Advice on Target

Many corporate intermediaries believe their consultancy offerings meet the needs of employers perfectly. Nic Paton asks HR directors where advisers are giving them what they want and where they can be off target

It’s probably fairly safe to assume that Oscar Wilde was not thinking of the relationship between HR and employee benefit advisers when he uttered the immortal lines, “the salesman knows nothing of what he is selling save that he is charging a great deal too much for it”. But without wanting to be too cynical, a sense of being on the receiving end of a “hard sell” has in the past often tempered HR’s attitude towards employee benefits advisers and consultants.

If not actively suspicious of their motives or intentions, there is often at the very least a lack of clarity among HR professionals about what exactly advisers can bring to a business or how they might be able to add benefit beyond the specific task they have actually been commissioned to carry out.

As Gillian Hibberd, corporate director (people and policy) at Buckinghamshire County Council rather more tactfully than Wilde puts it: “It’s all about looking at where you can add value rather than having just a pure contracting relationship. It is a subtle shift but an important one. In the past, there has sometimes been that transactional element in the relationship.”

In June Hibberd’s council, along with Cambridgeshire and Hertfordshire county councils, became the first in the country to introduce total rewards statements for their staff, an initiative put in place in conjunction with Edinburgh flexible benefit provider Vebnet. The pilot scheme will go live in September with the intention that statements will in time be offered to 60,000 public sector employees across the three councils.

For her, bringing in an external adviser made complete sense. “When we wanted to do total reward statements we immediately thought it would help to get an expert in that particular field to come in. We have been able to tap into their knowledge and learn from them,” she explains.

But, concedes Richard Morgan, head of consulting at Vebnet, advisers can sometimes be guilty of trying to fit a square peg into a round hole.

“They can have lots of ideas that are potentially really wonderful for their clients, but they try to sell them when the client does not want them. And this leads HR sometimes to feel it is being sold to rather than consulted with,” he says.

“A good adviser will listen to their client and try to understand what their true needs are and try to bring the benefit of their experience to bear on that. In my experience the relationship tends increasingly to be one of equals working in partnership,” he adds.

What’s more, a lot of companies in the current tougher economic climate are looking at how they can get more from their benefit spend or maximise their tax breaks, something that advisers, with their expertise and overview of the marketplace, should be well placed to capitalise on, argues Jonathan Watts-Lay of JP Morgan Invest.

A good example of this in action, he suggests, is the benefit both employee and employer can often get from transferring employee share schemes into workplace Sipps – yet this is something rarely recognised.

“There is no one really on the provider side that is out there talking about this stuff to companies. People look at their share scheme as something completely different to their pension,” he explains.

In fact, using the tax relief you can get when you transfer a share incentive plan into a Sipp means that companies can start creating pension pots for literally less than nothing, he argues.

“When I explain this to directors of reward – that they can use the tax system to link it all together – and that the risk downside is quite marginal while there is no cost to employer, it becomes quite a compelling reward strategy for them. Yet companies often say they did not realise they could do that,” he enthuses.

Often the attitude from HR can be “here is another consultant trying to flog me services”, agrees Clive Wright, principal at Mercer.

Yet an effective partnership can have the added benefit of giving HR teams greater kudos within their organisations and with colleagues, he argues. Particularly where there is a lot of employee apathy or lack of interest in their benefits, an adviser’s expertise can sometimes help to get the message across more effectively than if it is seen as just more talk from “management”.

A poll of 1,300 people by Aon Consulting in June concluded that 98 per cent of staff underestimated the true amount their employers spent on benefits – a worrying perception gap at a time when retention of key individuals remains a key concern for many employers.

But what advisers always have to remember is that their clients will inevitably have their own agenda that they are working to, says Gareth Ashley-Jones, head of flexible benefits at Aon. “Sometimes clients will ask us to do things for them without letting us understand the real reason for making that request, so in that scenario it is not a proper, open, honest partnership,” he points out.

“There are times when we do get commissioned to do a specific piece of work and no more than that and you have reluctantly to walk away even if you think you could have done more. If the client is very blinkered or just focused on their objectives for that year there is not much you can do about it,” he says.

Similarly, as an adviser, there can be a temptation to get excited and overload the agenda, with the result that it all becomes too much to implement.

“So you need to understand the client and sort out the timescales. It might be, say, that you introduce a childcare vouchers scheme in the first year and a total reward statement in the next so that it is manageable,” stresses Ashley-Jones.

