Strategy & Policy: How to create a reward and benefits strategy that is flexible enough to support employees of all ages
In the consumer world, companies know how important it is to understand their customers’ diverse needs. By doing this, they can tailor products and services based on demographic, behaviour and habit to maximise value.
In the modern workplace, it stands to reason that employers can benefit from doing something similar. If they know their workers, they can understand what motivates them at various stages of the employment life cycle, and what they are going to value.
Workers no longer stay with a single employer for life. An employee typically starts as an apprentice or graduate, achieves well enough to gain progression and promotions before moving towards retirement, all of which seems simple until you overlay personal and financial implications. As a worker progresses through saving for a first car, paying for a house or affording the various stages of parenthood, it is imperative that a benefits strategy can flex to match their needs. But what steps does a company need to take in order to achieve this more holistic approach?
In pure data terms, we need to break employees down into groups: by gender, ethnicity, age, tenure, level, and family status. Limiting this to five or six broad segments makes things manageable and the categories (described below) are not scientific but have been guided by ONS data to illustrate the different segments.
By combining this data with a broader analysis of staff turnover, tenure, employee satisfaction and performance, we can start to understand why retention is more challenging for certain age ranges, and we can highlight common misalignments between the expectation and reality of an Employee Value Proposition.
This data analysis is always a big step forward, but it will only ever take you so far. To understand motivations and expectations beyond broad groupings and eliminate assumptions - particularly around benefits - you need to get out there and talk with employees. Focus groups are great for gaining a deeper understanding of how to match affordability with value to employees. Whichever way an HR department gains this insight, by the end of the process they might produce a breakdown like this.
Developing (age: up to 24)
- Starting to understand basic finances, living for the here and now
- Short-term planning and less employer loyalty
- Prioritises ability to buy holidays and take shorter breaks more often
- Choice and the ability to personalise the package is important
Forming (age: 25 to 34)
- Want to put finances to more use
- Need sufficient understanding in order to maximise financial support, eg around ISAs, big-ticket purchases (house, car) and saving for a wedding
- Buying and Selling holidays to provide flexibility of holidays over cash.
- Need to know what is available, and how they can do it.
- Responsibility and unique work experiences are important
- This group will weigh up decisions for job mobility and will go for more opportunities to progress in salary and career
Flourishing (age: 35 - 44)
- Finances are committed
- Every penny counts so need to understand any support and advice available to them for mortgages, car finance, childcare, and school fees.
- Work-life balance and professional interests are important
- Job security is important, as well as the opportunity to develop careers and earn a higher salary
- Decisions are likely to be balanced and carefully considered
Establishing (age: 45 - 54)
- More disposable cash with the ability to support children still living at home, with house deposits or attending higher education
- Health and long-term finances are becoming more important. Likely to start increasing pension contributions and making a will or achieving strong financial planning is a focus
- Personal interests are important and careers are well established, so something must impact or change significantly to contemplate leaving or making a sideways move
Mentoring (age: 55 - 59)
- This group has established job security and contentment if they feel their role has a purpose and is valued
- Company loyalty and a sense of duty and culture are key motivators
- With more disposable cash, health protection and retirement are now key priorities. Allied to this, there is a risk they may leave early once pension draw-down kicks in
- Require more advanced financial support to ensure their finances and investments are working for them and any assumptions are not wide of the mark
- Likely to look for opportunities in flexible working or around additional holiday entitlement
- Can and will make choices for health and happiness
Coaching (age: 60+)
- Likely to make increased contributions to pension and additional purchases for health cover
- Often putting in place legal frameworks such as Power of Attorney
- Nearing retirement so unlikely to make an employment change unless forced to do so by a lack of flexibility around place of work or hours
- Will be contemplating their exact retirement age and date - an important life-changing phase
The danger of assumptions
Remember that this kind of report provides a guide but should not be used literally. One 28-year-old worker could be married with children and a mortgage, while another is still living at home with no dependants. Would it be right to assume that the first is keen to save for the future while the other is focused on the here and now? Can we assume that all employees over the age of 55 have more disposable cash, or take a greater interest in their benefits package, than either of those 28-year-olds?
Understanding your demographic can help create categories and align employee expectations as a basis, but beyond this life can take unexpected twists: redundancy, grief, illness, trauma, divorce, addiction. In these cases, knowing your workforce and getting crucial input from managers will help build a fit-for-purpose wellbeing strategy that provides the advice and support they need.
This collaborative approach should also enable companies to promote their benefits with regular and effective communication that resonates with workers. Whether you’re offering a simple Employee Assistance Programme or a royal flush of pensions, salary sacrifice, flexible holidays and recognition schemes, only relevant and timely communications will land with all workers.
Universal accessibility to all these benefits is also essential if the overall package is to be fair and equitable for every employee. Some of the best benefits tools, such as HAPI, are now accessed via smartphone-friendly apps giving 24/7 digital access to provide a continuous programme of support, awareness and education around benefits. With this kind of immediacy, you can inform employees about what is available, what it can do for them and how they can access it.