Need to know:
- As businesses grow, it is vital that their employee benefits strategies also evolve.
- Employers may start with a few core products but then expand into other areas, including wellbeing, lifestyle discounts and changes to working patterns.
- A more mature strategy is likely to include an element of choice so employees can opt for what is important to them.
Any organisation’s needs will change as it grows, whether that is premises, staffing or employee benefits strategies. With more staff comes a need for a more compelling proposition to attract and retain them, and that is something that must evolve as it takes the journey from start-up to small or medium-sized enterprise (SME), and then on to a medium or large-sized organisation.
It is important that this is thought through in advance, says Gethin Nadin, chief innovation officer at Benefex and Zellis. “By taking a short-, medium- and long-term approach to benefit design, employers should [allow] for any potential fluctuations,” he says. “This not only prepares providers for large shifts in take-up, but it helps with cost planning too. Big increases in headcount can translate to significant increases in employer-funded benefits and, in some regions, higher tax savings. Being able to articulate to the organisation the costs and benefits of headcount changes will put [an employer] in a very advantageous position.”
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A typical journey would see micro-employers offer a simple package, focused on a few core benefits such as pensions, life cover and healthcare, says Matthew Gregson, executive director at Howden Employee Benefits and Wellbeing. This might then evolve to a bigger range of core benefits for medium-sized organisations, with the introduction of some choice, before larger businesses expand both the range of benefits and levels of provision they offer. “Overall, as [organisations] grow, the common themes are for improving benefits funding, introducing more choice and putting time into offering more initiatives and services to support wellbeing,” he says.
Identify benefits gaps
For any organisation looking to change, or planning to adapt, its strategy, it is important to assess its current position. Jane Hulme, HR director at Unum, says: “Identify what is currently working and whether there are any gaps. This will help [an employer] assess where [it is] and where [it] wants to be, helping determine [its] current strategy’s effectiveness in supporting a larger employee base. It’s important [it] takes the time to understand the demographics of [its] newly increased staff so [it] can scale [its] offerings and determine the most valuable benefits to offer.”
Data from existing benefits usage can help to identify what is popular here, while talking to employees will also enable them to work out what they would like.
For those looking to make the transition from a start-up into a slightly larger organisation, there are a number of benefits that can be implemented relatively quickly. Ian Goodwin, partner, employment tax, at Mazars, says: “We often find that a good place to start is with the basics: pay, bonus, holiday entitlement and pension. Look at how these can be enhanced, perhaps with phasing introduced, to incentivise progression and also retention.”
Other quick wins include introducing car allowances, covering the cost of professional subscriptions and providing mobile phones to staff, he adds.
Lifestyle discounts can be a way of adding value to pay packets, says Chris Last, strategy director at Vivup. “These easily and significantly stretch an employee’s net pay, and salary sacrifice [arrangements] can be added quickly and effectively because they have been in place and working effectively for several years,” he says.
Not everything has to cost money either; flexible approaches to holidays and working practices can be hugely appreciated, while steps to improve physical and mental wellbeing should be a priority.
As organisations start to get a bit more advanced, they can think about adding a greater degree of choice to a benefits package, says Gregson. “This typically comes with very little cost to the business and, with the right solution, little admin too,” he says. “Benefits such as [bikes-for-work] schemes and gym memberships, managed directly by the benefits provider, can be a great way of taking the first steps forward.”
Increasing pension contributions from auto-enrolment minimum levels to a more competitive funding rate is another quick way to improve the package, he adds.
A more mature approach to benefits and business in general will need to take into account diversity, equity and inclusion (DEI), says Monica McCoy, chief executive officer (CEO) and founder of Monica Motivates. “Lean, growing organisations need to keep their focus on several critical DEI issues that are most important for them and their growing workforce and keep moving those forward before spreading themselves too thin,” she says.
From a benefits perspective, this means considering measures such as ensuring all staff have access to floating holidays, flexible working, professional development and sufficient paid leave.
Taking the step to reassess benefits also means removing those which are no longer fit for purpose, or needed, which can sometimes arise if an organisation grows through acquisition. Jenni Wilson, group sales director at Simplyhealth, says: “As businesses grow, one problem that can appear is duplication of benefits. This can happen if you have, for example, one app through private medical insurance for new employees, on top of an existing virtual GP service app that already existed for everyone else, which can cause employee confusion. To avoid this, it’s important to take the time to look at the existing benefits and consider how to align those to accommodate the new starters.”
Finding the right time to upgrade or overhaul a benefits strategy is not obvious, particularly when growth may be organic or incremental. But this is something that should happen at least every two years, says Julia Turney, partner for platform and benefits at Barnett Waddingham. “A growing workforce can change the shape of an organisation, from gender ratios to DE&I, so it’s important that employers are quick to adapt to any cultural changes being driven from the bottom up,” she explains. “This means seeking regular feedback from employees, involving employees in decision-making, while introducing, removing and adjusting benefits to suit workforce need.”
Employers could consider setting trigger points to review benefits, based on the size, structure and nature of the organisation, says Gregson. “Knowing the right time to review the approach is an art, not a science, so it can be hard to know when to take action,” he explains. “But if employers don’t, they can end up with a benefits offer that is no longer fit for purpose and won’t support their people and business goals.”
Other events can also dictate when it is a good time to consider a re-evaluation. “Look at Covid’s impact to demonstrate how benefits strategy adaption is crucial to remain credible, especially now that hybrid working is more prevalent,” says Vivup’s Last. “Wellbeing is incredibly important, so consider how to best support employees, especially when they may only be seen onscreen. Commuter season ticket loans, on the other hand, may take a back seat.”
For those employers that can successfully evolve their benefits offering as they grow, the rewards should be evident in terms of employee attraction, retention and commitment. “Achieving harmony between employer and employee, where there is a clear symbiotic relationship, is the nirvana,” says Turney. “Employees are an [organisation’s] principal promoter, and happy and engaged employees can lead to improved output, lower wastage and higher organisational growth.”