Pick n Mix or One Size Fits All?
Many organisations offer flexible benefits schemes to their employees as part of their reward strategy and as a result, sometimes have the edge over those that offer a ‘one size fits all’ benefits package. These businesses can be perceived as a little old fashioned, set in their ways, and more rigid in their attitude towards their employees. This perception can reflect on the potential culture / outlook of the business and in some cases will influence the candidate’s decision to join.
Flexible benefits are a pick and mix selection of benefits open to employees to suit their individual lifestyles. With flexible benefit schemes, employees can take control and make choices to suit them. They can retain their existing salary and vary the levels of benefits within their grade or increase / decrease their salary by opting for fewer or more benefits, respectively. Some schemes allow a degree of flexibility for just one or two core benefits i.e. holiday entitlement and pension contributions, but many have more comprehensive flexible benefit schemes with a much wider and diverse choice.
Due to the bespoke nature of the flexible benefits schemes, employees tend to appreciate the true value, rather than feeling deflated about benefits that don’t impact them. This can improve staff retention and help to bring new talent into the business, improving the overall employer brand.
It is fair to say our needs change as our lives and careers evolve as previously depicted in our blog on culture. People have very different needs and requirements and these will change at different stages of their life, by offering a flexible benefits package you can recognise the diversity amongst your employees and provide benefits that are relevant and evolve with them over time.
To be an employer of choice and to retain your people longer term, they need to feel valued from the outset and beyond. The benefits package seals the offer of employment and continues to motivate for the longer term. It can tip the scales when considering an offer of employment. The smorgasbord menu of benefits needs to cater for your employees at all stages of their life.
- In our 20’s, money, gym membership, holiday allowance, cars and training are typically important.
- In our 40’s we are thinking about life and medical, family, career progression/security, work life balance.
- 50 plus and work life balance, university funding and retirement planning tend to be higher considerations.
Some of the more typical ‘core’ benefits are run through a salary sacrifice scheme and are eligible for Tax & National Insurance breaks, which provide cost savings for both the employee and employer. The idea behind this is quite simple, you give up part of your salary and, in return, your employer gives you a non-cash benefit, such as childcare vouchers, or increased pension contributions. Once embarking on a salary sacrifice scheme, your overall pay is lower, so you pay less tax and National Insurance.
Typical salary sacrifice benefits include:
- Childcare vouchers
- Bike to work scheme
- Mobile phones
- Car schemes
- Season ticket loan
- Income protection
When weighing up the decision to join a new business it can be tough to walk away from a bespoke benefits package to a prospective employer offering a very basic and rigid scheme. It can seem quite deflating to be faced with a less than personal offering despite the opportunity and career development being more fulfilling.
Holiday entitlement can be a real bone of contention, some schemes are more generous than others, to have to consider reducing your annual leave by 5 or 6 days could impact on your family life. Private health care is highly valued especially when it extends to family members, but not all businesses offer this cover, and to have to subsidise this cover can be costly to the individual. People with a young family can be hesitant to join a business that fails to recognise the importance of cost savings with salary sacrifice childcare vouchers. Those who like to keep fit and consider environmental issues may think twice before joining a business that doesn’t recognise a Cycle to work scheme. It can raise the question of the disparity between two business cultures.
In summary, it is fair to conclude that we like to feel in control and be able to influence the choices we make, so given the opportunity to dip into the Pick n Mix bucket of benefits is surely a more attractive proposition than being dictated as to what and how much we can have. It will undoubtedly be a consideration for anyone facing an offer to compare their prospective benefits package with their current.