A literature review of flexible and employee benefits revealed that flexible benefits were an appropriate reward strategy for a company with a diverse group of staff providing that the reward strategy was closely aligned to the business strategy and was integrated with the total reward programme. However there were a number of advantages and disadvantages to such a scheme.
The main advantages of flexible benefits was providing employers with a tool: enabling them to reward a diverse workforce by allowing employees to choose benefits that met individual needs; that assisted with recruitment, retention and harmonisation after a merger; provided management information; could limit future increases in benefit costs; that provided a vehicle to reinforce corporate initiatives and culture.
In contrast the main disadvantages were: overall cost; design and implementation is time-consuming and lengthy; schemes are complex in terms of choices, taxation, administration, technology and communication; staff may not perceive the choices offered as meaningful or valuable; failing to reinforce corporate initiatives.
Successful schemes are well researched, well planned, implemented through good project management and communicated to staff through a robust communication programme.
Researching what benefits appeal to staff is key to a successful scheme so the primary research phase utilised a questionnaire to all staff followed up by semi structured interviews for a small number of respondents. As well as examining flexible benefit preferences, the questionnaire examined voluntary benefits and salary sacrifice to provide alternatives should a budget not be available for a flexible benefit scheme.
Analysis of the data showed that a traditional flexible benefits scheme was not appropriate for the staff of GenMed because the three most popular flexible benefits, in order of importance were holidays, cash and group pension scheme. Further analysis showed that the stakeholder pension plan, private medical insurance and critical illness insurance were the three most popular voluntary benefits, and there was considerable interest in salary sacrifice schemes – for pension contributions and childcare vouchers.
The costs of increasing holiday entitlement, increasing salaries above the annual increment and implementing a group pension plan were evaluated as part of the project and found not to be financially viable at the time of the research so the recommendation was to provide stakeholder pension plan, private medical insurance (Company funded), dental insurance, partner/family PMI and critical illness insurance as voluntary benefits and facilitate pension contributions through a salary sacrifice scheme. Staff would also be able to purchase childcare vouchers through a salary sacrifice scheme. The option of offering holiday instead of future salary increases and a performance-related reward scheme was also explored and shown to be a cost effective solution, particularly for roles such as GPs and nurses where the costs of locum cover for holidays were high.
A copy of the full research document is available on request.