Need to know: Employee benefits

It is vital that any HR business partner understands what the people agenda costs the business – and the individual cost of the key elements within it.

You can think of this in the same terms as a manufacturing manager knowing the component costs of the widgets that they use as well as knowing the total cost of their product. HR should know what people cost the business. Employee benefits are a large part of that cost.

Having this knowledge increases credibility, it is one of the key tools in driving forward the people agenda. Not having access to this information means that you won’t be able to prove that you understand the financial dynamics of the company’s resources, which would make it impossible to make informed suggestions.

As well as understanding the total cost of employee benefits per employee, it is also very useful to understand the cost of the key elements of the employee benefits package.

If you make suggestions or changes to the package, or someone else requests changes, then it will help you immeasurably to know the likely impact of that change. It will help you to know the cost of your company pension as a percentage of the total benefits cost. It is also important to understand the trends in terms of the percentage cost, so you can work out whether it might become more or less expensive to provide that particular benefit. Understanding these key ratios will help you provide proper advice to your client, and it will help you to engage in tactical conversations about hiring people – for example, if a potential employee wants a particular pension or package, you will know if it is worth pursuing.

This information can be part of the basic HR management data that you regularly receive. But if it’s not, you could ask whoever looks after compensation, or lobby to get this information provided to you (and the whole of HR).

This information is not something that an individual can try to find out, but is something that the HR department should be providing to itself on a regular basis. And having access to this information needn’t be time consuming, as it should drop into your in-box.

If you read, understand and take it on board, keeping yourself up-to-date, you will find it makes all the difference when it comes to credibly engaging with your clients on the agenda that should be yours to drive.

Jan Hills, director, HR with Guts

 

Comments are closed.