: All companies that participated in the study offer financial services and insurance policies, albeit to a very different degree. However,the relevance of these services is fading. With regard to company pension plans, plans that provide employees with additional freedom in the form of flexible deferred remuneration, in addition to an employer contribution or allowance, are becoming increasingly important.
Dr. Stephan Schmid: Also more important will be employee shares, which one third of listed companies already issue. In this respect, international standards suggest an upward trend. However, anniversary benefits are becoming less important. This is why more and more is being done in team events to shape corporate culture. More and more companies are also letting employees use their own smartphones privately in their spare time.
Mobility and flexibility are currently hot topics... even when it comes to benefits?
Andrea Sattelmayer: Indeed, opportunities to promote individual mobility have become more important. But also here, there is a shift in appeal: from the classic company car to sustainable mobility solutions.
Dr. Stephan Schmid: Flexible employment models are in the meantime a must-have. What previously was arranged on an individual basis is now increasingly settled on the basis of company regulations. Employees' spare time is becoming more important than money. However, only around one-fifth of companies, that participated in the study, allow special payments to be converted into leave. Long-term credits for sabbaticals are gaining momentum.
Andrea Sattelmayer: Health is also a top benefit element. Corporate offers range from nutrition programs to the company’s own sports and fitness facilities.
Usually, only managers are offered medical check-ups or health checks by the majority of employers. However, one in four companies already allows all employees to benefit from such programs.
And in terms of choices? You spoke of a revival of cafeteria systems.
Dr. Stephan Schmid: The trend is clearly towards more individuality, variety and flexibility. About a third of the companies offer their employees options using cafeteria systems. Such systems are very flexible, differentiated and customer-oriented, but also involve a high level of administrative effort and the use of resources. They are budget-oriented, but not really employee-centric.
Andrea Sattelmayer: Already first companies offer fixed portfolios based on personal profiles with regard to employee preferences and personnel management goals. Employees have a choice. But so far, less than ten percent of the particpants have such standard portfolios. However, more and more are considering following this approach.
Dr. Stephan Schmid: At the same time, even in times of individualization and flexibility, 35 percent of companies that participated in the study do not offer their employees any choice at all.
What is the reason for this?
Dr. Stephan Schmid: An important aspect here is a lack of trust. Freedom, be it through work flexibility or time control, requires responsibility. A lot of companies do not always trust that all employees will be able to do so. But particularly during turbulent times, mutual trust drives success!
Andrea Sattelmayer: Companies want to be agile and innovative. This requires employees to contribute with a variety of skills, knowledge and ideas. These contributors want to go their own way, therefore they want to be encouraged, appreciated and supported in their respective life situations.
Companies can only meet this demand if individuality is made possible...
Andrea Sattelmayer: Exactly. With regard to benefits, this means creating options and a diversified offer. Or in other words, more than ever the fish must like the bait and not the fisherman.
What recommendations do you have for companies that want to restructure their benefits portfolio?
Dr. Stephan Schmid: In addition to the employee-centered approach mentioned above, it is recommended to constantly review and adjust the benefits portfolio. For example, the portfolio management approach based on traditional product management can be adapted by HR – not only for benefits, but for all HR products and services. It is important to understand to what extent employee and manager performance is appreciated and to what extent they contribute to the corporate strategy.
To then streamline the benefit portfolio...
Dr. Stephan Schmid: Yes, even if it requires to break with habits. A restructuring requires panache. Only then it is possible to establish space for innovative and valued services. This enables companies to reach their HR goals better, whether it be recruiting specific employees, retaining relevant strategic employee groups, strengthening employee commitment or presenting themselves as an attractive employer.
Andrea Sattelmayer: Obtain more with less, that’s the philosophy! The quantity of the benefit portfolio is not important. The focus must be on efficiency and especially on the employee experience.
Thank you for taking part in this interview.