Flexible Benefits: Lessons from the travel industry

We a look at how the travel industry is responding to a tightening labour market and treating their employees like frequent guests

Loyalty is the key

How much will your company spend this year to attract, retain and motivate customers? Potentially thousands if you include all the discounts, special offers, lunches and gifts.

Now compare that to the amount you spend to achieve the same with your employees.

So what’s the ratio? I thought so when you exclude basic pay, you spend much more on customer sweeteners than you are keeping your employees sweet.

Cheaper to keep than recruit

It is cheaper to keep an existing customer than get a new one, and now that it is 50% more difficult to fill a vacancy than a decade ago, the same is true of employees.

One industry renowned for plying it’s customers with incentives is; Travel and Hospitality. Ironically according to the Chartered

Institute of Personnel and Development (CIPD) the average hotel has staff turnover of 50%, three times the UK average.

Traditional benefits

Like many industries, traditional benefits for hotel workers are connected to their job; travel related, free use of leisure facilities, plus free or subsidised accommodation, free uniform, and meals at work.

In reality these benefits are the ones that are the cheapest for the employer to provide.

The harder reality is that these sorts of benefits pale in comparison to the flexible benefits offered by industries that need similar skill sets but also offer higher pay and more sociable working hours.

So hotel HR managers are learning from their marketing colleagues and designing compensation and benefits programmes that create the same loyalty from employees.

Lessons from marketing

Examining the same customer loyalty strategies can provide valuable lessons for any employer regardless of their size or sector.

The first thing to remember is that the price or basic wage rate must be competitive. It makes no sense for a hotel to cut room rates to unprofitable levels. Likewise it is illogical for employers to increase basic pay to unsustainable levels.

Money does not motivate employees in the way some people would have you believe. It will de-motivate though if you get it wrong. It is better to go for a competitive basic pay. Calculating a competitive rate is as simple as checking your competitors adverts, but remember, just like houses the advertised price may not be the price that is paid. Compensation surveys can provide more accurate information, but this will come at a cost.

Add on extras

The marketers found it is better to go for a competitive price that is supplemented with benefits that have more value to the end user than they cost to provide. Their solution is point collection schemes, so the most frequent customers or infrequent but big spending customers get the most points and the best rewards.

The employment equivalent bases entitlement to benefits on length of service and seniority. Most employers are providing universal access to benefits, and just like the marketers allowing people without sufficient points or service/seniority to purchase additional entitlement.

Added value

Just as the marketers aim to provide benefits that will be of value to their intended customers so must the employers.

When Barclaycard announced that it will be withdrawing from the Nectar loyalty programme, and replacing Nectar points with free travel insurance. The decision was based on customer research, but meant that they lost customers who did’t value travel insurance.

Understanding what your employees want is the key to running a successful benefits or incentives programme.

What people want

Our research shows that 90% of employees would happily sacrifice some of their salary for more employee benefits. Some of the most popular benefits involve getting away from work. Over half of the employees wanted more holidays, or the opportunity to take a career break or alternative health treatments like a spa day. Over a third wanted help with everyday chores.

Some of the most popular employee benefits can also benefit the employer.

The top choice of over a third of employees was opportunities for ongoing training and personal development.

Close behind were benefits that improve work/life balance.

Only a quarter of people put basic pay as the most important factor when considering job offers.

Government support

The Government encourages employers to provide some benefits.

Salary Sacrifice schemes allow employees to buy products and services from their employers using their salary prior to the deduction of National Insurance (NI). Both the employer and the employee save on their NI contributions, a saving which the employer can use to finance other benefits.

Buying Power

Employers are realising that groups have more buying power than individuals, and are getting providers of discount shopping schemes to negotiate favourable prices for their employees on everything from take-a-way pizzas to new cars.

Financial services

Pensions and other financial products form a cornerstone of many benefits programmes, and are likely to increase in importance as the real value of state pensions decrease. If you have five or more employees you must provide employees with access to a stake holder pension.

Motoring

Company cars remain popular and aspirational benefit. Benefits related to car maintenance and breakdown services are increasingly popular with people who have opted to take a car allowance instead or are not entitled to a company car.

Shares

Share Option plans are not as popular as they were in the nineties and the dot.com boom. This is primarily because there is no connection between what an individual employee does and the share price, which is the value of the benefit.

Bonus

A more direct financial benefit is a bonus scheme. But as these often include subjective assessments it is important that the assessment criteria are clearly communicated and the actions required by the employee to obtain the bonus clearly understood.

Just ask

These are just a few examples, there are many more possibilities.

But remember what you include in your benefits scheme should just like a customer benefits programme be decided by what the users, your employees want.

Go on ask them, it might surprise you.”

Abeceder

Abeceder is a human resources management consultancy unlike any other.

Abeceder offers clients a comprehensive range of human resources management solutions that are designed to meet the needs of any business challenge and fit any budget.

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