Spending money to save money might sound counter-intuitive. But think of employee benefits as an investment in your people, a true attraction, retention and engagement tool, and you're on the right track.
Does that mean you need to spend huge sums funding every benefit under the sun? Not at all. In fact, it’s possible to actually save money with the right mix of benefits. Read on to find out how.
Benefit cost control
In a recent Willis Towers Watson survey, the rising cost of benefits was cited as the number one concern among survey respondents. Alongside worries that benefits were not as effective as employers wanted them to be.
Although this might seem like a gloomy outlook, the report finds that organisations are undergoing a sea change when it comes to workplace perks. Today, employers and employees expect benefits that do more than address core health and retirement needs.
As a result, there’s an increasing focus on supporting employee wellbeing, supporting an inclusive workplace culture, enabling flexible working and considering corporate social responsibility as part of the employee benefits landscape.
Against this background, how can you ensure your benefits are saving you money? First, you need to be sure they’re fit for purpose.
Ensure employee need and understanding
Let’s be honest - employee benefit spend is money that could go to the bottom line. So it’s important to align your provision with employee needs to get maximum benefit from your investment.
Research shows that employers are achieving this by finding out more about what employees want but also by making it easy for staff to choose their benefits. For many this means:
- investing in technology to enhance the employee benefit experience or working with partners who make it easy for employees to make informed decisions
- offering online or in-person training, education and communication of benefit programmes
These activities are the first step in helping you drive engagement with your benefits and ensuring you deliver a solid return. But can your benefits actually save you money?
The clearest pounds and pence savings
It’s easy to work out which benefits directly save you money. They’re those that require no outlay by your organisation and are funded by the employee via salary sacrifice.
Currently both Cyle2Work and salary sacrifice car benefit can provide employers with NIC relief. However, from April 2020, new HMRC tax rules around car benefit will reduce the BIK rates on all ULEVs and from 16% to 0% for electric vehicles between April 2020-2021. Meaning your employees can save even more tax on the amount sacrificed.
In addition, lower BIK rates will also result in organisations paying lower employer NICs which will enhance the bottom line.
It’s also the case that other, non-salary sacrifice benefits can save you money too. Let’s take health benefits as an example including physical, emotional and financial wellbeing products. These products can help address the following concerning issues:
- Money worries affect the performance of 77% of the UK workforce
- Financial concerns accounted for a third - or five million - of the days taken off sick in 2016
- 15.8m days were taken off in total in 2016 due to stress
- Musculoskeletal problems remain the second biggest cause of workplace sickness absence
Providing inexpensive benefits like financial education, interest free loans, employee assistance programmes and cashplans will go a long way to preventing people going off sick or reducing the length of their absence. And perks like income protection often come with comprehensive support aimed at proactively encouraging employees to live healthier lifestyles.
If you can work out the typical cost of a day’s absence or reduced productivity you can put a cost saving figure to any improvements. Helping you demonstrate the ROI of your benefits.
Attraction and retention
Nine in ten workers say benefits are integral to their job choice. So getting them right is a crucial aspect of your recruitment process. Yes, there’s a cost to paying for employee benefits - usually less than 20% of payroll. Although some of this cost - like providing holiday and sick pay and making pension contributions - is a legal requirement. The additional benefits you choose to provide as an employer say a lot about your brand. And they could be the difference between securing and losing top talent.
Perks can also retain employees - particularly long-term benefits like three-year bonus schemes or three-year car leases. Keeping hold of an employee, particularly a good performer, will pay dividends. Particularly with the cost of replacing an employee standing at an average of £30,000 in recruitment, training and lost productivity.
Employee benefits aren’t only about matching what the market is doing. They’re about:
- finding the right mix of support for employees and job seekers in a way that makes financial sense for your organisation and staff
- delivering against your corporate social responsibility agenda
- attracting and retaining the best people
- preventing and reducing sickness absence
All of which contributes to the effectiveness of your organisation and makes for a healthier bottom line.
Support your green agenda by introducing a low-risk, low-emission, market-leading car benefit to your total reward package.