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Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Tuesday 19 Feb 2013
Auto-enrolment: A chance to change reward offerings and drive engagement

Auto-enrolment: A chance to change reward offerings and drive engagement

Just as we get through one legislative minefield, another comes into view to cause pain, workload and - worst of all - unnecessary cost. That's how many of us will see auto enrolment, but what if we looked at it as one of the best opportunities ever to really overhaul our reward offering and use it to drive employee engagement?

There's the added benefit of keeping the finance director happy if we can make use of some key mechanisms to keep the costs down. The other factor that can be brought to bear on auto enrolment is that of employee engagement - how many of our exec management teams have got their heads round the fact that increased engagement leads to more sales and improved customer service?

Bringing all these thoughts together and transforming reward and benefits can lead to more than just getting the new defined contribution pension plan compliant - it can also help to bring otherwise unconnected employees back into the fold.

With this in mind, we was recently talking to a head of reward who was analysing her organisation's flexible benefits scheme. Understandably she was looking to minimise the auto enrolment cost and was exploring whether it was possible to do so through optimising existing salary sacrifice schemes. One of the interesting facts that came out of her analysis was the number of people changing their options (in a scheme that was 10 years old) was more than 70% - the employees were clearly signalling a shift in terms of their preferences. Such an analysis in turn has implications for attracting and retaining talent and led to a much wider and comprehensive discussion on reward and benefits than the initial focus on auto enrolment may have suggested.

Just think what your organisation could do in terms of attraction and retention if it had the tools and mechanisms to really appeal to its target demographic. Aligning the offering to suit your employee population could bring about improvements in employee engagement outcomes, cost savings in purchasing and even tax efficiencies in some areas. Targeting the benefits may even allow potential candidates to self select out of the recruitment process if it isn't really the kind of package that they are interested in - potentially bringing down time to hire and recruitment costs.

The great thing about reward and benefits transformation is that it's not a single product, it's more of a mindset. Don't just look at each element of the package in isolation but take the opportunity to stand back and really think through what would be good for your business. This could range from a small review of a couple of elements through to wholesale change; consider the technology that's available too.

Changing the pension plan arrangements for example could bring the opportunity of allowing employees to be part of a salary sacrifice scheme and that could lead to having on-line payslips and other improved mechanisms for employee communication - these can be linked directly to the employer brand and key business messaging.

That's the real benefit. It's not just about reward; the bigger picture - and one that must be looked at - is the wider employee engagement and commitment agenda.

Sally Knill, senior manager in KPMG's reward and benefits transformation team and Robert Bolton, partner in KPMG Management Consulting and global chairman of the firm's HR Centre of Excellence