Flexibility – the changing face of employee benefits.
Flexible benefits - giving employees what they want, rather than what the employer thinks they want, can be a powerful tool when it comes to attracting, motivating and recruiting staff.
Employee benefits strategies have evolved over the past few years. This is partly due to cost issues but also due to the pandemic, which has fuelled changes in employee expectations. The upshot has been the emergence of flexible benefits solutions.
Cost drivers
Cost has been a major factor in the move to flexible benefits. Employers want more control over the cost of providing benefits and expensive final salary schemes have been replaced by defined contribution pensions. More disability benefit schemes are also now written on a limited-term basis rather than to retirement, for example.
Pandemic influence
The pandemic helped to speed up the changes too. As organisations adapted to lockdown, previous niche benefits such as flexible and hybrid working, mental health support and virtual GP services started to become part of the norm.
The pandemic inevitably blurred the line between employees’ home and work lives and this provided more focus on where employees might need help and support – for example their need to look after two young kids or a parent in a care home as well.
Employee expectations
Partly driven by the pandemic, employee expectations have also shifted. Employees are now much more demanding and expect their employer to provide them with a benefits package that meets their needs.
Move to flexible benefits
With the increase in hybrid and remote working, it’s clear that, when creating a benefits package, the old ‘one size fits all’ approach no longer works well. And with each employee at a different place in their life and in their career, a blanket approach could mean that businesses are missing out on talent.
This is demonstrated by a recent survey from MetLife, carried out in January 2024, which showed that 40% of employees would be happy to move for a lower salary if it came with more generous benefits.
The upshot is that flexible benefits are becoming the order of the day. Flexible benefits, voluntary benefits, and allowances or pots, all offer the potential for greater personalisation.
Meeting expectations
Offering more choice and flexibility from the options available is one thing, but it is important that the benefits selected align with the specific needs of the workforce. Focus groups and surveys can help but with the changes in the array of benefits, it’s worth checking with our consultants to see what options are available.
Flexible benefit schemes can now cater for organisations with as few as 20 employees, although there a couple of constraints due to underwriting. However, by pooling risk across several organisations to create community schemes, it’s possible to remove some of these limits.
Building a benefits package
Whilst choice is now essential, some benefits, such as pensions, remain as mandatory. Salary sacrifice is often included too, as it remains a good funding method for flexible benefits due to the additional NI savings. The provision of health benefits is also increasingly becoming a must-have.
However, flexible benefits packages allow employees to personalise selections. This can mean offering a much broader range of benefits as different groups want different things. Voluntary benefits can also be an option, giving employees access to a range of endorsed products at preferential rates.
Benefits packages can also be driven by the economic cycle, so we are seeing a shift from the mental wellbeing support being offered during lockdowns to financial wellbeing as the UK went through the cost-of-living crisis.
Our consultants can help you create a bespoke flexible benefits package, that is right for your employees and for you.
Communications
Once you have your new flexible benefits package in place, you need to make sure employees know what’s available. As employees only tend to listen when something is relevant, it’s important to commit to regular communications to keep getting the message out.
By communicating frequent messages in different formats, this will help employees appreciate what is available, and this in turn will increase the value of the benefits package. Benefits training can also help to point employees to relevant support and services for them.
The next step
As the recent research highlighted above shows, employee benefits can play an important role in attracting, retaining and engaging quality staff.
If you would like to improve your employee benefits proposition or would like to move toward a more flexible benefits based structure, contact Kellands Corporate today. We would be more than happy to help.