Could it be that company cars and Christmas parties are coming to the end of their days? Last week BBC Breakfast News questioned company perks and whether they're on their way out.
In fact, benefits aren't declining, they just change all the time and employers are getting smart at realising what staff really want. Extras such as a pension, childcare vouchers, discount shopping scheme, dental cover, and extra holidays add to take-home pay and make an employee feel that their total well-being matters to the company. A good package can make an employee stick around and companies need to communicate these benefits to make sure the importance of them is understood.
Businesses have realised two things:
One, benefits attract and retain staff but only if they are well targeted. Offering a full refund private medical insurance (PMI) to a group of 20 somethings will not be a wise investment. Gym membership, a hospital cash plan and dental insurance (which total to about the same cost) would have a significant impact.
And two, a well structured benefits programme can have as big an impact on risk management issues, such as absence in the work place and grievance, as it would on recruitment and retention. As long as the programme is structured correctly it can result in tax breaks, reduced absenteeism and lower staff turnover. Therefore, in the tail end of a recession, why increase an employee's salary by £1000 a year when investing the same amount in a funky, engaging benefit package would give a better return?
Having said that, there is one complicating factor that's preventing employers from putting further investment into benefits packages. It's the current pig's ear of employer pension compulsion, currently due in 2012. This is a policy mooted and kicked off by Labour and likely to be maintained by the new coalition. Many companies don't understand that they'll be forced to auto enrol employees into a company sponsored pension. They don't know when, how much it will cost, how long for, whether they'll get tax breaks, what the effect will be on administration or even where they can make the best investment choices or get advice. No wonder they're feeling reluctant to invest in any significant benefit change.
In the main though, if you are a business that offered 'legacy' benefits to employees such as trust-based defined contribution pensions or full-refund PMI, then you'd be forgiven for thinking that only salary mattered. But, a new wave benefit provider offering everything from childcare vouchers, bikes for work, limited term income protection, personal pension plans, grocery shopping vouchers, holiday buying and selling to name only a few, is going to have a much happier staff.
Smart companies understand that getting this right engages employees in the workplace and prevents employee-related risks like absenteeism. It would take a very significant dip in the fortunes of any business to walk away from that kind of opportunity.
Tobin Murphy-Coles is director of flexible benefits and marketing at Lorica Consulting
