An employee is considered truly engaged in her work if she says good things about the company, has a desire to stay with the company and will strive to “go that extra mile,” said Hewitt Associates consultant Tim Clarke at the HRPAO Conference and Trade Show in Toronto last week.

A number of key drivers, such as senior leadership, recognition and career opportunities, foster that engagement. But can pension and benefits foster that engagement, too?

“Pension and benefits are not necessarily drivers of engagement,” Clarke said, “but they can certainly be roadblocks to engagement.” If pension and benefits aren’t done well, the other drivers won’t really take hold, he continued.

So how can an employer’s pension and benefits create a clear road to engaging employees and attracting and retaining new hires? In a word, flexibility. Flexibility through work arrangements, pensions and benefits.

Flexible work arrangements
Although a lot of companies are offering flexible work arrangements already, the younger workers coming into the workforce, said Clarke, are expecting the workplace and environment to be tailored to them. Such things as flex hours, eldercare support and job sharing are attractive to prospective employees.

In a 2006 survey, employers were asked what they offered currently and what they planned to offer over the next three years(by 2009). In 2006, 84% offered flex hours, with 90% to do so by 2009. With phased retirement, 26% of employers offered it in 2006, and 55% said they planned to offer it. One option that Clarke said did not surprise him was the unpaid sabbatical, with 44% of employers offering it 2006 and 58% by 2009. “People want to take big chunks of time off,” he said.

Flexible pensions
Employees want not only big chunks of time, but also big chunks of money. When looking at tailoring pensions, employers should ensure their pension plan offerings fall under one of three categories, said Clarke.

Simplicity/ease of use: An auto-enrollment plan is simple and easy to use for employees and won’t let them forget about their pensions.

Flexibility: “People want to see every possible investment option out there. As well, they’re looking to move money around.” Clarke said he sees a lot of flexible benefit plans in which employees can take their money and put it into their retirement savings, and he sees plans where retirement savings are put into a flex benefits plan.

Shared responsibility: With defined contribution plans, some employers are sharing responsibility, said Clarke. The employee puts in 5% and the employer puts in 5%, said Clarke, fostering a “we’re in this together” approach.

Flexible rewards
As the definition of benefits broadens, Clarke is seeing more organizations that are allowing employees to move their money back and forth between retirement and benefit plans. An employee, for example, could take her $5,000 bonus and instead of getting the total amount in cash, could put it into a health spending account or a flexible benefits plan(both of which are tax shelters), he said. “That concept of allowing people to take their variable pay and put it into a non-taxable vehicle is very attractive.”

Companies in both the U.K. and Australia have adopted total compensation, said Clarke. The employee is offered his entire salary as a non-taxable flex account; the employee then chooses how much he wants as cash and how much he wants to go into various benefits. However, Clarke said that companies really need to be of the total compensation mindset to implement this.

With the changing workforce and the increasing demand for flexibility, pensions and benefits certainly play a role, albeit peripheral, in engaging, attracting and retaining employees. “Benefits tend to be one of those things that people will rarely go to an organization for,” said Clarke, “but they can be the straw that breaks the camel’s back.”

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