The following is a guest post about employee benefits. If interested in submitting a guest post, please read my guest post policy and then contact me.
Employee Benefits used to be a side show. The perks pinned on staff noticeboards which some took an interest in, while others failed to notice.
But certain factors have coalesced to make employee benefits a central facet of many employers’ techniques to increase staff motivation, keep their key staff and recruit talented staff.
One of those factors is cultural. A couple of decades ago, there wasn’t the heightened interest, almost obsession, with well-being there is now.
The rise in fitness culture and healthier eating helped build interest in employee benefits in the workplace which promoted well being, be they executive health screening perks to discounts at the local fitness centre.
A client survey by one employee benefit provider in the UK, saw discounts on gym membership ranked top of the most valued employee benefit by many staff, whereas twenty years ago, it probably would have been having hot food in the staff canteen.
Such cultural changes have heightened the interest and receptivity of employees to internal staff benefits but there’s an economic rationale too, particularly on the part of employers.
When times are good, and the economy is booming, employers are well-positioned to give cash-based benefits to employees.
This would usually be in terms of incremental wage increases over inflation, and cash-based bonusing related to performance metrics.
This method of promoting motivation and loyalty helps fuel a workplace culture that gaining cash perks is the main goal, and is symbolic of progress at work. After all, a promotion in status without concomitant salary change is often seen as counterproductive – more responsibility for an employee, no extra cash from the employer.
But when the economy slumps as it has in recent years in many western countries, employers look to make their businesses leaner which inevitably leads to cost-cutting, and bonus culture and salary increases are often the first casualties. A significant number of employers are beginning to utilize the many benefits of a PEO, or Professional Employer Organization. These companies are a valuable resource for cutting costs. In essence, a PEO takes on the Human Resource tasks for a business. In times where there are noticeable dips in the economy’s health, a PEO can be an absolute necessity for a business that is just getting off the ground or even moderately established. These organizations also take care of interviews, hiring, and even background checks. Perhaps most importantly, a Professional Employer Organization can help employers implement a financially manageable employee benefits program.
Naturally, staff still need to be motivated, so employers become more receptive to promoting perks which can make savings for their staff while still keeping their own costs to a minimum.
This means that the employee benefits previously pinned to the noticeboard are more likely now to have lavish hoardings and leaflets extolling the virtues of benefits based on childcare provision, well being programmes, travel perks or even savings for staff at home through their utility bills.
Boost in Demand by Employers For Cost Neutral Employee Perks
With this dovetailing of cultural and economic factors, there naturally has been a greater market demand for employee benefits, and when there’s demand , there’s as usual increased competition to meet this demand.
This has contributed to the development of the employee benefits industry, whereby a host of companies position themselves as employee benefit providers to employers.
To make themselves attractive to the employer, the focus is upon promoting and administrating employee benefit schemes on behalf of busy employers, and making ever more attractive company benefit schemes. It capitalises on time-poor managers who probably could source and package similar benefits for themselves without the cost deduction from middle men.
But it’s wrong to think that’s all that’s been delivered. Many employee benefit schemes are predicated on ‘salary sacrifice’ i.e. pre tax salary deductions for reasons of tax efficiency. This requires sophisticated and secure software development by the providers to interact with company payrolls and effectively administer the schemes for employers and employees.
Whatever the causes: cultural, economic or market-led, the results are palpably the same. Employee benefits have now become a central part of many employers tactics to motivate and retain their staff, and there is a host of third party companies both willing and able to help employers succeed in this aim.
While employees in these recession hit times will welcome any measures that contribute to real savings, it’s a moot point whether they really replace the main motivating force for many employees: the measurement of progress from salary development over time. Nevertheless, as a technique for employers in times of austerity, they make a lot of practical sense.