HR will have the knowledge of the organisation, its people and processes. The adviser will have the expertise in best practice, new ideas and the general knowledge. The challenge is bringing those two together to mutual advantage, agrees Vebnet’s Morgan.

“HR can have an immense workload in just establishing priorities. So we as advisers have to understand that we might have lots of ideas about how to generate value and save costs within the organisation, but of course the internal people have a hundred other priorities to deal with too. So it’s a case of asking all the time ‘what do they need?’,” he points out.

“It is not untypical to be brought in to help with a specific project, to deliver it and then everyone walks away without having taken the time to do some accounts management. What people should ideally be doing is exploring what is the wider context, where the project fits in and whether there are economies of scale that can be expanded,” he adds.

Turning to an adviser can often make a real, tangible difference, says Ashley-Jones. “I had one client last year who came to me asking for advice, given that times are hard, on how to support employees as much as possible. So we were able to help them to introduce a retail discount card,” he points out.

“I had another who was having a problem converting contract IT staff to permanent. We were able to come in and demonstrate to them how important the overall package was,” he adds.

Or, if an employer wants a flexible benefits package or a total reward statement, it may be worth having a discussion about whether online pay slips or better absence tracking technology would also be of benefit to the business, suggests Morgan.

“Or on something like PMI, instead of saying to an employee you just have cover for, say, £950 you can provide a much greater depth of information and help them access things like hospital lists and claim forms and help with procedures. So the employee has much more information at their fingertips that they can use rather than having to phone up HR and take up their time,” he recommends.

“There is a fine line between education and the hard sell. Where advisers often are valuable to the HR team is in being seen as an independent party able to validate the business case. Sometimes HR can find it difficult to convince the rest of the business if they are just trying to do it themselves. So having an industry expert come in and say ‘this really is true’ can often add weight when you are trying to push something through,” he adds.

Certainly, Buckinghamshire’s Hibberd has found that using external providers to sell the message and create buy-in can be helpful. “They can help us in terms of how it is sold into the organisation and putting the business case,” she points out.

“Someone may be able to get £10,000 more in basic salary by going to work in the private sector but now we can say to them have you taken into account how much we are paying into your pension pot. Often people do not have a clue,” she adds.

But, while it is a good idea to have a proper dialogue and look at the bigger picture, as an HR professional you still need to be very clear about what it is you want from that relationship, Hibberd stresses.

“It can really help rather than just going straight to what is it we need to be doing. But you do need to be clear about the parameters,” she says.

As to the future, external advisers could play a much greater role in educating employees about retirement, predicts Mercer’s Wright.

“The relationship is changing, yes, but slowly. There is quite a lot of discussion about what is information and what is education; how much do we just want to give information and how much do we want to educate people about some of these issues?

“In particular they will, I feel, be explaining more what certain benefits are going to deliver,” he adds.

“There will be more use of external consultants for the general employee population with a view to informing them and encouraging them, through modelling and planning processes, to help them make the right decisions for their future,” he forecasts – something one imagines even Oscar Wilde would have been hard put to disagree with.


Expert view

Anne Barnett, compensation and benefits manager, TD Waterhouse

Meeting the customer’s needs

Stockbroker TD Waterhouse has been working with Aon Consulting for the past 18 months, introducing a range of extra benefits for its 500 staff including long-term disability, life assurance, tax-free car parking, holiday trading and a pre-paid retail card to replace paper retail vouchers.

“What we did right at the beginning was sit down with them and explain to them what our corporate objectives were and how our demographic profile was changing. Without understanding that it would have been very hard for them to understand us,” explains compensation and benefits manager Anne Barnett.

Having an open relationship where both sides felt able to make suggestions brought tangible benefits, she argues.

“We have been very open to suggestions. For example, Aon suggested that we could introduce a canteen card that allows people to buy snacks or lunch with their pre-tax and NI salary, which we would probably not have thought about on our own,” she adds.

Similarly, the company recently got back in touch to see if there was anything it could do to help employees cope with rising fuel, food and living costs.

“They came back straightaway and suggested we could re-open some of the benefits that we had launched at the start of the year, including the canteen card and a pre-paid Mastercard that offers various discounts,” she adds.

The key is to have a relationship that is more a partnership of equals than one of buyer and seller, she agrees.

“In the past what you’ve sometimes had is people just trying to get a good deal rather than getting to know an organisation or trying to be creative in how they are working with it,” she points out.