Business School
Department of Business System

NEW ADVANCES IN BUSINESS
12-13TYAABSS007-3:

INNOVATIVE MOTIVATION
IN ECONOMIC CRISIS:
THE FLEXIBLE BENEFITS SCHEMES
BY
Mai Ngoc Nguyen
1215894

An assignment submitted in partial fulfillment of the assessment for the New Advances in Business (12-13TYAABSS007-3) unit

March 2013

* Contents
Contents 2
EXECUTIVE SUMMARY 3
LIST OF FIGURES 3
LIST OF TABLES 3 1 Introduction 4 2 Literature review 6 3 The economic crisis and the transition in methods of motivation: The need for an innovate benefits package 9 3.1 Impacts of the economic crisis on employees and employers 9 3.2 The transition in methods of motivation: The need for an innovative benefits package 12 3.3 The traditional benefits package and its motivating effectiveness 14 4 The flexible approach to benefits provision in a gloomy economy 16 4.1 Effectiveness of the flexible benefits schemes in motivation 17 4.2 Factors affecting the motivating effectiveness of the flexible benefits schemes 18 4.3 Current issues influencing the adoption of the flexible benefits schemes 20 5 Conclusion 21
APPENDIX - Changes in the British WorkForce 22
REFERENCES 23
FURTHER READING 27

* EXECUTIVE SUMMARY
In recent years, in the UK, both employees and employers have to bear negative impacts from the recession, especially employees with their financial difficulties and diverse needs. It is more important than ever for motivation. However, employee motivation is getting harder and harder in the face of economic crisis. In times of gloomy pay awards, employers are finding ways motivate their workers through benefits. Benefits than can address the financial concerns and the diverse needs of employees would work effectively as motivational factors. The traditional benefits package is likely to be ineffective during recession, so employers are seeking for an alternative approach to benefits provision. The flexible benefits schemes are getting more popularity since many evidences has proven its positive effects in motivation. However, it is not always easy to construct truly effective flexible benefits schemes. It is necessary to have a careful consideration for the structure, communication, implementation, administration, the benefits of the schemes and some current issues that can influence the adoption of this approach. * LIST OF FIGURES Figure 1: The process of strategic reward management 8 Figure 2: Food inflation 10 Figure 3: Earnings growth and inflation (%) 11 Figure 4: Maslow's hierarchy of needs 14 Figure 5: Common structures of flexible benefits schemes 20

* LIST OF TABLES Table 1: BENEFITS STRATEGIES IN PLACE DURING TIME OF LOW PAY AWARDS 18

Introduction
Motivation is a range of processes that directs an individual towards a goal continuously. Motivated employees can work harder, have higher productivity and greater work performance, possess more profound organisational relationships, stay with the oganisation longer and are less likely to leave. That is because motivation is one of the three factors that affects employees’ performance according to Moorhead and Griffin (1998) and it is indicated in the following formula:
Performance = Motivation + Ability + Environment
Of all the above factors, it is generally accepted that motivation is the most difficult one to manage. This is mainly due to the complexity of human nature while the other two factors can be adjusted accordingly to suit the needed performance. As a result, the most challenging job for every employer is to motivate employees to work at their best for the organization.
Nowadays, what employees seek from their organisations no longer restricts to just financial rewards. Furthermore, the tense competition between companies in talent attraction and retention has given employees the power to demand more than just a sensible pay, and there are evidences that companies are paying attentions to this matter. According to a recent survey cited by Sadri and Bowen (2011), salary had only a 20% impact on job satisfaction. To motivate employees, companies are now finding ways to satisfy their needs on both extrinsic (financial) level through monetary compensation, as well as intrinsic (psychological) level through accompanied benefits. The constant attempt is to be innovative in constructing a benefits package that can draw in and keep talented workers.
In recent years, employee motivation in the UK is getting harder and harder in the face of economic crisis. Employee needs become more sophisticated and difficult to be fulfilled under economic pressure. Meanwhile, companies’ spending on human investment needs controlling closely, which leads to the doom and groom surrounding monetary compensation. This gives pace for employee benefits to rise in popularity as a promising option of motivation. According to Employee Benefits Research 2012, there has been a consistent rise in the percentage of employers that offer benefits through other mechanism than traditional benefits (flexible benefits, voluntary benefits or salary sacrifice arrangement). This information suggests that employers doubt the effectiveness of the traditional benefits schemes in motivating their employees in times of uncertainty and they are looking for alternative schemes that might have better effects.
The paper aims to discover the alternative benefits schemes that can better motivate UK employees during gloomy economic climate. To achieve this purpose, the paper is going to: * Investigate the impacts of the UK economic crisis on both employees and employers to find out the trends in UK employee motivation. * Assess the effectiveness of the traditional benefits package in motivation of British today workforce and economic environment in order to explain employers’ shifts to a more flexible approach to benefits provision. * Suggest the potential approach and evaluate its motivating effectiveness in the same context as the traditional package.

