How Can Flexible Benefits Make You More Attractive?

Flexible Benefits schemes have been in place for many years, though in the past, they were only seen as viable for large employers in the private sector. This has changed recently as more organisations recognise that employees perceive Flexible Benefits to be of higher value than ‘fixed benefits’ packages and they do not need to cost more. If you already use Flexible Benefits in your organisation, check out the Advantages and Disadvantages section below to see how closely they match your experience.

Before going into the detail, let’s be clear on what Flexible Benefits are since the term is widely used though sometimes misunderstood. Widely known as ‘Flex‘ or ‘Cafeteria Benefits’, this is a formal arrangement that enables employees to vary their pay and benefits to match their personal requirements and circumstances.

Flex should not be confused with Voluntary Benefits where employers use their bulk buying capacity to offer discounted products or services to employees, using external providers.

Here are the facts about Flex. 14% of UK businesses plan to introduce Flexible Benefits this year (CIPD 2006 Reward Survey). 80% of businesses believe Flex helps recognise diverse needs and values (Employee Benefits). Over 50% of businesses say Flex increases retention and recruitment (Employee Benefits).

What are the advantages of Flex?

• Employees understand the benefits better and value them more

• It recognises diversity of employees and their circumstances

• Flex is cost effective where benefit costs can be ‘fixed’

• Employers offer the benefits that employees really want without duplication

• It harmonises different terms & conditions in merger or acquisition

• Flex is increasingly important for organisations competing for talent.

What are the disadvantages of Flex?

• It can be expensive to set up, but doesn’t have to be

• Paper based administration of Flex is a burden, but is avoidable

• Flex needs to be part of your overall HR strategy – it is not a panacea!

As employers are increasingly looking to increase employee engagement, just how effective is Flex in achieving this? In the 2006 Employee Benefits survey, 4 out of 5 respondents thought the main advantage of Flex was that it enabled them to recognise their workforce's diverse needs and values. 61% said that Flex helped to improve the employer's image and over half said it improved retention and recruitment activities.

What Can You Include?

Most organisations operating Flex decide on a set of core benefits that may be altered, which usually include Life Assurance, Holidays and Private Healthcare. Other benefits that some employees can choose from include childcare vouchers, car options, discounted services or insurance plans.

Read the Tips section below to help you decide if Flex is right for your organisation.

Just News

Salary sacrifice goes to school: This summer brings a change for many school teachers who can now participate in the Salary sacrifice arrangements, where it is offered by their employer. These teachers will now be able to sacrifice part of their salary in exchange for Childcare Vouchers; ‘Bikes for work’ and mobile phones, as well as benefiting from tax and national insurance savings.

Hurricane Katrina one year on: According to the American SHRM (Society for HR Management) survey last month of employers in Gulf States affected by Katrina, just one third have changed their emergency response policy. However on the reward front, some companies including, Omni Hotels, have set up charitable funds which allow employees to donate holiday time or money to work colleagues in the event of another emergency. Surely, this could be an opportunity to prepare for any disaster?

Website of the Month

Every month we’ll recommend a website or book that can help you. For August, take a look at the Employee Benefits Interactive website.

This website is the on-line version of Employee Benefits magazine, the monthly publication dedicated to news and reviews on the subject.

The site is free to use and you can quickly access news and reviews on various topics such as healthcare, cars, voluntary benefits and more. Take a look at the Archive section to view past issues of Employee Benefits or you can search by subject topic.

Like the magazine, the site is good for top line news on what different companies are doing, along with interesting case studies. What’s the downside? Benefit providers are sometimes named in articles and some of these also advertise in the publication! This said, the site is a quick and easy way to find out what other employers are changing on Employee Benefits.

5 Ways to Check if Flexible Benefits are Right for You

Use the following steps to determine if Flexible Benefits are right for your organisation.

Step 1 - Assess your organisation. Has there been a merger or acquisition or is one anticipated? Are employees on different sets of terms and conditions?

Step 2 - Review your reward practices. How do they meet your employees’ needs and what is their impact on recruitment, motivation and retention? How would Flex impact your existing ‘fixed’ benefits including pensions?

Step 3 - Look at the bigger picture. What role could Flex play in achieving your wider business and HR objectives? For example, are you planning to implement culture change, control costs or harmonise reward practices?

Step 4 - Research the market. Talk to practitioners, consultants and advisers who have implemented Flex. What were the benefits for employers and employees?

Step 5 - Establish a business case. Use the above steps to build your business case with a clear indication of the costs, return on investment and timescales.