In benefits – as with everything these days – the bottom line comes first.
However much you want to spoil your staff and make them feel your company is one big happy family, your board will want to see a good business case for any changes you make to your benefits strategy.
And as Paul Roberts, healthcare consultant at health insurance provider IHC, says: “In difficult financial times, getting the most for your money is at the top of everyone’s agenda.”
Traditionally, companies tended to wait for something big – a merger or acquisition, or downsizing – to happen before reviewing their benefits strategy. Now, however, it is widely accepted that regular reviews are necessary – perhaps as frequently as every two or three years. And a review doesn’t necessarily mean change. It may simply be your way of proving to your board that you are already offering the best possible package.
A good benefits strategy requires balance. While it needs to make sound business sense, your benefits strategy also needs to be appropriate. You will need a real understanding of which benefits your staff value. And bear in mind that this will change. What constitutes a benefit to a single 20-something won’t necessarily be as popular five years later when they have dependants.
The economy too will have an impact on what people want. Less glamorous benefits, such as luncheon vouchers, which went out of fashion in more prosperous times, may once again appeal to employees. Bear in mind that there will be new benefits available. Above all, ask your staff what they want.
You will need to spell out the value of benefits. Like pensions, they tend to be poorly communicated, meaning that a considerable proportion of your staff may be unaware of the extent of their current benefits. Spell out what is already in place, and the value – both financial and non-financial – of an upgraded package.
Given the state of the economy, you may be under pressure to implement cheap benefits. Some may be of value to staff, but many will not. Don’t bow to board pressure to take the cheapest option.
One of the key business advantages around benefits is their impact on recruitment and retention. The existence of a decent private health insurance package could be the difference between you recruiting the executive you want, and losing them to your main competitor.
Look at your competitors – benchmark your offerings against theirs. Despite today’s economy, you need to be able to offer a competitive benefits package.
Analyse your existing benefits strategy. Do the benefits you offer represent value for money? Are there areas of overlap in what you are offering? This is where it is essential that you have hard data on the financial efficiency of your strategy.
You may find that, particularly if you work for a small company, it makes sense to bring in external benefits experts. As with any consultants, this may prove expensive, and you will need to invest some real time in preparing them. But, especially if you brief them properly, this could save you a considerable amount in the long run.
Perhaps the most important aspect of reviewing your benefits strategy is that you do it regularly. It needs to be part of your HR strategy, something that you do as a matter of course.
If you only do five things
Ask your employees what they want
Speak to experts
Understand the market
For more information
Just rewards: reward your staff and reap the benefits, Jamelle Wells, Allen & Unwin, £20.95, ISBN:1865089834
Paul Roberts, healthcare consultant, IHC
What are the biggest challenges?
On the surface of it, reviewing existing staff benefits is an easy way to cut costs, but the benefits world is too complex for the simple price comparison approach which usually accompanies such reviews.
Employers need to talk to independent experts who know the benefits market and can help squeeze the most out of every pound. The key to getting a review right is to focus not just on the price of different staff benefits, but on their value to the workforce.
What should you avoid?
It’s tempting for an employer to review benefits in isolation from their workforce and without expert help. For instance, when private medical insurance is part of the offer, premiums can easily be reduced by increasing excesses. But this can affect the cover for employees’ children, wives or husbands – something they see as particularly valuable. Now is the time to show your workforce that you understand what matters to them, even if you are having to make tough decisions in the interests of the business.
Know your workforce – ask what benefits will make the most difference to them, within realistic limits of what the business can offer.
Make use of your size – offer the benefits which will attract the greatest interest so that you can buy in bulk to reduce costs.
Seek out good, independent advice – shiny new benefits that won’t attract staff are an easy trap to fall into.
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