Literature review
Many efforts have been made to understand how motivation works and the factors that determine its strengths. Frederick Taylor (1911) believes that employees are motivated by the economic interests only. This view was criticized powerfully later as researchers found out that human behavior is much more complicated than what Taylor had assumed. Other thinkers soon realized the importance of employees’ role in organisations and form a new approach to motivation called Human Relations Approach (Middleton, 2002). This approach suggests that employees’ job satisfaction is closely connected with work performance and it is fueled by many other needs than financial desires. The theories developed from the approach can be classified into two types: Need-based and Process-based ones. Need-based theories explain how employees are motivated by satisfying their needs. Important theories include Maslow’s hierarchy of needs (1943), Alderfer’s ERG theory (1969), Herzberg's Two Factor Theory (1959), and McClelland’s Achievement Need Theory (1961). On the other hand, process-based theories concerns with “how” motivation occurs and consists of three famous works: Expectancy Theory (Vroom, 1964), Goal Theory (Locke and Latham, 1990), and Equity Theory (1963). These theories also help to categorise types of motivation practices, which are monetary incentives, job design, rewards, and quality-of-work-life (Kreitner, 1986).
Many studies have proven that rewards are an effective way to motivate employees. Reward strategy is used widely and plays an important role in organisations nowadays. Employee benefits are also a form of rewards in the company’s reward package in addition to various forms of cash pay such as pensions, paid holidays and company cars. According to Armstrong and Murlis (2004), employee benefits are provided for the personal needs of employees to increase their commitment to the organization and demonstrate employers’ care for them. They generally form a significant part of the remuneration package, with estimates suggesting that their value can account for up to around 40% of the costs of employing staffs. Any approach to employee benefits must be considered in the context of the overall reward and business strategy of the organization (the integrated approach).
Figure 1: The process of strategic reward management

Source: Adaption from Armstrong and Murlis (2004) cited by Chartered Institute of Personel and Development (2000)
In the UK, in mid 1800s, employee benefits provision was offered for the first time due to a common belief of employers’ moral duty to look after their employees. At the turn of the 20th century, with the arrival of national welfares to the general population, organisations built benefits provision based on state benefits such as complementary pension or health arrangement. From then on, the implementation of incomes policy and taxation regime has driven the design and content of employee benefits to become more generous. Currently, the major types of benefits on offer among employers include paid holidays and time off work, pensions, healthcare and risk benefits, company cars and car allowances. Choices of benefits provision has been changing over the years as reported in Employee Benefits Research 2012, offering benefits through another mechanism than the traditional core package, be it via flexible benefits, on a voluntary basis or through sacrifice arrangement.
Flexible benefits – the focus of the paper – provide employees “a choice within limit of type or scale of benefits offered to them by their employers” with a wide variety of approaches to satisfy their personal requirements. It is important to clearly distinguish this arrangement with voluntary benefits (Armstrong and Murlis, 2004). Flexible benefits gained their roots in the USA around thirty years ago and they soon become popular across the western world. Flexible benefits are usually offered through a formalized plan in which employees are able either to retain their existing salary while varying the mix or levels of various benefits they receive, or to adjust their salary up or down by taking fewer or more benefits respectively. However, in reality, they can appear in other forms in a benefits package, for example, on a voluntary basis or through salary sacrifice arrangement. In most schemes, it is typical to set out a list of core benefits and have a menu of non-core ones for employees to given consideration to. The flexible approach sparks interests due to the assumption that not all employee benefits are equally wanted or appreciated by the staffs. Flexible benefits are very popular and well-developed in the US, but their growth in the UK has been very limited despite all the discussion and attention generating over the years, particularly because of the efforts and costs of introducing and administering them. In this paper, whatever the forms in which flexible benefits appear, they are all considered as flexible benefits schemes.

