Amanda Wilkinson, editor of Employee Benefits: Benefits and HR practitioners planning to introduce new perks this year would do well to work out the possible return on investment before going cap in hand to the finance director for more cash.
With the economic outlook uncertain and many experts saying that the credit crunch could lead to a general slowdown and even a recession, the last thing on any finance director’s mind will be increasing the budget for benefits – that is, unless a positive return on investment is likely to result.
In fact, if a full-blown recession does come about, some finance directors will be looking to make cuts to their benefits budget. Therefore, those benefits and HR practitioners who don’t already do so should take steps to calculate the return on investment from benefits spend – if only to protect what they have already got.
According to Employee Benefits/JPMorgan Invest Benefits research 2007, only 41% of employers evaluate the effectiveness of their benefits strategy. Of these, 81% do so by analysing the results of staff surveys and 77% the levels of benefits take-up. These statistics may provide some indication of engagement levels within the organisation, but little hard evidence of a return on investment unless they are linked to other factors such as an increase in productivity or a reduction in staff turnover or sickness absence. So all these indicators should be monitored and analysed in great detail for evidence that can support the case for benefits.
This will take some time. However, there is one sure fire way of demonstrating a return on investment that will go down well with the finance director – savings on national insurance from benefits paid for by staff through salary sacrifice.
If benefits and HR practitioners are to protect their budget and even increase it, then they must become more accountable for it by demonstrating the positive impact of benefits on their organisation.
Amanda Wilkinson, Editor