How work can perk up your life

Kathi Jones, director of human resources at security software specialist Aventail, has just given away a free year's lease of a Lincoln Navigator. "It was the biggest car I've ever seen," she says. But Jones's company hasn't given the lease away to charity or to a customer. Instead, the keys to the Lincoln were handed over, in front of a throng of local journalists and TV cameras, to one of its employees.

The lucky recipient in question hadn't entered a competition to win the car lease. What he'd done was recommended six new employees to the company in the past year. It's part of an ongoing staff retention drive that appears to have reached almost manic proportions in Seattle, Aventail's home town.

Jones admits finding and keeping staff is an ongoing crusade, and she's on a mission to come up with new and exciting ideas to lure people onboard and hang onto them once they join. In fact, a set of new wheels for a year is just one of a whole host of benefits dangled temptingly in front of employees to keep them happy. Others include the services of a visiting masseuse on Thursdays and company trips to the nearby mountains for snowboarding and other winter sports. It may seem excessive, but it's paying off. "We have a retention rate of 95 per cent, 30 per cent higher than the industry average," Jones claims.

Trying to attract and keep IT staff in an increasingly competitive market is becoming a major headache for many organisations. One solution has been the development of more flexible remuneration packages, offering you a wider choice of benefits on top of your basic salary. Until recently, this 'self-service' approach was more prevalent in the US than in the UK, but on both sides of the Atlantic, flexible benefits are starting to catch on. This is partly in response to the rise of startup dotcom ventures, which commonly offer employees both flexible benefits and stock options as part of their package.

Synco Jonkeren, director of European product strategy at human resources software specialist PeopleSoft, says: "In Europe as a whole, benefits as a separate concept has barely existed until recently. Now, companies in the UK and the Netherlands, in particular, are paying a lot more attention to benefits as an instrument to keep staff happy."

With its HQ in Silicon Valley, renowned as a hotbed of dotcom activity and an IT recruiter's nightmare, PeopleSoft's own flexible benefits package allows employees to vary their own benefits within certain boundaries, giving them the choice between a pension, life insurance and savings plans.

"There are startup dotcoms across the street waving stock options at staff," explains Jonkeren. "Even though only one in a hundred may turn that into real money, it's a factor and we are trying to be creative in response by offering people this self-service application."

Flexible friends
From an employee perspective, flexible benefits also offer staff more control over their working lives. The advantages of being able to top up a basic salary with perks to suit your individual taste are obvious. After all, one person's meat is another's poison.

Providing more flexible benefits packages in a 'self-service' style has its problems, however. The range of benefits on offer can usually be picked by individuals from some form of human resources system, often on the company intranet. In most cases, the choice is pretty limited, and depends onto your role in the company.

Only 11 per cent of companies employing more than 200 staff offer a flexible benefits package to their employees, according to a survey conducted by HR software specialist Centrefile of 200 senior HR managers from a cross-section of industries. And only 15 per cent plan to introduce such a policy in the next two years.

The low take-up of flexible benefits in the UK is partly due to a deep-rooted dislike of them by HR and administrative staff, who complain that such systems are complex to run and demand more administrative resources.

Technology is another factor holding back widespread adoption, according to Centrefile. While 65 per cent of organisations surveyed have a company intranet, only 12 per cent have developed intranet-based HR information systems that allow staff to access personal, holiday, pay and training details from their own desktop.

Intranet-based self-service applications are set to increase significantly, however - a further 37 per cent of respondents say they expect to introduce HR information systems that can be accessed by employees at their desktops or through kiosks within the next two years.

For employees, meanwhile, it's difficult to know the real value of what's on offer. The actual value of benefits is not always easy to calculate, although benefits can be as much about lifestyle choices as about bottom line differences. For example, you may opt for gym membership rather than a pension, or a particular company car as a status symbol.

"If companies give more choice, they have to ensure their employees know what that means in net worth terms," says PeopleSoft's Jonkeren. Wading through the comparative tax implications of share options, car allowances, pensions and gym memberships, and the host of other benefits commonly offered, can be difficult and time-consuming. But it's worth making the effort, as not doing your sums could mean you miss out.