The economic crisis and the transition in methods of motivation: The need for an innovate benefits package
Impacts of the economic crisis on employees and employers
The British economic recession officially began in the spring of 2008, triggered by the US financial crisis in 2007, recovered somewhat during 2010 and 2011, and showed signs of return at the beginning of 2012. The crisis obviously has very bad impacts on both employees and employers.
In terms of employees, the crisis kicks in their everyday lives first. Their living standard is worsening because of increasing price, declining pay and rising debts. Employees, as consumers of the economy, have to face rising living costs caused by high inflation. The prices of commodity have been going up rapidly, pushing up the basic living costs such as gas, food, and house rent. For example, food inflation in the UK is currently standing at 6.3%, three times higher than the average 2.1% of the world’s seven biggest economies, according to figure from OECD (Figure 2).
Figure 2: Food inflation

Source: http://www.oecd.org
Meanwhile, British incomes have been shrinking heavily on the onset of recession. As said by Office for National Statistics, national income per head of the UK in the four years of 2008-2012 dropped by 13%, much more sharply than it did after the recession which came in the wake of Winter of Discontent and the 1979 oil shock (BBC News, 2012). Moreover, the high inflation continues eating into what people are earning. Figures from XpertHR shows that the pay rise in 2012 is only 2.5%, barely keeping track with the inflation rate of 3.7% (Attwood, 2012). The below graph indicates more clearly how the inflation outstrips the growth in people’s earnings:
Figure 3: Earnings growth and inflation (%)

Source: This is the Money (2011)
Debt is also becoming an increasing problem that almost British employees have to confront, especially the ones who have family. As analysed above, people have to spend more than what they earn. The fact that their sources of incomes decrease causes them to take debts to sustain their everyday lives. As a result, debts build up constantly and people have to struggle to manage them. According to a research from Money Advice Trust, around 10 million people in the UK, about 20% of adults, are in such situation (Culpan, 2012).
All these above issues put almost all British employees into financial difficulties. Many reports and surveys have recorded such a picture. For instance, the Chartered Institute of Personnel and Developments (CIPD)’s survey report Summer 2012 Employee Outlook focus found out 59% of UK employees reporting some financial struggles.
Financial concerns can have serious impacts on employees both at home and at work. At home, employees are under the pressure on their worsening living standard as noted before. At work, financial worries are a profound source of stress for many. As indicated by one study, among the five key stressors in life (relationships, work, health, crime/violence, and personal finance), personal finance is rated as the number one source of stress; concerns about personal finance are five times higher than those regarding health (Cash, 1996 cited by The Shepell FGI Research Group (2009). Research from Axa in 2010 discovers that a high proportion of UK employees suffers from physical and mental stress over financial worries (Barton, 2010). The research also points out that poor financial wellness is one of the most common causes of workplace absence and declining job productivity.
Another remarkable source of stress for employees is job insecurity. The highest rate of unemployment over the decade and massive redundancies during crisis cause anxiety and suspicion over job position. For the majority, it is case of having watched colleagues leave while those left have to pick up the pieces to carry one, often still feeling jittery about their own jobs. Around one fifth of UK employees feel that they could lose their jobs because of the economic downturn, reported by CIPD in the Autumn 2012 Employee Outlook Focus. People who are still in employment do everything they can to hold on to a regular pay cheque under severe pressures.
Financial worries and job insecurity have boosted workers’ stress to an unprecedented level. Work stress levels during recent economic downturns rose by more than 4%, compared to annual rises between 0.1% and 1% from 1992 to 2009 (Moskvitch, 2010). Increasing stress has led to decreasing employee productivity and low morale in most organisations in the UK.
Regarding to employers, the most noticeable effects of the gloom economic climate are all related to finance in some ways as well. As it gets more and more difficult to gain access to financial sources, most organisations restructure their business and control costs under rising scrutiny. Generally, the workforce whose salaries/wages and rewards usually take up a big proportion in business operating expenses is the first target to reorganize in order to cut costs. During the period of 2008-2009, massive redundancies and job cuts were carried out across all sectors of the UK economy, and the number in 2008 alone already reached 154,266 (The Telegraph, 2008). The pay is also in gloom: small increase, freeze or reduction. With the downsizing workforce, employers have to increase the workloads for employees. These actions impacts negatively on the workers as mentioned above. Consequently, employers face lower employee productivity and performance arising from stress and anxiety. Stress is estimated cost the economy £3.7 billion a year in lost productivity.
The transition in methods of motivation: The need for an innovative benefits package
The analysis in the previous part has proven that it is more important than ever for employers to motivate their employees. In a research by Grass Foots, 61% of employers agree or strongly agree that, in times of economic uncertainty, there is a greater need for motivation with incentives (Washington, 2009). However, how employers should conduct motivation when both parties are in race to straighten their finance is a challenging question.
It is difficult for employers to use pay and monetary bonuses in its remuneration package for motivation in such a gloom economy. A rise in pay and bonuses, however small it is, can be extremely costly when being implemented. A good example for this is the case of how increased bonus backfire Gordon Brown in 1999 when, as Chancellor, he awarded pensioners an increase of 75p per week. In fact, Mark Childs, managing director of the Total Reward Group, recommends using a pay rise altogether if it is only around 1% (Barret, 2012). The doom and gloom picture surrounding monetary compensation has given pace for benefits to grow in popularity as a promising option of motivation. Traditionally, benefits have been already seen as an effective retention and recruitment tool in the eyes of UK employers. According to Employee Benefits Research 2012, these two are the top reasons why employers offer benefits, 80% for retention and 79% for recruitment. Furthermore, there is a number of positive news about how the economic crisis changes employees’ attitudes towards benefits. The Guardian’s study in 2009 found that a high proportion of employees are afraid of taking time off from work to preserve benefits, and more than half of them even agree a salary deduction or no raise in bonus to maintain the current level of benefits. The increasing awareness by employees of their financial vulnerability seems to have translated into greater appreciation of the value of benefits in the reward package.
As Armstrong (2010) said, employee benefits are developed on the basis of the needs of employees in order to become motivational factors. Therefore, to motivate employees during crisis, the benefits must be able to satisfy the unfulfilled needs of employees. Recently in the UK, employee needs become more sophisticated and difficult to be fulfilled under economic pressures. The hierarchy of needs developed by Abraham Maslow (1943) can help to explain the changes in employee needs during economic downturn. There are five basic needs that underline all human activities. Those needs, presented in a hierarchical order from the most basic to the most advanced, are physiological, safety, love/belonging, esteem and self-actualisation (Figure 4).
Figure 4: Maslow's hierarchy of needs

