Flexible Benefits Consulting

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	Services
	Flexible Benefits Consulting
	What is Flex?
	Salary Sacrifice
	Business Drivers for Flex
	Introducing Flex
	Pan-European Flex

What is Flex?

Flex means different things to different people ranging from pure voluntary benefits to an all-encompassing flexible total reward programme as the spectrum below illustrates.

(Click on image to enlarge)

Voluntary benefits

Many organisations now offer voluntary benefits to employees by using their bulk purchasing power to secure competitive rates for products. They allow employers to offer additional benefits to employees with providers taking on the administration. Apart from displaying benefit and provider information (including web links and contact numbers) to enable employees to make choices, organisations need have no further involvement in the process. Generally, employees review their options for each service/product on the company intranet or internet and then deal direct (either by phone or web) with the provider to close the deal. Payments are usually made direct from the employee's bank account.

In our experience, take-up rates for these types of schemes are typically low, partly due to poor communication, but primarily because each individual voluntary benefit is not tailored to the specific needs of the employee. As a result, some organisations have begun to offer more restricted lists of voluntary benefits which are positioned and delivered slightly differently. The main differences include:

• Benefits are designed and communicated after taking into account an organisation's (and its employees') particular needs
• Employees have direct access to the product / service details via their company intranet or the web with their personal demographic data pre-populated on the screens
• Employees may purchase the benefit on the spot using the intranet.

Flexibility within benefits

Increasing flexibility within benefits is an approach that has been around for a long time. These plans introduce the concept of allowing flexibility within some of the existing benefits, such as holidays and private medical insurance. The option to trade up or down (either through gross or net pay) can be managed quite easily for relatively straightforward benefits such as these. More flexible options can also be introduced on pension benefits (especially defined contribution plans) and car schemes. Each benefit is actually "flexed" individually but a co-ordinated communication programme is used to bring all of the benefits under one umbrella with common branding.

Flexible Benefits

Increasing flexibility between benefits requires the introduction of a formal mechanism (i.e. a flexible benefits plan) that allows employees to trade between benefits or between benefits and cash. Under a typical plan, each employee is given an allowance with which to 'purchase' a selection of both existing and new benefits, any unused benefit allowance being available as cash.

Flexible Reward

The most recent development has been a shift in thinking from 'salary and benefits' to 'total reward' which is positioned to the far right of the spectrum. The total value of the job is determined using external benchmarking and is communicated to the employee. It is then up to the employee to decide how their total 'pot' is allocated i.e. the mixture of cash and benefits. Flexible reward can also include many of the softer elements that are included in the reward package, for example training and development, work life balance schemes etc.

Of course, with increased flexibility, comes a requirement for increased investment in administration, communication and technology. However, advances in technology have significantly reduced the cost and complexity associated with increased flexibility.

We work with organisations to identify their most appropriate approach to flex (i.e. where they should position themselves on the spectrum) as part of an initial feasibility exercise.

We take into consideration a number of factors, including:

• Business / HR strategy and objectives
• Employee feedback
• Systems environment
• Financial, resource and timing constraints.

The solution chosen will ultimately depend on the specific requirements of the company in question. For example, an organisation wanting to raise employee awareness and understanding of the total reward package through increased flexibility might decide to introduce voluntary benefits along with total reward statements. Another organisation focussed on controlling its costs and making its benefit processes more efficient might consider introducing either a full flexible benefit or flexible reward programme. Other organisations adopt a phased approach to introducing greater flexibility in order to manage change at their own pace, for example, implementing voluntary benefits in year one with a view to introducing total flexible reward at a point in the future.

The most important factor for organisations is that the chosen solution is properly integrated into the overall business and reward strategy.

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