- Employers should communicate with employees to understand what they need from a flexible benefits package.
- Benefits that are offered as part of a flex scheme need to add value.
- As employees’ needs can change throughout the year, more frequent benefits enrolment windows can provide greater flexibility and choice.
Following the impact of recent trends in the world of work, such as the increase in hybrid and remote working, it has never been more apparent that, when creating a benefits package, one size no longer fits all.
Indeed, Zest’s December 2023 Responding to the cost-of-living crisis report found that 65% of employee respondents would use their package more if it was tailored to their needs. With this in mind, how can employers design a flexible benefits scheme for today’s workforce?
Flexible benefits popularity
Employee engagement with flexible benefits schemes remains high and these are still integral to benefits strategies, says Matthew Gregson, executive director of Howden Employee Benefits and Wellbeing. “Having started life as the preserve of large employers, it is great to see that many mid-sized businesses have introduced them for the first time in recent years,” he adds. “Very few employers ever remove [flex] once established.”
For a benefits package to be both popular and effective, personalisation and flexibility help to add value regardless of employees’ circumstances.
Matt Russell, chief executive officer at Zest, says: “Flexible benefits are popular among both employers and employees, and are here to stay. Each employee is at a different place in their life and in their career, so a blanket approach could mean that businesses are missing out on talent.”
Scheme design and engagement
Communicating with employees to understand their needs, as well as analysing benefit take-up trends, is a useful first step when designing a flexible benefits scheme and can ensure a plan adds tangible value. An employer’s next move should be to decide how to present the scheme, because situations and needs can change quickly.
The key to a successful benefits scheme is having something that will engage everyone at various points across the year, while ensuring that employees are also aware of other available benefits, says Simon Moyle, chief executive officer of Vivup.
“For example, someone using a benefits platform to save on their supermarket spend should be able to see that they have wellbeing resources available to help them with stress, anxiety or better sleep,” he adds. “The benefit to having everything in one place is that employers see a strong return on their investment, as an employee returning to the platform for self-help with stress will be more productive.”
The cost-of-living crisis has changed outlooks on what is important from a working experience. With more generations in the workforce now than ever before, successful benefits packages must reflect this if they are to suit everyone.
“Poor benefits technology can negatively affect engagement,” says Russell. “An innovative and accessible employee benefits platform should make it simple for employers to administer benefits and easy for employees to access them. This will result in a business increasing engagement with its package.”
To engage employees effectively amid the multitude of market deals, employers must carefully consider the value of each benefit included in a flex scheme. Benefits that do not provide a high level of service or tax advantage and are not competitively priced should not be included within a flexible benefits plan.
Tax and national insurance (NI) savings were historically seen as the main drivers for offering flexible benefits, but now better product offerings at competitive prices are driving value for employees, says Gregson.
“[However], despite the tax changes, salary sacrifice remains the main funding method for flexible benefits, due to the additional NI savings that are available,” he adds.
Benefits to include
Zest’s aforementioned research found that some of the top employee desires for 2024 were private medical insurance (38%), and high street and brands discounts (20%). Conversely, only 8% wanted a bikes-for-work scheme.
In addition, benefits such as health cash plans and gym membership are often included in a flexible benefits package, along with group protection insurance, holiday buy and sell, and electric vehicle schemes.
However, employers should consider that what an employee needs at the start of a year might vary by the end. Being flexible in their offering and/or scheme design, while also keeping communication open, therefore, may prove beneficial.
Organisations are also increasingly leaning towards more frequent benefit enrolment windows that allow for greater flexibility for employees, who can adjust their package throughout the year to accommodate changing needs, says Russell.
“Allowing this can help to ensure employees are supported, which will, in turn, boost engagement and attract and retain talent,” he explains. “Furthermore, delivering benefits in the form of pots that allow them to choose their own can be effective, as it offers the flexibility to build a package that works for them. However, targeted and clear communication also plays a vital role in this. Employees must know about them and be able to easily access them to get the most out of what is on offer.”
While there are many points to consider when creating a flexible benefits scheme fit for today’s workforce, the best place to start is communicating with employees about their often-changing needs.