Source: Maslow (1943)
For a person to be motivated, each need has to be satisfied significantly in order for an individual to move up to the next level. However, in times of economic uncertainty, the two most basic needs of employees, which are physiological and safety, are in lack of fulfillment. The previous part of the paper has given a clear picture for this statement. Fundamentally, these two needs are not fulfilled due to the financial difficulties employees are experiencing. These worries are likely to lead to problems related to employees’ wellbeing such as health, mental pressures, etc. Benefits that can practically reduce employees’ financial stress or contribute to improving their wellbeing will be effective motivational factors as they can fulfill the needs that are missing. This is also one of top concerns in the minds of HR professionals during economic crisis.
Meanwhile, the difference of human needs between individual and individual are generally accepted in theory of motivation. Therefore, each employee must be treated as an individual with his/her own unique needs. This fact is especially true since today’s workforce in the western world in general and in the UK in particular is getting different, compared to the past and within the working population itself. Podro (2011) has outlined three significant pointers to changes in the composition of British workforce. The working population will be older than it is now and it will also be more femenished and more ethinically and culturally diverse (for a full description of the changes, see Appendix A). Taken all these changes together, it is essential to pay attention to the needs of each individual when providing benefits.
To sum up, motivation is extremely necessary in the face of crisis, but how to conduct motivation effectively under the economic pressures is a challenging task. Employers are now looking at other ways of motivating staffs beside monetary compensations due to the doom picture surrounding them. Employees benefits are rising in popularity as an alternative option. A good benefits package can be much less costly than an increase in pay and bonus, and employees are currently showing greater attention and appreciation of the valued of their workplace benefits. Benefits that can reduce employees’ financial difficulties and attach special importance on the wide variety of individual needs in the workforce would work as effective motivational factors during bad economic climate.
The traditional benefits package and its motivating effectiveness
Benefits in a traditional reward package are fully paid by employers and pre-defined. The package usually includes vacations, sick leave, company car, holidays, contribution to life, health insurance, and pension cover. This benefits package has been practiced in corporates for several decades. It has been seen as viable and effective in motivation for many years. It is questionable if the view is still true.
In the past, the dominant part of the working population was the stereotypical Caucasian male class. Their needs and demands were the basis for formulating reward strategy, to which benefits belong. However, as mentioned above, the working population in the UK has become significantly different with a more complex composition. It is logical to recognize that different categories of the workforce have distinctive needs and expectations. Added to this, most theories of motivation emphasize that providing employees with rewards that they want and desire is associated with greater motivation. This fact can be highlighted more clearly through some very simple examples. Young people would be more interested in such thing as holidays and company cars while mature employees would concern with their retirement plan, presented by pension benefits. A working mother would greatly value flexible working hours and assistance with childcare.
The fixed sets of benefits in the traditional package cannot address the unique needs of each group of employees. The package cannot ensure employees feel valued and fairly rewarded to put more efforts for better work performance. Thus, motivation is not achieved. Taken together, it can be concluded that employers will have to find a new approach to benefits provision in place of the traditional package.

