Redundancies could be avoided if firms stopped wasting millions of pounds a year on unnecessary employee benefits, experts have warned.
Small and medium sized employers could be squandering up to £950m per year on their reward and benefits arrangements, including group pensions, life and healthcare insurance for staff, according to the private wealth advisers Towry Law.
Pan Andreas, head of corporate clients, said: “Employee benefits costs typically represent about 7% of total payroll. This is a huge investment and any comparable expenditure would be under constant review from financial directors. However, for some reason, this level of scrutiny does not always apply to employee benefits.
“In these times of watching every penny, it is important that employers realise they could be paying too much and that this is often down to the type of advice they receive.”
Andreas warned against using corporate advisers paid only by commissions. “They have a financial incentive to sell products and no incentive to review existing arrangements, which may have become uncompetitive,” she said.
Andy Philpott, marketing director at Accor Services, an employee benefits provider, warned employers to match the rewards and benefits on offer to the needs of the workforce. Writing in Personnel Today last year, he said: “People at different stages of their careers want different things. For example, at a simplistic level, new graduates might want money towards their holidays rather than a pension contribution.
“Investment of time and money in rewards and benefits communication will be wasted if the products you’re promoting are unwanted and uninspiring for your people.”