Perks of the job
IT recruitment company Blue Fruit recently asked 250 IT professionals to rank 14 possible work-related benefits in order of preference. Their feedback threw back some interesting results.

A company pension, that perennial benefits package favourite, is top of the poll - no surprises there. However, this was closely followed by a deal in which employers provided IT equipment for their staff to use at home, not just for teleworking, but simply as a perk. This ranked second overall (although it was significantly more popular with male than with female IT employees).

Share options, the current hot topic in the startup world, came out third overall, again favoured more strongly by men than women in the sample.

Given the recent hype over internet millionaires, perhaps those of us in IT know something the investors don't!

What the Blue Fruit index also highlights is widespread misunderstanding or lack of knowledge about the tax implications of different benefits. Childcare vouchers were the least popular of the work-related benefits listed. But did you know that childcare vouchers are as tax efficient as pensions?

Richard Bicar, a director at Blue Fruit, believes the findings show that we are slow to accept benefits to which we are unaccustomed. But ignorance of the tax implications could cost you dearly, he warns. Choosing to pay for nursery education out of salary, once tax and national insurance have been deducted, is something many people are opting to do, rather than take up the far more tax-efficient childcare vouchers.

PeopleSoft believes it has found a partial answer to helping employees understand the implications of one benefit over another. Its HR portal links internal HR websites to external sources of information, including pension providers and health companies. "By linking to external sources, employers can provide personalised content for their staff," says Jonkeren. "It is good information to help answer questions about choices."

Currently, the HR portal is available only in the US, although PeopleSoft intends to roll out a similar system in Europe.

Culture shock
There's another explanation why companies might be dragging their feet, which goes beyond the complexity of working out who pays what tax on which benefit.

Most companies, it seems, are perfectly satisfied with their current arrangements. The most common reason for not offering staff a flexible benefits package is the belief it would not fit in with the existing company culture.

But the strong position of IT professionals in today's supply-driven market means one way to get more flexible benefits options is simply to move to a more forward-thinking company within the IT industry.

What Kathi Jones at Aventail calls "the shelf-life" of a software engineer in Seattle is three days. That means that if she hasn't interviewed a prospective new recruit and presented them with a firm job offer within three days, someone else will have beaten her to it.

With pressures like that, it's little wonder that some of the newer IT firms are considerably more flexible about benefits and perks than long-established companies: the bring-your-dog-to-work syndrome.

Even on this side of the Atlantic, new dotcoms pride themselves on their more wacky benefits. There is, for example, a startup in north London that provides a real indoor lawn on which staff can relax. Or what about wireless application protocol messaging specialist Teamphone.com, which sends staff to Switzerland for stress-busting breaks?

Lucrative schemes
Even if you've not yet joined a dotcom, it's not all bad news, particularly for those looking for more concrete financial benefits.

According to research from IT recruitment firm Harvey Nash, almost a quarter of IT directors in the UK are now in some form of profit-sharing scheme, and more than a third receive performance-related pay. These sorts of schemes can be lucrative: at least one IT director in the UK earned £1m last year, after cashing in a long-term benefits package.

Six-figure bonuses are still relatively rare, but the dotcom phenomenon has certainly helped accelerate the introduction of more innovative performance-related bonus schemes, according to Simon La Fosse, a director at Harvey Nash. The tax breaks for companies offering share options to their employees, introduced by the Chancellor in the recent Budget, are likely to further this trend.

And that's not all. We're also seeing a trickle-down effect into some of the larger, more established companies, which are now carefully considering the benefits packages they offer to IT staff. Whether it's a reactive move to prevent a brain-drain to dotcom startups, or whether they've realised the benefits to be gained from implementing such schemes, is unclear.

La Fosse singles out for particular praise blue chip giant Diageo, the 18th largest corporate in the UK, formed from the merger of Grand Met and Guinness.

"This is a forward-looking organisation that has a long-term incentive plan for staff," says La Fosse.

Diageo offers an equity-based reward scheme in which the performance of the company is measured not on its share price, but on its performance against its competitors. "This has really helped IT people focus on delivering business benefits."