Need to know:
- Technology is key to offering a flexible benefits scheme that confers greater autonomy on employees to select, change, and manage their benefits.
- Cash pots are becoming an important element of the flex offering due to their personalisation power, as employees increasingly expect a tailored approach.
- With benefits budgets under pressure, flexible benefits schemes can allow employers to?share the cost?of employee benefits with staff, reducing business expenses and enhancing employee choice.
Since they first appeared in the UK more than 30 years ago, flexible benefits schemes have evolved to give employees unprecedented levels of choice, and the ability to personalise their benefits package.
As employers' understanding of the importance of employee wellbeing and engagement grows, benefits schemes that can fit to an individual's needs are only going to become more integral. So, how has this market evolved in the past three decades, and what further innovations might be on the horizon?
New technologies
Technology has been a key driver of change and evolution within the flexible benefits market, easing the administrative burden so that the ‘once a year’ benefits enrolment window is being superseded by any time access via a flexible benefits platform, where staff can select the benefits that are most valuable to them.
New technologies are advancing this further; for example, the possibility of greater interaction between employees and flex schemes, including benefit suggestions facilitated by artificial intelligence (AI)-powered chatbots and virtual assistants, is already on the horizon.
The administration of flex schemes is also evolving, with greater automation to handle tasks like updating payroll systems and notifying benefits providers when an employee activates or changes a benefit. Many employers have access to a wide range of data visualisation tools, and applying these to internal survey feedback allows them to optimise their flex offering for maximum effect.
During the pandemic and the subsequent move to hybrid working, digital technology eased some of the pressures on employers to respond to changing employee needs, and a heightened focus on physical, mental and financial wellbeing. In many organisations, the flex schemes themselves were well established enough to cope with the impact of Covid-19.
Matthew Gregson, executive director UK Corporate at Howden Employee Benefits and Wellbeing, explains: “The use of technology, with portals accessible on any device, at any time, meant that most employers weren’t having to make significant changes.
"What we have seen, however, is changes to the products and services being offered to employees; everything from health screening to fitness memberships has all gone hybrid, with virtual, home and office-based solutions now being offered by most product providers.”
Maximising value
Flex schemes comprise some core benefits that people cannot opt out of, and a wide range of flexible benefits, including bikes-for-work schemes, buying and selling holiday, travel concessions, gym memberships and other fitness-based options, as well as health and wellbeing benefits. The latter might include private medical insurance (PMI), health cash plans, and more recently, access to digital healthcare and mindfulness apps.
To maximise the value of benefits without impacting cost, employers are giving employees greater autonomy by implementing more flexible versions that employees can upgrade at their own cost, or with a degree of subsidy. Some, for example, are providing flexible cash pots with a lump sum that employees can use to create bespoke benefits packages tailored to their personal needs.
Dee Coakley, chief executive officer (CEO) and co-founder of global employment platform Boundless, says: “Giving employees the option to buy more time off for volunteering days, money to put into a savings account, or use to offset the rising cost-of-living rates is paramount to employee job satisfaction and, ultimately, staff retention.”
Benefits for the future
In the current economic climate, with cost of living increasing and inflationary pressures unlikely to abate any time soon, HR and finance teams might need to become more creative, as costs need to be managed carefully.
Mona Akiki, chief people officer at benefits and reward platform Perkbox, explains: “Budgets aren’t growing, yet employees’ expectations of greater benefit choice and increased salaries are, because of talent shortages and inflation.
“Organisations will, therefore, need to stretch their benefits budgets, as most employees will be less able, or amenable, to share in the cost of them.”
In the post-pandemic era of hybrid working, an increasing number of employers without a flexible benefits package are revisiting the business case. In no small part, this is because these packages offer a robust benefits technology system, which employers are realising is integral in order to effectively reach a remote workforce and maximise their investment in benefits.
“We are seeing a second wave of flexible benefits, as employers play catch-up to those who’ve had flex for some time,” Gregson concludes.
“The difference this time around is that they are combining their approach to flexible benefits with their approach to wellbeing, meaning a much broader set of products and services are being offered through platforms, and not just those that are paid for through payroll.”
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