EMPLOYEE BENEFITS
Move towards greater benefits flexibility
Benefits philosophy is continuing to shift from high security/low employee risk to encouraging employees to take more responsibility. This is the one of the main themes that shone through in a new survey by pay consultancy Towers Perrin.
The survey found that the vast majority of UK plcs are overhauling the content and delivery of employee benefit packages and while flex plans are not currently the norm, the trend towards a flexible benefits programme is continuing.
Widening choice
Entitled The Benefits Package for the Future, the survey is based on the benefits structure in 172 companies. Businesses are giving employees a wider choice of benefits to better reflect their changing personal needs, thereby enhancing employee appreciation. Its main conclusion is that companies strongly believe that benefit packages should "differentiate between employees, reflect employees' personal tolerance of risk and be integrated with other components of total reward."
Survey highlights
Additional benefits
The 172-company survey by Towers Perrin provides key empirical evidence of existing additional benefit practices and pointers towards planned changes. It highlights graphically the bewildering array of programmes that are now offered by UK organisations.
Gone are the days of a straightforward, standard package of benefits. Pushed by a desire to create a culture of greater employee responsibility and give the employer the edge in the battle for scarce talent, companies have increasingly been adopting a much more broader structure of benefits, frequently on a voluntary, employee-pay-all basis or through a flex plan.
But the type of additional benefits on offer has changed since the last survey. In particular there has been a move away from mortgage subsidies and personal loans, but an increase in options such as childcare vouchers and employee assistance programmes.
Trends in benefits provision
The most prevalent approach to managing benefits in the UK is still the standard, fixed package. But companies are planning to make their benefit provision more flexible - either through new flex plans or revising existing package for extra flexibility - in order to suit employee needs, enhance appreciation of benefits and assist recruitment and retention.
Moreover statistics gathered by Towers Perrin suggest that traditional benefits are not a significant factor in recruitment, retention and motivation of most employees. As the report observes: "Our experience shows that traditional types of packages are not a significant factor in the recruitment, retention and motivation of most employee, nor do they elicit high levels of awareness, understanding or appreciation."
Types of benefit programme: survey findings
| Fixed benefit package A traditional, fixed benefits programme with little or no choice between benefits. | Still the most extensive form of package in the UK. Offered by nearly two-thirds (52%) of survey respondents. But only 8% are planning to retain this type of benefit structure. |
| Voluntary programme In addition to the standard, fixed package, employees can purchase benefits - dental insurance, health club subscriptions - at their own expense through company-sponsored schemes. | An increasingly popular approach often viewed as a "precursor to, or as an alternative" to flex. Used by 33% of survey respondents, up from 22% in 2002. |
| Benefits flexibility Basic package with flexibility in some benefits - holidays, death benefits -and a range of additional, voluntary benefits. | More than two-fifths of respondents (44%) are planning to give their employees more opportunity to choose the level of cover of individual benefits they receive. |
| Fully flexible package More formal "flex" schemes - where employees are given the freedom to trade benefits, that are part of a cafeteria-style menu of benefits, to suit their own specific needs. | Remain far from universal but they are one of the most popular choices for the future: only 7% currently offer a fully flexible package, but 25% plan to offer a fully flexible package. |
Source: The Benefits Package for the Future, Towers Perrin, 2003.
Technology
A central finding of the Towers Perrin research is that there has been a marked increase in the use of computers and web-based technology to communicate benefit flexibility and administer choice. As the report explains: "Technology is also playing its part in the benefits revolution. Intranets are becoming increasingly common and allow for ease of communication with employees. Internet administration delivery efficiencies have been another 'push' factor for companies considering flex benefits."
Web sites have become one of the most effective communication methods and are now used by nearly 50% of respondents to administer flexible benefit choices, compared with only 18% in 2000.
"In the past companies have expressed some concern about administration costs, complexity and work-burden," says Towers Perrin. "However, new web-enabled technology, when used effectively, can provide efficient solutions to benefits administration."
Want to know more?
| Title? | The Benefits Package for the Future. |
| What is the purpose of the survey? | The stated objectives of the survey include:
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| What is the survey sample? | 172 organisations spread across 15 industrial sectors. List of participants included. |
| How often is the survey published? | Biennial - report is sixth in series that started in 1992. |
| How long is the report? | 25 pages. |
| What is the price? | Free. |
| How is the information collected? | Based on questionnaire returns from HR professionals. |
| What information is collected? | Survey focuses on:
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| How are the results published? | Includes comparisons with previous surveys. Much of the information is presented in tabular and graphical form with concise analysis drawing on the statistical data. |
| Where can I get further information? | Towers Perrin, 71 High Holborn, London WC1V 6TP. |
| Telephone | 020 7170 2000 |
| Web site |
Posted 9 May 2003