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Heart of the matter

IFAs are ideally placed to make the most of the growing market for employee benefits and should alert corporate clients to the cost savings that can be brought about through a comprehensive scheme.

Traditionally, many employers, particularly smaller businesses, may have been reluctant to introduce a fu
lly-fledged scheme for their staff. Deterred by the assumption that a flexible benefits scheme means prohibitive start-up costs and maintenance expenses, many smaller businesses also believed this type of scheme was the preserve of the big corporations.

While it is true there has been a tendency for big corporations to bring in this type of scheme more quickly, today&#39s menu-based benefits packages are accessible to businesses with as few as 50 emp-loyees, just as easily as those with 5,000 staff.

Although there is an initial cost to the employer, the long-term savings far outweigh this, no matter what the size of the business. Employee benefits benefit employers as well as employees. It is an important point that a benefits package can help a business to attract and retain key staff. There are also some added-value services that can prove beneficial to the business in other ways. By highlighting these advantages to corporate clients, IFAs can carve out a role for themselves in helping shape solutions to staff remuneration.

It is worth pointing out that stakeholder can provide an ideal catalyst for employers to undertake a review of what they offer their staff and IFAs who are informed about the employee benefits solutions on offer are in an excellent position to make the most of this.

One key area where a benefits package can help is in staff retention. Employers can save substantial amounts of money in terms of recruitment and training of new staff, not to mention reduce the disruption to the business by keeping staff turnover low.

The UK labour market has been buoyant for some years now. In particular, the massive number of new dotcom businesses started up over the past two years has left many companies feeling vulnerable.

The prospect of making money apparently overnight has encouraged even the most loyal of employees to abandon their jobs and become online entrepreneurs. Staff involved in small- and medium-sized businesses can often be extremely well placed to spot potential business opportunities afforded by the internet.

As a result, more and more businesses are looking to enhance and reshape the benefits packages they offer to ensure they attract and retain employees of the highest calibre. This opens up an important and growing new area where IFAs can add value to their corporate clients.

Where, in the past, IFAs have provided advice on areas such as group pensions and possibly group life insurance, the opportunity to extend this with the provision of a full employee benefits package should prove attractive to employers.

In terms of cost benefits, one area where a benefits package can really make a difference is absence management programmes, which are often incorporated into group income protection schemes.

For example, if the benefits provider incorporates additional services such as rehab-ilitation following accident or illness, it can mean employees are helped back to work quickly, ensuring productivity is not affected and minimising potential disruption to the business.

The CBI has calculated that sickness absence costs employers an average of £426 per employee each year. Nationally, this adds up to a cost of £10.2bn each year so potential cost savings are significant.

A typical absence management programme might involve the benefits provider offering a bespoke programme of counselling and assessment designed to get people back to work sooner. This is important as research also indicates that employees who are absent from work for more than six months have only a 50 per cent chance of ever returning to any employment.

For employees who have been in an accident or had severe illness, returning to work and regaining a sense of belonging and purpose can represent an important part of the recovery process. A programme such as this also assists employers in complying with their responsibilities under the Disability Discrimination Act.

As well as impacting on staff turnover and absence management, a quality benefits package will generally have a positive impact on staff morale, which can often improve productivity and performance. Many employers choose to implement a new benefits package following merger or acquisition activity to mitigate the disruptive impact on the running of the business.

Although mainstream benefits provision such as critical illness or income protection cover remains the priority in most cases, the range of benefits available to staff can be diverse, with gym membership or creche facilities often included alongside more traditional options.

Perhaps one of the most entertaining examples of more imaginative employee benefits selected carefully to improve staff morale has been the recent growth in the number of businesses offering subsidised membership of a dating agency – following research which indicated productivity increased when a higher proportion of their staff were involved in relationships.

Although this is possibly a somewhat unusual concept here in the UK, evidence from the US indicates there is a growing trend for employers to provide benefits which genuinely seek to make life more enjoyable and hassle-free for their staff. This in turn benefits the business in the short, medium and long term.

Employee benefits is a growing market for IFAs and there is a great deal of scope to add value to corporate clients by helping them implement a comprehensive bene-fits system. Areas where the advantages of employee benefits can be highlighted include staff morale, staff retention levels and sickness management.

For small- and medium-sized businesses, this may prove equally attractive and the cost savings can often have a more significant impact. IFAs focusing on the corporate market would do well to consider employee benefits as an important way of enhancing the service they can provide to their clients and of ensuring this relationship is strengthened.

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