Survey shows twice as many flexible benefits schemes for staff

Citation

(2001), "Survey shows twice as many flexible benefits schemes for staff", Industrial and Commercial Training, Vol. 33 No. 4. https://doi.org/10.1108/ict.2001.03733dab.003

Survey shows twice as many flexible benefits schemes for staff

Survey shows twice as many flexible benefits schemes for staffKeywords: Benefits, Pay, Employees

Flexible benefits schemes – where employers offer a menu of benefits to their staff – have doubled in the last four years according to an Industrial Society report.

The report into flexible benefits – from The Industrial Society's "Managing best practice" series – is based on qualitative and quantitative research. It found that over half (53 per cent) or the organisations which responded to the survey now operate a flexible benefits scheme.

Employers introduce the schemes mainly to help retain staff (27 per cent) and as a recognition of employees' individual requirements (16 per cent). Other reasons included competitive pressures (16 per cent) and cost effectiveness (10 per cent).

In most companies (77 per cent), all employees are eligible for the scheme. In 19 per cent, flexible benefits apply to middle managers and above, and in 5 per cent of companies, only the top 10 per cent of employees are covered.

The benefits most frequently offered as flexible are healthcare, additional holiday and company cars. Other common benefits in flexible benefit schemes include life insurance, medical insurance, share plans/options, dental care, optical care, gym membership, childcare vouchers and nursery vouchers.

Staff are apparently very keen on having some choice over their benefits, according to 92 per cent of respondents. Asked about drawbacks, 55 per cent of respondents said that administration is costly, 38 per cent said that employees would rather have their basic pay increased and 36 per cent said that flexible benefit schemes are difficult to manage.

Christine Garner, The Industrial Society's head of organisational development, says that, although flexible benefits remain relatively uncommon, take up is increasing rapidly:

Organisations introduce flexible benefits for a variety of reasons. They show that a company is forward thinking and they allow employees to choose benefits suitable for their needs. Parents may want to take extra holidays to be with their children. Older people may want extra medical benefits or life assurance and younger staff may want extra money rather than extra holidays. For employers, they are a way of increasing employees' satisfaction and also of attracting the best recruits.

The report includes case studies and best practice tips from Alcatel Telecom Ltd, Cable & Wireless, Cadbury Ltd, EMAP, PricewaterhouseCoopers and Spring Group plc.

Cadbury's Ltd introduced flexible benefits two years ago. According to Jan Johnson, the benefits development manager, the response from staff was initially cautious and on occasions there was cynicism. However, more people are now using their options and Johnson believes that word of mouth is spreading the good news.

PricewaterhouseCoopers also experienced some scepticism, but once employees became familiar with the scheme they became much more enthusiastic. An attitude survey in late 1999 confirmed positive attitudes, but a key message that emerged was that employees need more time to understand how flexible benefits work.

Alcatel Telecom Ltd has found that its system is extremely popular.

Those who do not want to use it do not have to. The majority like being able to change benefits according to their needs.

Problems have included time-consuming administration, but less so than it had feared. It also found breaking down the apathy barrier at the beginning took a good deal of effort.

Christine Garner says that communication at the start of any flexible benefits scheme has to be very clear to show staff exactly what is and what is not on offer.

We recommend a sustained, targeted campaign that makes use of a mixture of methods such as staff meetings, posters, e-mail and intranet sites. We also recommend that organisations regularly monitor the take up for each benefit.

"Managing best practice" is the Industrial Society's monthly report on achieving excellence in key areas of managing people. Copies of "Managing best practice" No. 75, Flexible Benefits, are available from The Industrial Society, price £60.00 plus postage and packing (Tel: +44 (0)870 400 1000). An annual subscription to the "Managing best practice" series costs £450.00 and covers 12 issues.

Further information from The Industrial Society, Robert Hyde House, 48 Bryanston Square, London W1H 7LN. Tel: +44 (0)20 7479 2111. Fax: +44 (0)20 7479 2401.