The flexible approach to benefits provision in a gloomy economy
Flexible benefits scheme is increasingly getting more popular as a smarter alternative approach to motivation through benefits beside the traditional package, with 62% of employers currently offering this type of benefits package and 21% plan to do so in the future, according to research by Aon Hewitt (Patton, 2012). The popularity of the approach is much clearer when looking at the presence of flexible benefits in the benefits strategies in different sectors during times of pay restraints in the table below:
Table 1: BENEFITS STRATEGIES IN PLACE DURING TIME OF LOW PAY AWARDS
Source: XpertHR (2012)
Effectiveness of the flexible benefits schemes in motivation
Flexible benefits plan is really a useful tool of motivation in a gloomy economy. In general, to employees, the flexible plan allows them to select the benefits that suit their lifestyle and needs, so they would value the benefits more highly. This is the biggest advantage of this approach, especially in today diverse and fast-changing workforce that requires increasing flexibility. By this means, employees would not bypass benefits on offer and let them be wasted. The flexible benefits schemes require more interactions from employees, so they have better understanding of the package, compared to the pre-defined set of benefits, which employees just automatically receive from employers. Thus, they gain a sense of control and responsibility by having the powers and authorities to decide what are right for themselves. In times of economic uncertainty, flexible benefits schemes can contribute to the fulfillment of the two missing needs in Maslow’s hierarchy of needs as noted above. The schemes provide employees with great help in reducing their financial difficulties. The schemes give an employee the ability to pay for benefits with pre-tax income, making his/her taxable income lower and raising his/her take-home pay. Thanks to that, employee can increase their capability to cover basic needs and obtain a greater feeling of safety in terms of finance. Moreover, the schemes can even reinforce the upper love/belonging needs. It can drive the sympathy between employees and employers, a significant factor in motivation, as employees see the care and appreciation from their employers, especially the well-educated and key staffs.
Besides, flexible benefits plan can deliver other remarkable effects to employers and help them cope with the economic climate. In a gloomy economy, acquisitions and merger in business are common. In such occasion, the flexibility of the schemes allows employers to provide a harmonized compensation framework within which employees can retain their original benefits or choose others. Employers do not need to review the package from all parties to design a new one. In consideration of cost-effectiveness, flexible benefits schemes enable employers to benefit from reducing costs in short term. The cost of the schemes can be funded by a part of salaries/wages that employees are willing to give up in exchange for the benefits. In long term, the flexible approach to benefits provision can drive changes in organization to a desired culture because it aligns the reward strategy with business objectives.
Factors affecting the motivating effectiveness of the flexible benefits schemes
Figure 5: Common structures of flexible benefits schemes
Figure 5: Common structures of flexible benefits schemes
Though flexible benefits plan is a great way to boost employee engagement in difficult time, it is not easy to produce a motivationally effective benefits package. The wide range of benefits for selection is the strongest points of such approach, but it can cause confusion for both employees and employers if it is not designed well. Jenifer Paterson affirms that a flex scheme can offer a wide variety of perks (a number of UK employers offer more than 10 perks through a scheme) (Tower Watson, 2012), but the scheme must be structured, communicated and administered well. Employers have to ensure to provide the right benefits for employees. Below is the examination of all the factors affecting the effectiveness of flexible benefits schemes in today environment, which will give a better vision about the probability of applying the scheme in reality, especially in times of crisis. * Structure
There are some ways to structure a flexible benefits scheme. The above figure shows the common structures in the UK together with the popularity of each one. Whatever the structure employers use, it must be easy and convenient for employees. John Puddephat, principal of Aon Hewitt suggested using employee segmentation, a benefits strategy similar to customer segmentation in business, to determine the best mix of benefits and tailor them more effectively
.
* Communication
However well-designed the package is, it has no meaning if the employees receiving them do not understand the offered benefits. Therefore, it is essential to have a tailored comprehensive communication strategy to employees after they have been placed into groups of common demographics. This is even more importation when considering the complexity of flexible benefits scheme and current conditions that demand the package to change often. Findings of research by Credian Group and Vebnet Group (2009) implies employees often have unclear views of the true value of their organisations’ benefits package at the time. Currently, traditional methods of communication such as brochure, annual meeting and reward statements are still popular though there is a considerable increase for more technical ones like social media (Facebook, Twitter, etc.), according to Employee Benefits Research 2012. * Implementation and Administration
One of the barriers limiting the growth of flexible benefits schemes in the UK is the cost and the complexity of implementation and administration of the scheme. However, in fact, these tasks nowadays can be passed fully or partly to a third party in the benefits providers’ marketplace (Barrett, 2010). The competition between these providers is quite intense, especially when employee benefits are getting popular these days, making price and quality reasonable and negotiable for employers of all sizes despite the unfavorable economic climate. * Benefits on offer
