How to use voluntary benefits and salary sacrifice to increase the value of your reward offering to staff.

How do you use voluntary benefits and salary sacrifice to increase the value of your reward offering to staff? Glenn Elliott, MD, Asperity Employee Benefits www.asperity.co.uk Leanne Frith, Lloyds TSB Group plc. www.lloydstsb.co.uk 1st October 2008. Employee Benefits Live Conference. www.employeebenefitslive.co.uk © 2008 Asperity Employee Benefits Ltd. Sunday, February 22, 2009

So what are voluntary benefits and what is Flex? Voluntary Benefits : Benefits paid for by employees out of their own money > Could be tax efficient, such as Childcare Vouchers > Often be at a special group rate negotiated by the employer Flex system : A system that allows employee to utilise a “pot” of money allocated by an employer to spend on benefits that they choose Core benefits : Benefits that are provided by the employer to the employee on a compulsory basis and employees have no choice in them. 2 Sunday, February 22, 2009

A “Benefits Programme”? Often a combination of : A website listing benefits available and allowing selections Benefits book or other paper enrollment pack Telephone helpline or enrollment line Communications programme Set of benefits arranged and provided by the employer and paid for either by the employee or the employer. Some of them likely to be tax efficient. 3 Sunday, February 22, 2009

Voluntary beneﬁts? Always “employee paid” When “employee paid” Employee Discounts Cycle to Work Dental / Optical Insurance Childcare Vouchers Healthcare Cash Plan PMI 4 Sunday, February 22, 2009

Is the distinction between voluntary and flex important? Well - the answer is YES AND NO. Your employees will worry less about the distinction - they’ll be interested in the benefits that you offer not what we call them Whether you do holiday trading or offer a funded flex pot dictates the type of benefits system you need and the type of provider that you choose and therefore the costs that you have to bear. But ultimately what is important is the range of benefits that you offer, how well you communicate them and how easy they are for employees to access. 5 Sunday, February 22, 2009

To offer these benefits do you need a Flex system or a lower-cost integrated voluntary benefits system? Childcare Vouchers Cycle to Work PMI Buying more holiday 4% of salary to spend on your Employee Dental & Optical Plan choice of benefits Discounts Integrated Voluntary Benefits Needs a full Flex System 6 Sunday, February 22, 2009

Choosing your benefits Whether you choose a Flex system or an alternative platform they both cost a small amount compared to your paybill. A Flex system allows holiday trading and an employer funded flex pot Both should provide you with : Higher profile benefits, with higher employee engagement Single website for all benefits Single employee helpdesk Single employee communications programme 7 Sunday, February 22, 2009

Can VB lead your benefits strategy? Employee Discounts are “most voluntary” benefit of all voluntary benefits Easy to understand - everyone understands “discounts on shopping” Attractive and high profile “Save 25%” is always an attention grabber Universally used - from lowest paid staff to the highest Often used very regularly -multiple times per year The goal in benefits “get the employers benefits brand seen in a positive light as often as possible” 8 Sunday, February 22, 2009

Ease of Employee Discounts Communication Childcare Vouchers PMI Cycle to Work Sharesave Scheme Pensions Value 9 Sunday, February 22, 2009

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So you could think about An easy-to-use employee discount scheme being the anchor of your benefits programme. Use discounts and savings to bring employees to a place where they can learn about other benefits whilst they shop and buy services. Get employees used to your benefits brand and the concept of employee benefits before launching more complex messages Then you can communicate the more complex, but very valuable pensions and sharesave schemes. 12 Sunday, February 22, 2009

Putting it into practice. “From 0 - 50% in 7 months” A Case Study in Effective marketing of voluntary beneﬁts 13 Sunday, February 22, 2009

History Launched in 2002 as an in-house run employee discount scheme with around 100 discounts Achieved moderate success with around 22% employee engagement by 2006 In-house programme became a product offered to other employers via Lloyds TSB Registrars (bringme) The sale of Lloyds TSB Registrars gave opportunity to take a fresh approach and look to what the market could offer L 14 Sunday, February 22, 2009

