EMPLOYEE BENEFITS
Flex has little impact on staff retention
Flexible benefit schemes are frequently touted as a key way to reduce labour turnover. But new research by Arthur Andersen has found that there is little evidence to back up such claims, although flex has certainly delivered on its promise in many other ways.
Fewer than one in ten respondents to the Arthur Andersen survey said that flex reduced staff turnover. However, for companies seeking to develop benefits packages that meet employees’ changing needs, flex is considered an overwhelming success. What’ s more, when it comes to maximising the perceived value of the benefits offered, flex can bring impressive business results.
But the most significant effect, Arthur Andersen says, has been to enhance the perception of the organisation as an employer of choice and bring benefits into line with HR strategy.
One in five operate flex schemes
The evidence from the 70-company survey suggests that the long-predicted take-off in the use of flex schemes has finally arrived. The proportion of survey respondents with flex has grown from 12% in 1998 to 20% this year. However, companies continue to use pilot schemes before introducing flex across the entire organisation: almost one in three of the sample said flex covered less than 5% of their people.
From the data Arthur Andersen gathered, flex schemes in the UK are most prevalent in large companies. Says Michael Stanley, head of human capital and author of the report: This may be an indication of the perceived cost involved in operating flexible reward.
Cost savings
While flex schemes may be expensive to introduce, Stanley believes that long-term cost gains can then be achieved . Seven in ten companies have achieved cost savings after implementing flexible benefits, according to the research.
However, the survey makes clear that introducing flex is not always plain sailing. Costly and complex administration continue to tax employers.
Which benefits?
Respondents to the Arthur Andersen survey were asked to identify the main components of their schemes, identifying which are core benefits — put simply, those benefits employees are required to retain with no flexibility — and which are non-core — in other words, employees can pick and choose whether to have or not to have.
The results of Arthur Andersen’ s research tell us something very important about how companies are introducing flex in the UK. Any of the traditional elements of the benefits package can be provided through flex, but Arthur Andersen says that in addition to holidays the most popular ones are typically of a protective nature, including life insurance, medical insurance and pensions.
The most common non-core components are dental insurance, medical insurance, cars, critical illness and childcare assistance — each cited by at least four in ten of the flex pioneers.
Survey results
Administration: the percentage of organisations undertaking the administration of flex schemes in-house has fallen to 50%, down from 70% two years ago.
Communication: when it comes to communicating the launch of a flex package, the most common methods are direct and personal , such as presentations, helplines, focus groups and team briefings. However, there has been a marked increase in the number of companies using web-based technology — from 10% in 1998 to over 40% this year.
Take-up: more than two-fifths of companies said that fewer than 20% of their employees made changes to their benefits packages following the introduction of flex. As Arthur Andersen observes: This low level of take-up may be linked to the high level of employee confusion, which was cited as a key issue faced by 35% of companies.
A final word
Businesses need to ensure that they take their own planned approach to flexible working. They need to take into account all their human resource activity holistically and consider the impact of every new initiative in the context of their business as a cohesive whole. Flexibility can only prove its true power for an employer when it is properly integrated into the environment that currently exists. — Michael Stanley, head of human capital, Arthur Andersen.
Want to know more?
Title: Flex forum highlights 2000.
Survey sample: the 20-page report is based on information supplied by 70 companies, of which 20% operate flexible benefit schemes. Six in ten respondents had turnover of over £ 100 million, with the number of employees ranging from 150 to more than 5,000.
Methodology: online survey questionnaire. This year’ s survey has been extended to include flexible working practices, such as job sharing, flexitime and homeworking.
Business sectors: participants represented a broad cross-section of companies and sectors, most notably financial services (27% of respondents) and manufacturing (26%).
Availability: contact Michael Stanley, head of human capital, Arthur Andersen, tel: 020 7438 3000 or email michael.x.stanley@uk.arthurandersen.com
Visit the Arthur Andersen web site . . . www.arthurandersen.com/uk