In the end, the most important part of a benefits scheme is the package itself with the benefits on offer for employees. Employers must ensure employees get the benefits they really want. In times of economic uncertainties, according to the above analysis and Leopold’s recommendations (2009), employers should offer benefits that can 1) foster financial security and 2) cultivate health and wellbeing: (1) Employers can help workers’ money go a bit further through tax-efficient benefits like childcare, bike-for-work, etc. They also should build benefits that can assist them in taking control and responsibility of their financial situations such as financial counseling and advice. These benefits are essential particularly because three quarter of UK employees report lack of financial assistance at workplace as CIPD investigated recently. (2) Stress at workplace has never been as bad as now and affected greatly employers’ health and wellbeing. Employers need to take step to ensure their employees as healthy as possible at work. Some very simple benefits such as gym membership, walking program and free healthy lunches might be unexpectedly effective.
Naturally, employers should not abandon some fundamental core benefits that are enjoyed and valued by all employees such as pension and life/death insurance in service.
Current issues influencing the adoption of the flexible benefits schemes
Currently, there are some notable issues that are believed to influence the implementation of flexible benefits schemes in particular and other benefits schemes in general. These issues are also the results of the bad situation of the economy. They include the rising costs of healthcare and the introduction of auto-enrolment in pension. This part will discuss the effects of these issues and find out whether they can prevent employers from adopting flexible benefits schemes.
Healthcare is often a highly valued benefit, yet employers are facing rising costs in this area. The “2012 Healthcare Survey” by XpertHR finds that employers have expected the effects of the issue and prepared to cope with it by either controlling cost carefully or replacing with less costly plans. In general, there have been no serious impacts of this matter on the adoption of flexible benefits in the reward strategy.
Similarly, according to Flexible Benefits Research 2012, employers have prepared themselves with the arrival of auto-enrolment in pension schemes for employees in October 2012 and many have known how to adapt their schemes. At present, the majority still does not know how auto-enrolment would change their views of flexible benefits, so no real potential effects have been detected.
In brief, flexible benefits scheme is worthy of consideration for motivation in place of the traditional benefits scheme. It has many advantages that can deliver greater employee engagement and level of productivity. The increasing number of employers taking up this option is the best evidence. However, it is not always easy to construct an effective flexible benefits schemes as sustainable consideration for structure, communication, implementation, administration, and the content of the benefits is needed. Currently, there are also some issues, which are the results of economic crisis, affecting the potentials of incorporating flexible benefits scheme into the reward package of companies. They are the rising costs of healthcare and the arrival of auto-enrollment in pension. Luckily, no real serious impacts of these issues have been detected. Overall, in a gloomy economy, flexible benefits scheme is still a promising motivation tool with high potential.
Conclusion
The paper provides a discussion about how UK employers achieve better motivation for their employees effectively in a gloomy economy through their benefits package. In times of uncertainties, employees suffer from financial difficulties, but the needs among individuals still vary greatly. Benefits that can reduce employees’ financial worries and attach special importance on the wide variety of individual needs would work effectively as motivational factors. The paper lays down the ineffectiveness of the traditional benefits package and promotes the flexible approach to benefits provision through flexible benefits schemes. The remaining tasks are for employers to explore how to incorporate the schemes into their organisations and assess the effects the schemes has on their employees, and the conditions in which those effects are attained. If employers can make the flexible benefits schemes work effectively in motivation in times of difficulties, the effects would not present only at the time. They would continue later when the economy recovers, especially in the retention and recruitment of talented employees, because “how people were treated in a downturn will be a driver in how they perceive their employer in the future” (Keefe, 2009). It is worthy for employers to consider to take actions now. *
APPENDIX - Changes in the British WorkForce
Today’s workforce in the western world in general and in the UK in particular is getting different, compared to the past and within the working population itself. Podro (2011) has outlined three significant pointers to changes in the composition of British workforce. The working population will be older than it is now and it will also be more femenished and more ethinically and culturally diverseThe baby boomer generation may refuse to retire and stay in work longer as the value of pensions are shrinking and the Default Retirement Age is removed. The older workers will make up a big proportion of the workforce. Today, the vast majority of women of working age are employed to some extent. Research for the GMB union found that female employees now account for 49.4% of the 24.2 million of all workers in Britain and their presence in some industry is bigger than males (Ali, 2011). Ethnic minorities are progressively form a sizable proportion of the UK workforce and their participation in organisations is no longer relegated to menial occupations as well. They drive a greater ethnic and cultural diversity at workplace. It is also missing not to mention the changes in the makeup of the family. The dominant family model today is the dual-income family with both parents in work, compared to the nuclear family structure where men were the wage-earners in the past. This model is likely to continue in the future. These changes have brought additional strain on family life which is commonly reflected in employees as they struggle to balance their work and personal life with issues evolving around working hours and childcare.