Lloyds TSB : Key Facts 64,000 staff in the UK UK’s largest retail banking network with 2000 branches Flexible beneﬁts programme in place since 2003 Leading graduate employer with 120 intake each year into a 2 year graduate development programme. A key objective is to get more of our new staff to engage in beneﬁts. 15 Sunday, February 22, 2009

Lloyds TSB - Key Facts Age distribution %age of employee base 40 30 20 10 0 under 25 25 - 34 35 - 44 45 - 54 55 + 16 Sunday, February 22, 2009

Lloyds TSB - Key Facts Gender Split Length of Service 70.0 50.0 37.5 52.5 35.0 25.0 17.5 12.5 0 0 Female Male 10 Years + 5 - 10 Years 0 - 5 Years 17 Sunday, February 22, 2009

Oct 07 Staff Offers Relaunch Employee feedback : Loved the idea of employee discounts but range and strength of offers wasn’t great Staff wanted more of a choice of where they could get discounts, rather than just one type of each shop. Offers on LTSB Group’s own products were popular and felt like a key part of working at LTSB. Feedback from LTSB Group : A more integrated offering within the Total Reward package and offering more choice to all employees Better and more detailed management information 18 Sunday, February 22, 2009

What did we do? Evaluated the market for third party propositions Chose Asperity’s Reward Gateway as a platform to take Staff Offers forward. This would give the employee : Much bigger range of offers, many more big brands and high street names Cashback facility at key online stores including M&S, Next, Boden, Supermarket Savings at Sainsbury’s, ASDA, Waitrose & Somerﬁeld And LTSB Group : Detailed, real time management information - including spend New, integrated communications plan utilising existing group channels 19 Sunday, February 22, 2009

Action plan for re-launch Target set of 50% for employee engagement for the year. So over 32,000 staff would be targeted to register for and use the service Created links between internal comms, intranet, HR and Asperity to facilitate constant employee communication Divisional “reward reps” would be used to help get the message out within standalone divisions such as Scottish Widows, C&G and Asset Finance Briefed Asperity to use existing employee communications channels so as to minimise any additional costs or production of paper-based media. 20 Sunday, February 22, 2009

Branding, Content and Employee Communications 21 Sunday, February 22, 2009

Online Launch Used Lloyds TSB brand images to make the website feel “very Lloyds” Looks consistent with internal websites to show close linkage with rest of the reward offering. Enabled staff to login from work or from home 22 Sunday, February 22, 2009

Staff Registration Validated “Employee Number” for strong security and to allow us to manage leavers from the system Asked additional proﬁle questions to allow segmentation of management information MIS to be used to ﬁne-tune the comms plan 23 Sunday, February 22, 2009

Clearly branded to Lloyds TSB : re-enforcing employer as the provider of the scheme. Over 1500 offers on a broad range of products and services Offers on the group’s own products integrated into the mix Discounts on everyday shopping, groceries and services Ability to earn Cashback on online purchases 24 Sunday, February 22, 2009

What sort of offers did we include? Four key principles Broad spread of offers from Big brand names that people will Broadband to Mobile Phones recognise Childrens to Clothing & Fashion Multiple choice so people can Electrical to Entertainment shop where they choose Groceries to Gardening Good headline offers to attract attention Health & Wellbeing Good savings on every day Green & Ethical shopping - not just holidays and days out 25 Sunday, February 22, 2009

What sort of offers did we include? 26 Sunday, February 22, 2009

Efﬁcient Employee Communications Diverse workforce, geographically far spread, but some common channels that can be used. Approach is to a number of communications channels Global - that reach all employees Area speciﬁc - that reach sizeable pockets of employees Project sponsorship - integrating Staff Offers into the wider reward offer at Lloyds TSB through “sponsorship”, especially of prizes. 30 Sunday, February 22, 2009

Global - Upfront The Lloyds TSB Internal magazine for all staff Monthly print run of 64,000 Available at work as a printed magazine and also online Is something of an “institution” so is well read by most people. Great communications vehicle - well read, no additional costs, reaches all parts 31 Sunday, February 22, 2009

