How to use stipends to ensure BYOD success

There are real differences between stipend options, and the success of your program will depend on getting them right

stipends
Credit: Thinkstock

Stipends are a way for businesses to reimburse employees for a portion of their wireless costs and, if implemented properly, address these common issues: cost, eligibility, control and taxes. Here’s how:

* Costs. When businesses talk about costs, they generally are referring to either time or money. And companies opting to use expense reports for stipends will find the task occupies a good bit of both. It’s time-consuming for accounting departments to sort through individual expense reports and issue payments only after an employee’s usage has been verified. It’s no surprise, then, that an Aberdeen Group study suggests each expense report costs $18 to process. Compounding those costs, companies opting for this method will issue hundreds or even thousands of payments each month, so the benefits that attend stipends can be quickly outweighed.

More recently, a few carriers have started to offer a split-billing solution. Split billing attempts to categorize employee usage as either personal or work-related and, in turn, solves some of the issues that expense reports present. For starters, companies could avoid the need to process individual expense reports, as employees’ bills would obviate the need. Unfortunately, though, these split-billing solutions are only partial solutions, as they typically do not account for the voice portion of an employee’s bill. An even larger concern, however, is that split-billing forces employees to align with one carrier, a concept that is at odds with the heart of BYOD: autonomy.

A less discussed but potentially more complete stipend solution is referred to as direct-to-carrier credits. In fact, Gartner has called this process the most effective method for managing BYOD expenses. Simply put, companies determine payment levels based on employee role or any other relevant factor, and then have the stipends applied directly to employees’ bills as a credit.

This solution is typically tied into software that encourages employees to comply with mobile policies and alerts the employer and BYOD solution provider when a device is out of compliance. Plus, by integrating with HR Information Systems, the solution alerts the vendor when an employee’s role or status has changed within the organization.

* Determining Eligibility. Regardless of the stipend approach used, companies must determine which employees are eligible to participate, and many base the decision on roles. For example, an organization may decide to exclude hourly employees from its stipend program. That doesn’t necessarily mean those employees can’t access the network; it simply means they bear the entire costs themselves. If utilizing direct-to-carrier credits, companies may place eligible employees into one of three or more categories. An employee who rarely needs to be contacted outside the office might receive a $35 stipend each month. A salesperson, on the other hand, might receive twice that amount due to the demands of the position. In any event, employees would be assigned a tier by managers and then enroll in the BYOD program over a web portal.

* Taking Control. The decision to reimburse employees for BYOD, at least in California, became clearer with the Cochran ruling. In other states, it may simply come down to control. That is, control over the devices accessing corporate information. For example, if MDM software is required to be downloaded prior to accessing the network, businesses can ensure their employees don’t download certain apps or visit certain sites that may jeopardize security.

Stipends offer a compelling incentive for end users. Employees get help paying their mobile bill (for work-related purposes, of course) and employers get some measure of control over the device itself due to the fact that stipends can be tied into the MDM software in such a way that if a device falls out of compliance the stipends are immediately suspended. Those safeguards are absent from reimbursements made via expense reports. And though stipends may be contingent upon compliance, if those stipends aren’t synced with the MDM software, it does little to prevent a breach or respond quickly to a noncompliant device.

* Limiting Taxes. The Internal Revenue Service (IRS), in Notice 2001-72, thankfully removed mobile devices from the “heightened substantiation requirements” they were subject to prior to 2010. The devices, to avoid tax consequences, have to be provided for substantial noncompensatory business reasons, such as an employee’s need to communicate with clients after normal work hours or the employer’s need to reach the employee during similar off hours.

Shortly thereafter, the IRS issued Interim Guidance on Reimbursement of Employee Personal Cell Phone Usage in light of Notice 2011-72, wherein it addressed reimbursements made to employees for the business use of employee-owned devices. In order for a stipend to avoid taxation based on additional wages or income, the memorandum states that, where employers, for the same substantial noncompensatory business reasons noted in Notice 2001-72, require employees to use their personal cell phones, the employee must “maintain the type of cell phone coverage that is reasonably related to the needs of the employer’s business, and the reimbursement must be reasonably calculated so as not to exceed expenses the employee actually incurred in maintaining the cell phone.”

A tiered approach to stipends that considers the differing needs and demands of various roles within an organization would seem to satisfy those requirements. Though not without shortcomings, split billing solutions clearly satisfy the requirements by separating usage on each bill.

While there is much that is unclear regarding the tax code, the fact that BYOD is growing in popularity every year is undisputed. And as more Millennials enter the workforce, that trend will likely not slow.

BYOD is about more than the wishes of tech-savvy employees; it’s about productivity and the bottom line. To maximize both, companies should strongly consider offering employees a stipend for the work-related use of their personal devices.

While options for paying stipends exist, organizations need to understand there are real differences between those options and, often, the success of a BYOD program depends on how those stipends are offered.

A bank holding company and member of the Federal Reserve, Cass is a leader in outsourced Telecom Expense Management (TEM), Managed Mobility Services (MMS) and BYOD, helping global enterprises control and reduce costs, gain better visibility into their key communications processes, and better manage and secure their mobile workforce. For more information, visit casstelecom.com.

 

To comment on this article and other Network World content, visit our Facebook page or our Twitter stream.
Must read: Hidden Cause of Slow Internet and how to fix it
Notice to our Readers
We're now using social media to take your comments and feedback. Learn more about this here.