Magazine article HRMagazine

Here's the Deal

Magazine article HRMagazine

Here's the Deal

Article excerpt

Discount programs provide employees with a low-cost benefit.

Employee discount programs have become big business. While discounts for phone service, personal computers and theme parks may not be new, the range and reach of discount programs has greatly increased in the past decade with the advent of web-based platforms, more and larger discount players, and a wider variety of offerings.

Programs for both an employer's and third parties' products and services are receiving increased attention from HR managers in a difficult financial environment where employers are hard-pressed to reward employees through more conventional means, such as bonuses and salary increases.

"It's a weak economy, and vendors and service providers want to maximize their exposure, so they'll offer discounts to achieve that goal," says Jennifer Loftus, GPHR, SPHR-CA, a partner at New York City-based HR consulting firm Astron Solutions LLC. "In a tight economy, people are watching what they are spending. If they can save 5 percent or 20 percent, it helps them."

A fall 2011 Society for Human Resource Management survey of HR managers found that 58 percent of their employers had employee discount programs. Of those with programs, 51 percent said their organizations' programs had grown in the previous two years, as measured by the value, types and number of discounts offered. The respondents represented 486 organizations of all sizes.

Larger employers often receive a plethora of offers. "We have numerous outside vendors who give us great programs," says Danny Garces, PHR, HR manager at Southern Wine & Spirits of America Inc., a Miami-based alcoholic beverages distributor. The company's 12,000 employees are offered discounted Sprint or AT&T cell phones and discounted tickets, such as for amusement parks.

At smaller companies, offers may be more limited. "We'd like to offer more discounts," says Terri Clarke, HR manager for Optima Healthcare Solutions, a Palm City, Fla.-based software development company with 70 employees. The company already offers discounts for AAA memberships, banking services at Wells Fargo and the nearby Daytona 500. "Since we just grew to more than 50 employees this year, I expect that more companies will offer us better discounts," Clarke adds.

Some employers and many aggregators of discounts charge a royalty or finder's fee to vendors for the opportunity to market to employees. Some discount aggregators charge employers to join their discount programs.

A Growth Industry

Ten years ago, New York City-based Next Jump negotiated and managed discount programs for 50 large clients with 1.5 million employees; now it provides discount programs to more than 90,000 employers with more than 100 million employees, including 70 percent of the Fortune 1,000 companies, says co-founder Greg Kunkel. He says 85 percent of the employees of participating employers register for the discount programs, and 30 percent of participating employees make discounted purchases each month.

Virtually every large corporate employer with 1,000 or more employees now offers employee discounts through aggregators that package deals, through vendors directly, or through the company on its own products or services, Kunkel says.

These programs are trickling down to employers who in the past might have been bypassed because of a relatively small number of employees. Kunkel says four years ago, Next Jump expanded into serving small to medium-sized businesses with its program. Certain discounts are available to employees for free, and employers can pay fees to receive larger discount offers for their employees, he says.

Kunkel identified six common categories of discounts for employees:

* Home items, ranging from diapers to lower Internet bills to construction and repair goods offered at home improvement stores.

* Electronics, including computers, televisions and cell phones. …

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