Global - Upfront Monthly features in Upfront from the following formats : Special offer promotions Monthly competitions Cover shot goes here Top 10 new offers Employee Savings Success stories - using real people 32 Sunday, February 22, 2009

Intranet Special news story on the Intranet News site about Staff Offers every 6 weeks. Time limited savings Offers expiring soon Special offers and competitions Requests for feedback and ideas Seasonal offers and news linked with the time of year. 33 Sunday, February 22, 2009

Intranet Advent Calender Another regular - the annual advent calender Online - takes over the Intranet home page for December Very popular with stories and information about real people in the group and their achievements over the year Became “Sponsored by Staff Offers” for 2007 Daily competition to win a prize Over 25 prizes, one per day Gained over 3000 entries per day and resulted in over 10,000 new registrations to the beneﬁts scheme 34 Sunday, February 22, 2009

Niche and Tactical Projects For some call centre teams we provided fortnightly updates for their team brief - so there was always something new to talk about. Staff Offers “sponsored” a Green Fair - promoting environmental and ethical products and companies Cross promotion of the Flex window with “Register for Flex and win a prize sponsored by Staff Offers” 35 Sunday, February 22, 2009

Year 1 Results 36 Sunday, February 22, 2009

Employee Engagement 40,000 Engagement now at 58% and still growing strongly at 2000+ per month 30,000 20,000 10,000 Sep Aug Jul Jun May Apr Mar 0 Feb Jan Dec Nov Oct 37 Sunday, February 22, 2009

Unique Employee Visits 400,000 On average, employees visit the website 10 times per year - almost once per month 300,000 200,000 100,000 Sep Aug Jul Jun May Apr Mar 0 Feb Jan Dec Nov Oct 38 Sunday, February 22, 2009

Employee Spend Employee spend is close to 500,000 £1/2 million per month 375,000 250,000 125,000 0 Sep Aug Jul Jun May Apr Mar Feb Jan Dec Nov Oct 39 Sunday, February 22, 2009

Employee Feedback Key aspects of employee feedback received during the year : It is the wide range and number of offers that makes the scheme a success. It means that people assume the thing they want to buy is discounted through the scheme rather than thinking it might not be. Choice of retailers is very important - people like to shop around and they like to buy from brands that they buy from normally. Genuine offers are really important - employees can be skeptical and will compare with other deals and places to make savings. Above feedback is unsolicited, through Upfront magazine and the website feedback system 40 Sunday, February 22, 2009

Look back on demographics Age distribution Population Uptake 40 30 20 10 0 55 + 25 - 34 35 - 44 45 - 54 under 25 41 Sunday, February 22, 2009

Look back on demographics Population Uptake Gender Split Length of Service 70.0 50.0 37.5 52.5 35.0 25.0 17.5 12.5 0 0 Female Male 10 Years + 0 - 5 Years 5 - 10 Years 42 Sunday, February 22, 2009

What’s next for Staff Offers? Start cross-promoting flex with a Flex window countdown timer Harnessing the traffic obtained by the Staff Offers website to engage people in other benefits Start deeper communication into harder to reach areas including branches and call centres Relax the “no print” rules slightly where printed communications would be really helpful. Broaden engagement into the product teams to help with promotion of LTSB Group’s own products. In 2009 we’re planning more formal surveys and research to help refine the proposition and communications plan. 43 Sunday, February 22, 2009

Key points to take away. Come up with a brand and a logo for your reward scheme and stick to it - it takes time to build up recognition. Get everyone involved - especially intranet and internal communications teams. They are key to reaching all audiences across the Group View communications as an ongoing task - always know what your next 6 months looks like. Look for joined up working with other departments and initiatives - things look much better when coherent and visible across the board. Think big but think small as well - some divisions and departments will need a bespoke approach. Personal stories about real employees work well 44 Sunday, February 22, 2009

Questions Glenn Elliott MD Asperity Employee Beneﬁts Ltd glenn@asperity.co.uk 45 Sunday, February 22, 2009