FLEXIBLE BENEFITS
Introducing flex gives more freedom, but some worries
The 1990s have been littered with a range of reward management fads and fashions to which many organisations have been attracted. In the search for competitive advantage organisations have been lured into adopting a range of practices which have, too often, been underdeveloped and inappropriate. At the moment, there seems to be books and articles all over the place extolling the virtues of flexible benefits. But the evidence from a string of surveys is conclusive and irrefutable: the long-predicted explosion in flexible benefits has proved ill-founded. Far from soaring, there are at most 200 fully-fledged cafeteria-style packages operating in the UK today. Why? A recent edition of the monthly magazine Employee Benefits offers some answers.
The 14-page report demonstrates an impressive degree of insight, based on a breadth of access to practitioners, consultants and trade unionists. It brings together three pieces of research which underline the perils of rushing into flexible benefits without first doing the necessary preparatory work and setting clear objectives.
For the first piece of work Employee Benefits gathered together a distinguished and impressively practical panel of experts and asked them to comment on the challenges facing those organisations that are considering the move to flexible benefits.
The second study is devoted to enumerating a 10-step guide to flex implementation. The final article is a useful analysis — with numerous practical tips — of which benefits to offer in a flex scheme and how you should go about including them.
The supplement covers a broad range of topics, but one powerful message came through: employers seeking some win-win formula with flex will be disappointed. As the preface to the report notes: The concept of flex is terrific: giving staff more choice and achieving better appreciation levels for the same benefits budget. So why isn’ t every employer in the country switching from their existing package to the flex scheme of the future?
Eddie Hodgart, a principal with consultants Watson Wyatt, offered one explanation during the panel discussion. In short, there is a paucity of research data to back up claims that flex can have a positive and lasting effect on the bottom line. Although cost control is one of the key attractions of introducing flex, few companies with schemes are able to pinpoint major savings they have achieved, said Hodgart.
The reason is they compromise. There are administration, design and communication costs. Moreover, Hodgart had a strong warning for those considering implementing a scheme: the advantages are pretty limited .
While the round-table discussion found some consensus that it was difficult to prove that flex saves money, other experts put forward some pretty compelling reasons for introducing flex. Among them was Paul Sheffrin, a compensation and benefits manager at PricewaterhouseCoopers, an organisation that has operated flex for a number of years. He said: You can get higher levels of appreciation for the same benefits spend. We may be paying more but flex helped us to get our acceptance rate [for job offers] up to 80% from 50%.
What’ s more, he feels that flex gives them an edge when it comes to retaining staff. People’ s lifestyles change, and a fixed package will only meet the median need, whereas flex is able to meet the changing needs of staff both now and in the future.
What about the workers?
One of the most telling discussions concerned the attitudes of employees and trade unions towards flex. Are they suspicious of it? No, the response from employees is generally positive, said David Cowie, a research officer in the banking union Unifi. There is a certain amount of suspicion to overcome. The importance of telling people what implications a choice made might have on the future can’ t be overplayed. One reaction I have heard is that there is not a huge amount of consultation.
While the unions remain uneasy — some deeply so — about individualised pay, Cowie reckoned that flex is still compatible with collective bargaining. Flex allows unions to be involved in negotiating a core package, leaving employers the freedom to individualise their offering to hold on to key staff.
Title: Flexible benefits supplement , Employee Benefits, November 1999.
Price: £ 4.95
Availability: Centaur Publishing, tel: 020 7292 3719.
Want to know more? email: employee-benefits@centaur.co.uk