Isn’t flexible reward an opportunity for HR to step in the driver’s seat and fully contribute to the people experience of the organization?

There is no doubt that the workforce is changing and that organizations have to prepare themselves for the future. Many organizations realize this and almost every organization is already thinking about redesigning their business, e.g., implementing new operating models, using HR systems to smooth the HR processes or implementing robotics to take over the first routine-based tasks.

While implementing these advanced HR technologies, it’s crucial to not overlook the importance of the people in the organization. What about their developmental opportunities? Their work-life balance? Their remuneration? Or.. the entire people experience of your employees?

Never before has so much pressure been put on HR departments to deliver and improve the people experience in all aspects of a job. Also in the field of compensation & benefits, where the majority of the Belgian work population (70%) has a strong desire to influence and build their salary package by themselves.

Research has even shown that 26% of employees are willing to ‘buy’ extra-legal vacation days with their own money. So.. if organizations really believe people are the secret to their success, can we still reward them in the old-fashioned way by not tailoring it to their individual needs and preferences? Or should organizations radically rethink their remuneration strategy and use it as a key driver of their overall (HR) strategy?

The flexibilisation of employment conditions, i.e., cafetariaplan, already exists in the United States and other Anglo-Saxon countries since 1960. The traditional cafetariaplan provided employees the possibility to convert – within a specific time period – elements of the salary package (e.g., bonus) into alternative spending options (e.g., pension saving).

In Belgium it took a while before the first organizations started implementing flexible reward schemes. Not only due to the Belgian specific labor law and income tax landscape, many organizations were also afraid of the administration burden and workload that would be accompanied by the implementation of a flexible reward scheme.

However, due to the growing need for individualization and flexibilisation, and the evolution of (HR) technologies, the flexible reward scheme has become more popular and the use of new technologies is assisting companies in containing the administration workload.

The cafetariaplan by itself has also emerged into more innovative schemes, like the MyFlexReward system of EY. In the more traditional flexible reward schemes, employees only have the opportunity to convert elements of their remuneration package into spending alternatives within a specific time period.

This means, for example, that employees have to decide in December if they want to receive additional vacation days in October of the following year. This type of flexible reward scheme has less impact in the organization.

Many employees don’t know what to choose and/or opt for ‘save’ spending options, such as vacation days or pension savings. Next to that, this design isn’t really making the salary package flexible as the employee is bound back to a fixed salary package once the specific time period has been expired.

The MyFlexReward system of EY allows the employee to convert elements of their remuneration package into spending alternative during the entire year (24/7). With this employees have the ability to opt for extra vacation days at the moment that they really need it.

It’s not only beneficial for the employee, for the employer it means that their compensation & benefits policy immediately can be adapted to societal and fiscal changes.

Organizations often have various reasons to implement a flexible reward scheme. One of the most common reason is that the existing compensation & benefits policy is no longer in line with the market and the diversified expectations of the employees. Besides, many organizations use it to achieve (strategic) HR / organizational objectives, such as:

Driving a strategic (remuneration) strategy

Flexible reward schemes enable organizations to steer the choices of the employees by making specific spending options more of less attractive via conversion modalities. By doing this organizations can achieve (strategic) objectives via a flexible reward scheme, e.g., increasing the use of sustainable mobility solutions.

Increasing the employer branding and keep/attract high potentials

A positive image, due to flexibility and autonomy in the salary package, has a positive effect on the talent management strategy of the organizations: it increases employee’s satisfaction, productivity and retention.

By giving employees freedom and responsibility to compose their own salary package, employees become more responsible for their own career, working hours, developmental opportunities and work-life balance.

For example, an employee can opt for a training instead of receiving a bonus, or choosing for extra-legal vacation days in exchange for a smaller company car. Research has shown that employees who experience autonomy and control are generally more motivated and satisfied.

Increasing employees’ satisfaction, motivation & employability

Thinking about the war for talent, the need for a healthy work-life balance, the Belgian mobility issues.. Isn’t providing flexibility in the compensation & benefits policy a step in the right direction to overcome these challenges?

About the authors

Anne advises and accompanies organizations in transitioning to the Transformative age. She has a robust experience in implementing innovative and digital compensation schemes as well as Change management programmes.

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