Most organisations have a range of benefits that may have been built up over years, often with little strategic intent. However, with the increase in flexible benefits schemes and the concept of total reward, benefits are now being positioned more clearly. But I believe it is worth standing back and questioning just why we have each of the benefits we do in organisations. Other than a legal requirement, such as paid holidays, I suggest there are only five reasons why an organisation chooses to provide particular benefits to its employees.
The first is market need, where a benefit helps to compete effectively in a particular market, for example executive stock. The second is tax efficiency, where a benefit brings tax and/or national insurance savings. Employers should also consider whether they can provide the benefit more cheaply than an individual can, as is often the case with group income protection, and whether they have a moral responsibility to provide the perk. They may also consider the reputational risk if a benefit is absent, for example life assurance. Finally, employers must decide whether there is a direct value to the organisation as well as to the employee, as with private medical insurance.
Employers can use these factors to analyse their benefits. Put each factor as a separate column heading and list each benefit down the left-hand side. Then put a cross or tick, as appropriate, in each box of the table. If they really understand how employees feel about each benefit, they can add a sixth column in which to indicate the perks’ perceived value.
Organisations that have hierarchical benefits will find their answers differ depending on the level of the recipient. Some people find it more useful to use two (or more) tables to analyse different hierarchical groups where benefits differ.
This analysis may help if employers are thinking about reducing benefit costs. They may be looking at changing benefits, and so considering new benefits to add, or they may be considering simplifying the benefits they offer and want to replace some with cash. The analysis can also help challenge thinking about exactly what each benefit is meant to be doing. If different people complete the same table, they will not answer in exactly the same way. This, in itself, can be useful to stimulate some discussion on benefits policy.