The past year or so has had a fundamental impact on benefits strategy. There is nothing like a recession to focus minds on costs, and how to reduce them.
All of us in this field know instinctively that benefits are a good way to tie staff into an organisation and to tempt talent to work for you. Some benefits, such as share schemes and incentive vouchers, can also be used to engage and motivate staff. Others, such as the various long- and short-term health insurances, are a useful part of the human resource toolkit that will help to reduce absence, decrease workplace stress levels and boost productivity.
However, it is no longer good enough for us just to know this intuitively. Now finance bosses expect it to be proved with hard figures. If this doesn’t happen, the benefit in question is under threat of being cut.
Defined benefit schemes are certainly victims of the profit and loss account – few companies have been able to justify to shareholders and board directors the huge costs and big deficits on their balance sheets.
So the year ahead will be an interesting one for benefits. The worst of the recession may be over, but no one expects much spare cash to be washing around for quite some time to come, especially those who still expect to see a double-dip recession.
The challenge is now on to ensure that any benefit on offer is a true benefit to the employer, for whatever reason. If no evidence can be found that it benefits the employer in any way, then it might be time for it to go.
I make this statement with some confidence, because I believe there is little danger of a mass reduction of benefits provision in the UK. This is partly for the reasons stated above – recruitment, retention, motivation, engagement, and so on – but also because providing benefits is often much cheaper than offering cash salary. This is thanks largely to the tax breaks on many key benefits, and because organisations can command corporate deals on perks and insurances not available to ordinary staff members looking for the same products on the high street.
So, over the next 12 months, I expect to see employers maximise the value of benefits packages in an effort to soften the blow of pay freezes (or low increases). This will involve some challenging work for everyone in the industry, but it will also result in this important part of the reward package coming ever more into the limelight among employees. Which is a very good thing indeed.
Editor, Employee Benefits