Need to know:
- The pandemic has forced organisations to re-evaluate their benefits strategy.
- Future schemes are likely to include elements around health and financial awareness.
- Wider societal trends should also be factored into any futureproofing strategy.
It is fair to say that 2020 presented its share of unexpected events. Even with the best planning, it is not feasible to predict a global pandemic, or the impact that would have on how, and where, people work.
From an employee benefits perspective, many employers have had to adapt their offerings, either as a result of tougher financial conditions or in response to homeworking and the greater emphasis on health, in an attempt to ensure schemes are as futureproofed as possible in the uncertain climate. Robert Ordever, managing director of workplace culture firm OC Tanner Europe, says: “Last year accelerated the need for benefits that connect people to purpose, accomplishment and each other. These include the likes of wellbeing, appreciation, leave entitlement and flexible working.”
Benefits evolution
The pandemic only underlined a growing belief that benefits programmes needed to evolve anyway, says Mark Ramsook, senior director at Willis Towers Watson. “When we rolled out our benefits trends survey at the end of 2019, only 6% of UK employers thought they were highly effective in all areas of benefits strategy and only 36% said they tailored their benefits to meet workplace needs,” he says. “Even prior to 2020, there was an acknowledgement that benefits needed to evolve and develop.”
Unsurprisingly, health and wellbeing is a vital component of any future benefits strategy. Research by Unum, Employee benefits and the value of help, published in December 2020, found 95% of employers said that the pandemic has highlighted the need to make people feel more protected, and 68% said investment in health and wellbeing has grown in importance over the past two years.
Shona Lowe, private client and corporate director at financial planning firm 1825, says: “The events of the past 12 months have shown us that flashy in-house gyms or nap pods are increasingly insignificant and it’s more about what employers can do from afar to support their employees’ wellbeing.”
The trend towards virtual and digital health benefits such as telemedicine is one which has come into its own during the pandemic, says Ramsook. “Part of the challenge with futureproofing, depending on the workforce and its needs, is how employers strike that balance between the traditional spend on classic insurances and face-to-face delivery, versus virtual and digital health solutions that lower costs but can still be very tangible in terms of demonstrating health outcomes,” he says.
This virtual provision could also extend to providing support around issues such as reproductive health, potentially helping employers meet their diversity objectives by including same-sex couples or people who have been through gender reassignment. “It allows employers to cater for a much wider range of workforce needs than perhaps they have historically been able to,” Ramsook adds.
Financial focus
With a much more uncertain economic outlook, financial education should also form part of any futureproofing strategy, potentially delivered through virtual seminars in the current context. “This means moving away from simply helping employees with their retirement savings and towards more holistic financial planning support,” says Lowe. “The need for emergency savings, along with appropriate protection products such as income protection, critical illness cover and life assurance, has been bought to the fore by the pandemic. The past year has seen an information overload and employees need to know how to cut through the noise to get to grips with what really matters.”
Support with powers of attorney and wills has also become more important, she adds.
It is possible organisations may want to consider longer-term incentive plans too, as a means to engage staff. Stephen Ravenscroft, partner and head of employment at law firm Memery Crystal, says: “We may see more businesses offer equity-based long-term incentives to employees where their cash position is currently uncertain but future growth is anticipated. For those businesses that qualify, an enterprise management incentive (EMI) scheme remains a tax-efficient way to deliver valuable incentives to attract and retain key employees.”
Employee control
There are broader trends that need to be factored into the design of any plan, too. For example, there is a need to provide employees with a degree of choice, such as through the purchase of technology and bicycles, says Chris Ford, senior director, incentives, at Blackhawk Network. “By offering both types of benefits, an employer can make sure [it is] able to fulfil the needs of a wider range of employees,” he says. “A futureproofed benefits strategy incorporates multiple options, allowing employees to make the choice that best suits their needs. Ultimately, this approach will result in the greatest return-on-investment on benefits schemes.”
It is also important to factor in upcoming changes in workforce demographics, says Richard Morgan, principal strategic consultant at Aon. “In the UK we’ve not just got an ageing population caused by increased longevity and lower pensions savings, there has been a marked reduction in the birth rate over the past two decades which means there are fewer young people entering the workforce,” he says. “At the same time, the proportion of women in the UK’s workforce has also been steadily increasing. Employers are, therefore, likely to need to plan ahead and consider that future recruitment plans may involve dialling down the number of people in their 20s and focus more on older employees or, indeed, from overseas.”
Any strategy, though, will need to be kept under review, ensuring it can evolve to changing circumstances. As Adrian Matthews, head of employee benefits at MetLife UK, says: “Pulse and annual surveys can be highly insightful about understanding what workplace benefits staff find most valuable. From these insights, organisations can seek to understand what else they would like to see from the business in the future.”