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* FURTHER READING
Brenner, B. K., (2010). Using Employee Benefits Can Help Recruit, Attract, and Retain the Workforce of the Future: The Mature Employee. Journal of Financial Service Professionals, 64(3), 24-28.
CGMA Magazine, (2012). Talent: A Battle on Two Fronts. Journal of Accountancy, 214(3), 20-21.
Cho, Y. J. & Perry, J. L., (2012). Intrinsic Motivation and Employee Attitudes: Role of Managerial Trustworthiness, Goal Directedness, and Extrinsic Reward Expectancy. Review of Public Personnel Administration, 32(4), 382-406.
Dychtwald, K. & Baxter, D., (2007). Capitalizing on the New Mature Workforce. Public Personnel Management, 36(4), 325-334.
Hom, P. W., Mitchell, T. R., Lee, T. W. & Griffeth, R. W., (2012). Reviewing employee turnover: Focusing on proximal withdrawal states and an expanded criterion. Psychological Bulletin, 138(5), 831-858.
Jins, J. P. & Radhakrishnan, R., (2012). Changing Jobs: Influencing Factors. SCMS Journal of Indian Management, 9(1), 59-68.
Manso, G., (2011). Motivating Innovation. Journal of Finance, 66(5), 1823-1860.
Matz-Costa, C., Pitt-Catsouphes, M., Besen, E. & Lynch, K. (2009). The difference a downturn can make: Assessing the Early Effects of the Economic Crisis on the Employment Experiences of Workers. The Age & Generation Study [Online], June(22). Available from: http://www.bc.edu/research/agingandwork/ [Accessed 20 March 2013].
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Wiley, J. & Kowske, B. (2011). Respect: Delivering results by giving employees what they really want 1st ed. San Francisco Pfeiffer
WOODWARD, D. (2011) Perking up the workplace. Director. Vol 64, No 6, February. pp33-34.

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[ 1 ]. Commonly, they may consist of occupational sick pay, private medical insurance, life insurance, permanent health insurance, critical illness insurance, employee assistant plans, and dental insurance.
[ 2 ]. The traditional package of employer-paid pre-defined benefits in which employees can now opt out of, or switch between, perks.
[ 3 ]. A package of employer-paid benefits that enable staff to switch between two or more benefits, or between employer-paid perks or cash.
[ 4 ]. The mechanism through which employees can opt to pay for tax-efficient benefits by sacrificing some of their gross salary for the employer to purchase these benefits on their behalf.
[ 5 ]. Products or services on which the employer negotiates a discount with suppliers, but which the employee pays for out of his or her net salary.
[ 6 ]. The benefits that employers provide all employees.
[ 7 ]. People who were born between 1946 and 1964.