This article is supplied by Benefex, sponsors of the www.employeebenefits.co.uk flexible benefits channel
How do we ensure our Flex scheme aligns with our organisational values and objectives?
What are the current issues affecting benefit tax and legislation?
Benefits that are operated under salary sacrifice arrangements that save both tax and/or National Insurance are often subject to changes in their rules and regulations. Changes often have an impact on your Flex scheme, leaving you to modify how you operate your benefits or remove certain benefits all together.
A strong trend that has emerged among some of the most forward-thinking employers is to link their Flex scheme with their brand identity and strategic objectives, creating a powerful tool for reinforcing the organisation’s direction and values, whilst subsequently boosting the level of employee engagement with your business.
Flexible Benefits can be used in a number of ways depending on what you want to achieve.The main question you need to ask yourself is ‘What is this benefit actually going to do for the business?’
Flexible Benefits can help to achieve both strategic and softer ‘value based’ objectives.
In our experience Flex can be used to support the following:
- Defining yourself from the competition
– be an employer of choice - Control costs and achieve savings
- Harmonisation after a merger or acquisition
- Meeting the needs of a diverse workforce
- Recruitment and retention of key talent by giving employees choice
- Increased employee engagement
- Simplified administration
The Flex portfolio can also be used to send ‘value signals’, for example the promotion of green policies can be supported by the inclusion of green benefits like carbon offsetting, or perhaps innovation is core to your business and as such the inclusion of more unusual benefits such as wine plans and curry vouchers can be used to support this element of your organisational culture.
Keeping branding consistent with existing corporate communications can also help employees to link their benefits to the overall employer brand. This helps to increase employee loyalty as the link between you as an employer and the benefits that you offer is clear and highly visible.
How can we maximise the returns on our reward investment?
We advise clients that to get the best returns from their reward investment they should follow a three step process;
Know what you want to achieve
Having a clear business case for Flex helps you to form clear objectives and provides criteria for you to benchmark against when you come to evaluate the success of your scheme.
Plan strategically
A feasibility study helps answer all the critical questions that should be asked during the early stages of implementing Flexible Benefits.We use feasibility studies to analyse the cost of the scheme vs. the benefit to the organisation and will incorporate a detailed business case and risk analysis.
Planning should also include focus groups and employee surveys to establish which benefit options will be well received by employees.This helps to ensure that the investment you make will result in high employee take up and engagement in the scheme.
We also advise our clients to undertake detailed financial reviews prior to implementing Flex to ensure that you are implementing the most cost effective deals with the most appropriate providers for your budget.
To maximise the financial returns from the reward investment employers often choose to include salary sacrifice benefits as part of their scheme.The inclusion of tax efficient benefits can produce significant savings in tax and National Insurance for employers, who then have a variety of options as to what to do with the difference. 53% of employers with Flex use the savings gained from salary sacrifice to fund their plan (Employee Benefits Research 2008).
Review and adapt your scheme Investment can also be maximised by reviewing and adapting your scheme to keep the offering fresh and employees engaged. This helps to maintain and build upon the returns of your initial investment and ensures that Flex continues to make a positive contribution to your business strategy.
So how do we measure if we’ve got it right?
The obvious starting point in calculating the return on investment (ROI) of Flexible Benefits is to calculate the amount saved on tax and NI. 92% of our clients Flex schemes break even within year one (and the rest over a three year period) – indicating that Flexible Benefits does, in the majority of cases, provide a positive return on investment.
Other key measurables that enable organisations to demonstrate whether their schemes have been a success include;
- Employee statistics
– Log on
– Modelling of benefits
– Submission of benefits
– Selection of benefits away from standard terms and conditions
– Meeting Service Level Agreements (SLA’s) - Benefit take up
- Employee spend
According to the Employee Benefits Flexible Benefit research 2008 58% of employers measure the impact of their scheme on employee engagement.The number of employers who measure the impact of Flexible Benefits on staff recruitment and retention is 27% and 35% respectively.