The rise of flexible benefits – employees expect more from their reward package
The working world has changed, and it will continue to do so as job functions evolve, new technologies are introduced and peaks and troughs in the economy each play their parts in changing the ever structure of the workforce. I've written before about the notion of tenure, permanency and lifetime employment being gone. So too has the traditional "reward package".The expectation from employees and employer now is for more flexible payment options, delivered in parallel with a well-planned benefits and rewards strategy.
The silver lining in the Cloud
Employee benefits and rewards present huge (often missed) opportunities for businesses, even, and you could say especially, at times when there is no budget available for cash pay reviews.
People like to be rewarded, and they respond positively to recognition. Loyalty and performance are boosted when engagement is high. Everyone is a winner
While I have been working closely with Thomsons Online Benefits in the continued development of NGA Online Benefits, it has been very interesting to learn more about the impact that employee rewards have.
There can be the perception that benefits are simply add-ons to a salary package, but the bearing they can have on a business, and its relationships with its workforce, is so much greater. Did you know
- Benefits cost a business 25% of their total people spend, yet only 7% of employers actively interact with employees about their benefits on a monthly basis.
- Benefits packages are worth 10 – 15% of an employee's total pay, yet rewards packages are undervalued by an average of 5.4% (the equivalent of a luxury annual holiday) a year.
- Benefits add 42% to the value perception of an employee's package, yet only 9% of employees take advantage of the employee loyalty opportunity a standard, global flexible benefits policy builds.
These statistics highlight just how many businesses are failing to use benefits to gain advantage in an increasingly competitive world. To recruit and retain the best people, you have to offer them the best salary package, the best being one that provides options and is portable as their personal situation changes through their employment.
Life keeps changing and so should benefits
As people reach new stages in their life, so their lifestyle changes. Flexible benefits evolve to support the employee through these changes.
For the employer, with minimum effort, the employees is receiving far more than a monitory reward for their work, they are being offered options. People like to feel in control.
Flexibility is a huge employee retention tool
It is also a great stress eliminator because it can make the logistics of life so much easier. A happy workforce is a productive workforce.
For someone in their 20s and 30s, the option to assigning less of their benefits allowance to a pension and more to buying days off to cover travel or childcare is a huge bonus – and one that costs the business very little.
Employees in their 40s are likely to be attracted to generous pension contributions (all tax deductible), while those in their 50s could be looking at extended healthcare options, or again, the opportunity to travel while still in good health and likely on higher salaries.
If you're not offering flexible benefit, it is very likely your competitors are.
Business benefits of flexible benefits are clear
It's surprising how many businesses still offer no benefits beyond the basic holiday, paid leave and pensions statutory in their jurisdiction. By looking at the cost versus the performance and loyalty return, this makes no sense.
According to the recent Global Pay Optimization Survey, conducted by NGA at the end of 2015, businesses that have a benefits and rewards programs in place say it makes absolute business sense.
Companies with online, self-service options, where employees manage their own rewards packages, report even greater returns.
- Easier recruitment
- Better retention of the best people
- Ability to add benefits when no budget for salary reviews
- Employees respond well to control of salary and benefits
- Admin is simplified and costs cut
- It is incredible easy for everyone to use – on any device, from any secure location
For the majority of businesses, the cost of rolling out a flexible benefits scheme is almost immediately negated by the cost savings gained through process standardization, retention and control of costs.
Employers want to save money
Darwin, Thomson's online benefits and rewards platform now integrated into NGA Online Benefits, introduces seamless admin checks, for example, matching the number of employees against invoices for premiums.
Most pension and insurance companies issue a single invoice for all employees, but what if someone leaves? How easy is it to notice if the premium of a now ex-employee is still being paid? The processing lag using standard processes can be several months, with several £1,000s in overpaid premiums.
This simple cost control alone usually justifies the business case for integrating an online benefits platform into your HR and payroll processes. It integrates fully with the employee lifecycle.
Employees want more!
The visibility that self-service benefits and rewards bring to the employee / employer relationships cannot be under estimated. Without this visibility;
- Employers can undervalue the time and lifestyle options that benefits offer an employee above straight money
- Employees can be naive to the actual monitory value benefits add to a salary
For a quick example, a £50,000 salary can easily become a £55,000 with the addition of tax free pension contributions.
When matched against the £2,000 pay increase a potential new employer is offering, suddenly, it becomes clear to the employee the value of a total pay and rewards package, but you, as the employer, needs to be sure that this is clear!
What do employees want?
Our own Global Pay Optimization Survey found that the Top 5 Benefits employees want are very simple to deliver and low cost to the business;
- Increased flexible working
- Spot bonuses or cash incentives
- Employee wellbeing e.g. in-house massages or yoga classes
- Options to buy days off
- Travel / health insurance
A recent survey by Glassdoor, the fastest growing jobs and recruitment, suggests that;
- 3 in 5 people rate perks in their top considerations before accepting a job
- 4 in 5 would prefer new perks over a pay raise
Further research by Arise suggests that 58% of workers would take a pay cut to be able to work from home and 25% would be happy with a lower salary to avoid their commute.
What we now know
These findings tell us that employees rate benefits and perks highly when making job decisions and determining which companies to work for – and to stay working for. It makes sense, therefore, that all employers rank benefits and rewards high on their HR agendas. The true value of benefits and rewards needs to be sold to the business and to the workforce.
The easiest way to sell the benefits of benefits is to let employees "shop" for them!
Everyone is familiar with shopping online for clothes and groceries. It is just as easy for your employees to go to the "online benefits shop" and select and purchase the benefits and rewards that best suit them now. Next year they can repeat the purchase, or they can make changes to their "shop".
The business case for flexible benefits is clear and how you seamlessly integrate them into your existing HR processes is about to become a whole lot easier!
Webinar for more information:
I am hosting a webinar on June 7, together with Thomsons Online Benefits, NGA's benefits platform partner, to highlight the benefits of online benefit solutions. You can register here.