If you’ve ever lived in a small town or are over the age of 30, you’ll likely remember a time when your options for entertainment or products at the grocery store were limited. In today’s world, it’s all about bespoke, or personalization. No two people are alike and customizable preferences have become a way of life from a new pair of kicks to a new car. Employer benefits are no different.
As diversity and inclusion become more important, companies that focus on employee engagement through workplace programs have learned that providing allowances increases employee participation by as much as 3 times more than companies that offer subsidies alone.
Employee engagement leads to an increase in overall employee satisfaction and happiness, which is why the majority of the companies on the Fortune 100 Best Companies to Work for 2018 list offer employee benefits programs.
Bespoke Benefits with Employee Allowances
What are employee allowances? Allowances, just like when you were a kid, provide you with a set dollar amount to spend on whatever the employee values most. Some companies, like Salesforce, prefer to focus on employee wellness initiatives providing $100 to each employee every month for their health and fitness expenses. The $100 allowance is administered through reimbursements, meaning an employee pays out of pocket first for the program and then submits an expense report for reimbursement.
We see the most success from companies that offer a monthly allowance within a workplace programs administration solution so that the allowance acts like an employee wallet. Focusing on making engagement easy, we see participation rates as high 95% when workplace programs are offered on campus, employees can use their allowance on any program, and the allowance is automatically provided.
“Employee engagement is the key to attract and retain top talent in today’s competitive market. Employee allowances empower [our] employees with choice.” Says Brian Sereda, CFO and Head of HR of Energous. Energous provides an employee allowance per month to spend on fitness and health or other workplace programs and services that employees value most, like massages for example. As a result of letting the employees choose, Energous has seen an average employee engagement rate of 95%.
Traditional reimbursement programs can be cumbersome on administrative staff when thousands of employees are submitting expense reports per month. Switching to an employee wallet model can relieve not only employees, but HR staff as well.
Subsidies Guess at What Employees Want
Typically, HR will conduct a survey that only 10% of employees will fill out. They will then use that data to provide subsidies based on the company’s initiatives around fitness and wellness. The challenge is that companies are guessing at the preferences of the other 90%.
Companies who subsidize select workplace programs typically see a participation rate of around 37%. Those companies that simply offer workplace programs without any subsidies, should expect an engagement rate of 10% or less.
Companies tend to shy away from offering allowances for two reasons: cost and difficulties executing. Subsidizing a few fitness programs may seem like a budget friendly option, but it is important to look at your cost per engaged employee. If less than half of your workforce participates, the unengaged employees may find they don’t connect with the company and can be tempted by the recruiters from your competitors.
While the cost per employee increases, it’s important to understand that allowances are an investment in an employee’s happiness. Replacing an employee can cost 213% of their salary for highly trained positions.
Getting started with employee allowances means shifting the way that your workplace employee programs are managed.
- Decide what types of workplace programs the allowances will cover – we recommend a bespoke option allowing each employee to choose from a variety of programs and services.
- What’s the budget? You don’t have to start with $200 per employee, per month. You’ll see a change in engagement for as little as $25 per employee per month.
- Make it easy for employees to use by automatically depositing funds into an employee wellness wallet and providing a wide variety of programs and services. If employees can’t sign up and use their allowance in three clicks or less (including log in), your engagement numbers will drop dramatically.
Providing allowances fosters a sense of community and employee engagement, which leads to higher retention. It’s important to remember that it’s not just the cost you pay today; it’s mitigating the cost of tomorrow.
|Alex Shubat is the cofounder and CEO of Espresa, a workplace programs administration platform that empowers companies like Workday, Box, and Pandora to provide world-class workplace programs.