Buyer’s guide to flexible benefits technology

benefits technology

What is flexible benefits technology? 

Earlier in the evolution of employee benefits, organisations would provide a static set of rewards. Although these might change somewhat according to seniority or length of service, there was little in the way of flexibility or tailoring. These benefits would likely be communicated via letters or total reward statements, sent out to staff at certain intervals.

Later, with the rise of digitalisation and online services, these letters were largely replaced by a central information hub via the employer’s intranet. Then, as personalisation and flexibility became more the norm, allowing employees to tailor pick and choose their own perks from a broader set, sign up for salary sacrifice schemes, trade holiday days for cash, and more, the simple information hub had to evolve even further.

At first, benefits technology evolved with the aim of making reward more visible, and allowing for more effective communication.

Now, as employers increasingly understand that reward is not a matter of one-size-fits-all, it is a broad and booming business, with everything from websites to mobile apps, meaning that staff can access information and update their preferences wherever and whenever suits them.

An employer’s benefits technology might still take the form of a relatively simply website or intranet, largely used to provide information, but with links to each individual provider’s website so that employees can use this as a semi-interactive hub to access their entire package.

At the other end of the scale, however, employers can integrate direct access to all providers under one umbrella, in addition to providing access to financial education and modelling, wellbeing resources, and more. Modern benefits technology can also provide a stream of helpful data, from employee information on age or life events, for example, to showing employers what benefits staff are engaging with, canvassing opinions more easily to discover what they want in the future, and other usage data.

As a result, flexible benefits technology is no longer just a method of effectively communicating information about pay and reward, but instead can be a key element to a strategic overall approach to employee engagement, support and motivation.

What are the costs involved?

It is difficult to pin down a clear set of costs, as not only is there a wide range of products and platforms available, but there are also economies of scale involved with employers of different sizes. In addition, organisations are able to strike deals with any number of different providers that mean there is no easy cookie-cutter example.

However, average costs for a simple site might be as little as £1 per month, per employee. Meanwhile, opting for the most complex site with all the bells and whistles might cost anywhere between £15 and £50 per year, per employee.

From a different perspective, for a larger employer the initial cost of building and implementing a simple employer-branded platform or site that conveys information and links to providers could cost £10,000. One that enables staff to make nuanced and informed decisions directly through the interface, as well as mapping eligibility rules and user information, could have an outlay of £100,000.

How does this translate to return on investment?

The costs, of course, will vary, and must be mapped against the potential return-on-investment (ROI) of things like increased benefits take-up, as well as the potential boosts to productivity, employee engagement, and health.

It can sometimes be difficult to quantify these things, particularly when looking at a considerable outlay for something that, ultimately, is a way of packaging and presenting benefits, rather than a direct investment in reward itself.

However, communication and presentation are becoming increasingly important when it comes to making sure to get the best out of benefits spend. In addition, flexible benefits technology can also help combine other resources, such as financial and physical wellbeing, consolidating the entire employee experience into one simple, clear user interface.

In the current environment, with increased remote working and an ongoing war for talent, making it as easy as possible for employees to see and understand the value their organisation provides to them, beyond pay, could be invaluable.

In addition, ROI can be found in increased automation. By reducing manual tasks such as the inputting of employee data and choices, HR teams can be freed up to perform more high-level, strategic roles, with greater benefits for the business long-term.

There are other benefits, such as improved quality of workforce data, and the potential for increased national insurance savings for the employer, that should also be factored in.

On a practical level, the right provider will allow for an organisation new to benefits technology to start smaller, with a simple, streamlined package. Then, as time goes on and the results start to show, this can be scaled up according to preference.

Are there any tax or legal implications?

When dealing with anything that encompasses reward in its entirety there is the potential for legal and tax complications. Salary sacrifice arrangements, for example, can have issues when employees are close to minimum wage, while there are complex rules around benefits in kind, holiday trading, and many other elements of flexible benefits packages.

However, a comprehensive benefits platform, which automates the input of employee data, pay scales, eligibility and tax implications, can, in fact, help avoid legal and tax pitfalls. Bringing complex systems under one digital roof means less manual work and potential for human error.

How can benefits technology be implemented effectively?

To ensure effective implementation, providers have a few tips to offer, the foremost of which is to think of this as part of a wider, strategic approach to total reward. Employers looking to implement benefits technology should not see it as a standalone measure, but as an opportunity to consider what they want from their benefits package, and how all aspects of reward fit together as a whole, and to harmonise and simplify the approach.

Employers should also try to align this with their existing technology strategy. If the organisation consistently uses a certain type of interface, which employees understand and are comfortable with, it should try and reflect this in the benefits technology it opts for.

Finally, although the discussion centres around automation, employers should not forget the importance of the human element, particularly in a remote work environment. Benefits technology should, therefore, integrate things like access to contact centres, giving people the confidence to make decisions supported by guidance, as well as the ease to do so at the press of a button.

What are some current market trends?

Technology across all walks of life is constantly evolving, and the employee benefits market is no different. Some notable areas of change are the continued refinement in terms of the collection and use of data, as well as enhancements to security, allowing its confident collection.

Beyond this, user interfaces and engagement are a particular area of focus for flexible benefits technology in the coming year, particularly as employers work to get staff to see the value of staying, and of discussing them as a great place to work to potential candidates.

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Who are the main players?

There are many providers offering benefits technology, some of which also provide benefits packages, while others are fully focused on providing the platforms themselves. Some key names include Aon, Benefex, Edenred, Isio, Mercer Marsh Benefits and Zest.