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Menu for all tastes

Flexibility is the new buzzword in employee benefits as providers and IFAs realise that benefits are particularly effective when they can be suitedto the different needs of different employees.

For many years, the UK labour market was characterised by a nine-to-five culture and a regimented culture where ascending the corporate ladder was as much about serving an appropriate amount of time with the business as through showing particular merit in the workplace. There was much less mobility of labour and people tended to stick with the same company for a number of years.

But in the late 1990s working practices in the UK began to emulate those in the US. Work has become a more integral part of people&#39s lives.

People work longer hours than before, frequently as a matter of course, as it is part of the corporate culture rather than as a result of any overtime package. Mobility of labour has increased dramatically and people now expect to change jobs far more frequently. In an increasingly competitive labour market, this can mean a challenge for employers in a number of ways. However, the key difficulty that many employers face is how to retain and motivate a workforce.

Most employers would readily acknowledge that a highly motivated workforce aids productivity. Equally, the cost of recruitment and training can have an impact on a company&#39s bottom line, particularly if staff turnover is high. A recent article in The Times suggested that it costs the average employer between half and two times an individual&#39s salary to replace them. This level of expenditure can be particularly draining for a small business and this will be exacerbated in the case of a new and expanding small business. In this type of situation, particular individuals can be crucial to the future growth of the company.

Introducing a benefit package for employees can go a long way to help employers boost staff retention levels. Employee benefit packages can include mainstream benefits such as critical-illness cover or permanent health insurance as well as more diverse benefits such as retail vouchers, gym membership and creche facilities. What is the best type of package for IFAs to recommend to corporate clients?

The important principle to bear in mind is that every employee is different. As IFAs are used to dealing with clients of different age ranges, they are well placed to provide valuable guidance to corporate clients. In some businesses, it will be relatively easy to establish a typical age and lifestyle profile for the majority of employees and to put together an appropriate range and level of group benefits.

But in some businesses there may be a greater divergence of age and circumstances. IFAs are experienced in recommending different protection and investment products for individual clients, depending on their circumstances and can easily applythe same principle to employees within a company.

Recognising the individual traits of employees is the key to putting together an effective employee benefit package which is cost- effective to the employer and which represents real value to employees.

If a benefit package is to be successful in promoting company loyalty, it has to offer benefits which are attractive and which mean something to an employee.

For example, a 22-year-old graduate trainee, single with no family may not necessarily find creche facilities and life insurance as attractive as subsid-ised gym membership and critical-illness cover although they might appeal to a 40-year-old executive with a young family.

It is for this reason that one of the most talked about developments in the employee benefit market in recent years is that of flexible benefits. This type of provision enables employees to select the benefits which are most appropriate to their lifestyle and circumstances from a broad and often diverse menu of options.

Flexible benefits have typically been introduced by companies following a deliberate change in corporate culture or after a merger or acquisition. The concept of empowering employees to select their own benefit options works especially well within a corporate culture where employees are allocated a high degree of responsibility for their own job functions.

Although the emphasis is on flexibility, it is rare that employees enjoy com- plete freedom of choice. Employees have a significant amount of control over the benefits they choose but, in most cases, employers prefer to have certain core benefits provided for all staff or in some cases for particular key groups.

The concept of providing a broad range of employee benefits within a flexible scheme may be attractive to employers but, in reality, the cost of imp- lementing a full flexible benefit scheme may prove prohibi-tive to some small and medium-sized businesses.

However, as previously discussed, the same business considerations which motivate bigger employers to adopt flexible benefit systems are just as crucial, if not more so. For employers looking for the advantages of a flexible benefit system but without the inherent administration complications and costs, a menu-based system can be the answer.

The employer selects a menu of potential benefits for the workforce and employees are free to pick their preferred benefit options from this menu. There is also often the facility for employees to alter their menu choices following a significant event such as marriage, divorce or the birth of a child – with the same flexibility available in today&#39s individual protection menu products.

Typical menus might include mainstream benefit options such as critical-illness insurance, life cover, spouse life cover and income protection.

Although this might mean that the number of benefit options are slightly more restricted, it also means the administration costs are greatly reduced.

Using web technology is one cost-effective way of approaching the administration issue and can also prove to be an inexpensive and adaptable way of communicating the benefit system to staff.

No matter which type of benefit package is deemed appropriate for a particular firm, IFAs should bear in mind that their corporate client&#39s employees are as individual as those on their own client bank. An employee benefit scheme which increases staff retention levels and improves motivation can mean a real boostto business.

By providing guidance on devising and implementing such a scheme, as well as giving ongoing advice on the scheme, IFAs have the chance to cement their relationship with their corporate clients and exploit a business opportunity which is likely to prove valuable in years to come.


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