Employee choice in flexible benefits schemes is becoming widespread.
However, there are only two good reasons for offering employee benefits from the employer’s point of view.
The first is that the benefits add to the organisation’s brand, making it more attractive to potential employees and reducing recruitment costs.
The second is that the organisation can offer benefits at a lower cost than the employee could obtain on the open market, usually because of economies of scale.
Both these advantages have to be weighed against the cost of benefits provision, and this is not free.
The employer takes on the administrative burden of offering more benefits choice and currently this is being controlled by making it simple and providing one enrolment window a year.
Increasingly, instant selection and choice is available through the internet. When done properly, this moves the cost of administration from the provider to the recipient because they have to fill in the information required, which is processed automatically.
Employees are increasingly expecting the flexibility offered by an online benefits system and employers will find online solutions cost-effective. For these reasons, employers are moving to offer flexible benefits ‘on demand’.
But some benefits, such as health insurance , do not fall into this category. Staff can’t pay for health insurance only when they are ill; they have to have the cover for a certain period.
I expect to see health insurance, dental insurance and similar offerings continue to be provided on an annual basis only, while the many other benefits on offer increasingly become available more than once a year to meet growing employee demand.
Mike Bourne is a professor of business performance at Cranfield University