What are flexible employee benefits?
With increasing numbers of candidates citing flexible benefits schemes as something they look for when searching for their next role, organisations are beginning to consider flexible employee benefits more and more.
An introduction to flexible benefits
Flexible benefits schemes can positively affect recruitment and retention figures by enhancing the range of benefits that are available to employees. It is also believed that benefit schemes improve employee engagement and motivation, which can have a significant impact on the productivity and bottom line of a business.
The provision of choice undoubtedly enhances employee perceptions of benefits packages. However, business owners and management teams must think carefully about the types of perks that will achieve high take-up rates and be widely appreciated across the company.
Are flexible benefits schemes a necessity?
No, but organisations may struggle to compete with their rivals for top talent without the provision of an enticing benefits scheme with the flexibility for employees to select the options that appeal to them most.
The provision of a flexible benefits scheme should be viewed as a people-focused strategy that demonstrates an organisation’s commitment to diversity, cooperation and fairness. After all, offering certain benefits to senior staff and excluding the wider workforce can promote division rather than harmony.
How to select the right benefits
Take-up rates of benefits vary across different sectors. The take-up of certain benefits will be limited by their very nature because they will only ever appeal to a particular group of employees. Working parents are the only group who might want childcare vouchers, for example.
Let’s run through some of the most popular benefits that employers can choose to offer in a flexible scheme.
Buying or selling annual leave
This popular offering allows employees to increase their entitlement to annual leave through the purchase of a limited number of additional days. Conversely, staff are also permitted to sell leave days back to their employer if they do not wish to use their entire entitlement in any given year.
Employees value this benefit because it allows them to make use of additional leave days without seeing a significant impact on their take-home pay.
Private medical insurance
Too often, private medical insurance is reserved solely for senior management and directors because it can be costly to provide. There are, however, many benefits to offering this perk as part of a flexible benefits scheme across the whole workforce, particularly when there is the added opportunity to extend coverage to their spouse or other close family members.
If staff do not wish to utilise the private medical insurance benefit, offering a healthcare plan can prove to be a popular alternative. These plans cover or contribute towards the costs of everyday expenses and are less expensive to provide than full medical insurance. Such schemes can help to reduce unforeseen absenteeism and communicate to a workforce that management cares about their health and wellbeing.
Additional pension contributions
Employers are now required to enrol their employees into a pension scheme whereby both parties make mandatory contributions. This can also work as part of a flexible benefits scheme by offering employees the opportunity to increase these contributions on a salary-sacrifice basis.
Many employers can obtain a corporate discount to a national or local gym, offering memberships to employees will further communicate that management are invested in their wellbeing.
When provided by employers, life assurance policies will typically offer a tax-free lump sum payment of approximately three or four times salary if an employee dies. Flexible schemes allow employees to increase the pay-out by making additional contributions, giving them the peace of mind that their family will be taken care of in any unfortunate circumstances.
Although dental insurance typically covers the cost of basic treatments including fillings and routine appointments, policies can also be used to contribute towards the costs of more complex procedures such as root canal treatment, orthodontics and implants.
Prices are generally lower when obtained through a flexible benefits scheme than they would be if purchased from the marketplace directly and individually. Employers will benefit from offering this option because encouraging employees to attend frequent dental check-ups can help to reduce unforeseen absences.
When offered as a core benefit, health screening is typically limited to senior management. When included within a flexible scheme, however, staff have the opportunity to access a service that can provide peace of mind at a time of worry or access to early treatment that can deliver more positive outcomes.
Employee premiums will often be lower than they could otherwise access elsewhere and employers can further demonstrate their commitment to ensuring the health and wellbeing of their workforce.
Can take-up rates be improved?
Although there will always be multiple variables impacting the percentage of employees who will utilise any given benefit, successful flexible schemes rely, to a certain extent, upon an employer’s ability to improve take-up rates.
In addition to ensuring that the benefits on offer are genuinely appealing to the workforce, communicating those benefits is vital. Allowing team members to select their benefits year-round, rather than implementing a single enrolment window, can also see take-up rates soar.
Employees want to feel valued and employers want to invest in a healthy workforce who value the work they do. Flexible benefits schemes have a great deal to offer both employers and employees. It is vital, however, to ensure that decision-makers understand which benefits will appeal to the broader workforce and identify ways to promote and implement a successful scheme that delivers excellent results.