The credit crunch, recent turmoil in the markets, and the general economic slowdown are causing many organisations to take stock.
Although the UK economy has yet to fall into a recession there are worrying signs that all is not well. Last month’s Budget saw Alistair Darling cut growth forecasts and increase government borrowing. Some organisations are already taking steps to prepare for the worst-case scenario and are reviewing budgets, including those that relate to reward, in a bid to find ways to save money where they can.
While salary increases will obviously be under tight scrutiny, it is hard for employers to tinker with contractual perks without consultation. Nevertheless, canny benefits professionals can make savings by pushing for lower premiums through the rebrokering of insurance benefits such as private medical insurance. They can also look at increasing insurance excesses in an attempt to cut costs or, at the very least, keep them under control.
Salary sacrifice around tax-efficient benefits is another money-saving device that can be used. More and more organisations are introducing salary sacrifice on pensions contributions, but not all are passing their national insurance savings onto employees in the form of increased employer contributions as best practice would suggest. Some organisations are using them to fund the introduction of flexible benefits schemes, while others are simply pocketing them.
In addition, so-called perks of the job can also be rationalised. For example, travel policies can be amended so that staff have to travel second rather than first class.
But before taking any action benefits professionals would do well to get their house in order first, so that if the finance director does come calling demanding cuts then they can at least try to justify their spend by pointing to increased levels of employee engagement and productivity, and reduced sickness absence. They should also remember that they are not the only ones under pressure. Staff will be worried about economic uncertainty and perks such as financial education and employee assistance programmes can provide them with some guidance and reassurance.
Amanda Wilkinson, Editor