Strategic use of flex

Companies already know the value of human capital. How can a
flexible benefits package help sell the company to top talent? By Mike Ashton

Increasingly, companies are focusing more on their people and claiming,
"people are our biggest asset". Becoming an employer of choice is
critical to their business, as this is perceived to be how to address
recruitment and retention difficulties among others.

One way of supporting this is to introduce flexible reward (flex). This
requires a distinct move away from simply tweaking the base pay numbers and
instead, adopting a more holistic view of reward to meet the changing needs of

While addressing these needs, companies also have to sell the concept to the
board and shareholders by demonstrating a clear link between the introduction
of flexibility in the reward package and increased profitability and
shareholder value.

For companies wishing to address this issue and align reward with the HR
strategy, there are several steps to take. It is imperative for a business case
to be drawn up to highlight the impact of introducing flex. This should clearly
state how flex will increase profitability while demonstrating tangible
benefits to employees. Some of the main objectives cited within the business
case are:

– reduce or control the cost of total reward

– meet employees changing needs

– enhance the perception of being an employer of choice

– maximise the perceived value of benefits

– communicate the value of total reward

– maximise the use of technology

Factors such as eliminating hierarchy and onerous benefits are not common
reasons for introducing flex, although it can assist in facilitating this along
with the harmonisation of benefits.

The business case should focus on financial efficiencies, including tax and
national insurance savings that can be generated. This can be enhanced by
including retirement benefits within flex which, typically, have not been
included in the past due to the perceived complexity of doing so.

After building the business case and identifying how the objectives can be
met, the next challenge is to ensure that any changes made to the benefits
package are made with the profile of employees in mind to ensure an attractive
plan is introduced, encouraging participation.

Communication, which to many organisations may historically have meant
holding a meeting with union representatives, is key to any change and ensuring
key stakeholders and employees buy-in to the concept. The process adopted can
have a profound impact, as not only will it provide details of the change, but
it may be the first time companies have chosen to express the value of total
reward and emphasise the investment that the company is making in each
individual employee.

It may also assist in raising awareness of the value of benefit provision,
highlighting that company-provided benefits often enable employees to benefit
from corporate buying power.

Communication also gives the company the opportunity to reinforce its brand
and enhance the ‘look and feel’ and ‘opportunity’ associated with being part of
the organisation.

But what happens when organisations want to extend this ‘look and feel’ to
employees within the European or global firm?

There is an increasing awareness of flex in Europe and in some cases, on a
global basis. Often, employees are required to work internationally and within
the fierce labour market that we currently operate in, often referred to as a
war for talent, companies are looking to distinguish themselves from their
competitors, while ensuring that from an employee perspective, the company
looks the same irrespective of the country in which an employee is located.

The inherent structure of flex allows different benefits, across differing
countries and regions, to be brought together in one package enabling one
identity and one brand to be consistently applied.

Difficulties often occur if the planned structure is too rigid and does not
account for modification as a result of differences in tax and legal regimes.
However this does not mean that a similar concept cannot be made available to
each participating country.

Flex, which so often has been considered to be a list of insurance products
that enables an individual to provide cover for their spouse and family, is
almost as antiquated as the historic fixed benefits structure. Flex is about so
much more – opportunity, learning and development and it can offer so much, to
the business and also to employees.

If people really are your greatest asset, it is vital to stay in touch with
changing practices to ensure you are not perceived as a second division

Flex can take anything from six to 18 months to implement, depending on the
number of benefits included and the complexity of the eligibility and choices

If your organisation is forward thinking and wants to benefit from the
advantages flex can bring to you and your people, now is the time to act.

Mike Ashton is Director of Human capital Advisory service, Deloitte &

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