BENEFITS IN KIND
Vouchers are here to stay despite higher cost, says IRS
Non-cash incentives which reward staff with retail vouchers are still a cost-efficient and effective part of the benefit package, despite the harsher national insurance regime, according to new research by Industrial Relations Services, the independent pay analysts.
The appeal of this once-prized perk may have been tarnished somewhat by the government’s decision to extend employees’ and employers’ national insurance contributions to cover vouchers from April 1999. Yet IRS has found evidence that non-cash benefits, such as supermarket, DIY and department store vouchers, still play a "valuable role in remuneration, particularly as they have a more immediate and emotional impact than equivalent cash payments."
The corporate voucher business — reckoned to be worth £500 million — looks set to grow, predicts IRS, as companies seek to fill the vacuum left by the demise of tax relief on profit-related pay schemes.
Why? Because organisations operating voucher schemes report a variety of advantages over cash bonuses, according to the IRS study:
simplicity - easy to administer compared with some other reward systems
efficient - high emotional impact or "memory value"
flexible - can be used as part of a formal incentive scheme or recognition programme
cost-effective — when bought in bulk at sizeable discounts.
What’s more, vouchers have many uses, says IRS. Some employers use benefits in kind to reward the achievement of personal or group performance targets, others feel they make a useful menu item in a flexible benefits scheme, and some think they are ideally suited to awards which recognise long service.
There are few conventions regarding the use of vouchers in an incentive scheme, other than common sense. For IRS, there are five golden rules:
align with overall reward strategy
link to clear business objectives
use easily understood, well-communicated criteria
must be inclusive and seek to increase every employees’ commitment
offer good value.
Title: "Adding value through vouchers", Pay and Benefits Bulletin 481, October 1999.
Availability: Industrial Relations Services, tel: 020 7354 5858.