If you’ve decided to introduce an employee benefit scheme, or if you’d like to swap suppliers, there are several factors that need to be evaluated.
Remember, it’s important to select a benefits package that will not only be cost-effective but will also be simple to manage and help increase employee engagement.
Types of employee benefit schemes
First of all, think about what type of scheme is right for your business, depending on company size, level of investment and employees’ expectations.
There are several different options available:
Core package: A standard package offered to all employees. Staff can’t opt out or change which benefits they receive.
Flexible benefits: The employer pays for this type of package. Staff can switch between benefits and choose the ones they want.
Voluntary benefits: Employees pay for this out of their salary. The employer negotiates a discount with suppliers so that employees can access the benefits at a reduced rate.
Salary sacrifice: Employees choose to sacrifice part of their gross salary in return for benefits that their employer buys on their behalf. This is a tax-efficient way of accessing benefits.
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What to consider when choosing a supplier
Before you start looking for suppliers, be sure you know what type of benefits your employees would like you to provide.
Consider your workforce: For parents with young families, Tax-Free Childcare is likely to be popular. Older workers may be more focused on healthcare and pensions. Picking a scheme that offers some flexibility is a good idea.
Ask your employees which incentives they prefer: However, be aware that there may be a discrepancy between what employees say they would like and those they actually choose.
Review uptake in other businesses: Take a look at our article about investing in an employee benefits scheme – it includes information about the most valued benefits.
Shortlist potential benefits suppliers
To help you find a supplier, use an online service to find a benefit scheme to match your business needs. And to help you make a decision about which one suits your business, think about the following criteria:
Do they have a proven track record for providing employee benefits?
Check their credit rating and financial stability to ensure your employees’ investments will be safe.
Can they offer everything you need?
It may be easier to have a single supplier to manage all aspects of your benefits package, rather than using multiple companies.
Get full details of all the benefits available, as there may be subtle differences between schemes.
Are they familiar with working with your size of business?
Are they reputable? Who are their other clients? Ask for references and take them up.
Do they offer support to your employees?
Phone up their support lines and see how quickly they answer and how well they handle queries.
Is there a website or portal to manage the process?
Test it to see how easy it is to use.
Do they have the right security in place?
They will be holding sensitive information about your employees, so check that they follow data protection and have good online security measures.
What level of reporting do they offer?
This will be useful so you can track which benefits are the best performers and which ones have less demand.
How much would their service cost?
Try to negotiate the best deal and make sure it’s possible to review the contract within a year. This way you have an opportunity to change supplier if the one you choose isn’t a good fit.
Running a scheme in-house
In general, it’s easier to find a supplier to manage your employee benefits for you. However, there may be some benefits that are specific to your company and will need to be managed by your team.
These may include:
- Holiday trading: Employees can buy or sell holiday time.
- Car parking: Allocated spaces or subsidised on-street parking.
- Bonus schemes: Employees receive a set sum or percentage of their wages when the company hits a particular target.
Make sure you have an allocated member of staff to manage these schemes and that they have enough time to do this. Having a poorly managed scheme can be worse than not offering these benefits at all.
Communicating with your employees
Once you’ve chosen a scheme, it’s important you let your employees know about it.
- Make a big splash to launch new schemes and speak to staff about what’s available.
- Keep reminding your employees of the benefits on offer.
- Make the sign-up process as simple as possible.
- Build a conversation around benefits into your annual review process.
- Record the number of staff who opt-in so you can measure the success of your employee benefit schemes.
The cost of keeping quiet about your benefits scheme
Cass Business School estimates that failing to tell employees about benefits schemes costs UK companies £2.7 bn a year through increased staff turnover and sickness absence.
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