Peter Reilly: Small employer? Think big for flexible benefits

Smaller employers with a limited reward budget may have to use their imagination to provide cost-effective flexible benefits.

Small and medium enterprises (SMEs) have an immediate disadvantage compared with large organisations when it comes to flexible benefits. They cannot use scale to obtain discounts, nor do they have the funds to offer a full range of benefits. So SMEs must use their imagination to create attractive and appropriate flex offerings for their employees.

The starting point for any organisation considering flexible benefits is to consider the suitability of flex for their workforce. What does it need to add to its employee value proposition that will attract and retain the employees it wants? Is it driven by competitor behaviour, employee expectations, executive assumptions or the HR team’s own view of best practice? Whatever the drivers, flexible benefits have to address a business need.

Next, employers need to understand employee preferences, which they can do simply by asking their workforce via an all-employee survey. To maximise employee feedback, employers should consider using their intranet, employees’ mobile phones and printed literature to promote the survey.

Then comes the question of affordability, which is where innovation comes in. Employers should see if they can band together with industry peers to increase their buying power, or to access technology. This could involve joining forces with competitors or, perhaps more easily, through a trade association or local business group. Pooled arrangements can help SMEs gain access to discounted benefits to put into their flex plan or provide through voluntary benefits.

Working with other employers may also enable an organisation to afford an IT platform that would otherwise be out of reach.

Alternatively, SMEs can exploit local business links rather than using national benefits suppliers. For example, local gyms and crøches might be interested in giving employees discounts, especially if the employer is willing to take part in publicity exercises to advertise the service.However, if the business driver for flexible benefits is to reward staff for their efforts, reward can be tailored to teams or individuals that have contributed particularly to the business’ success.

SMEs can make this process fun by engaging staff and customers in choosing which employees should receive an award. Some organisations allocate points to each employee that they can award to a colleague for help given or a job well done. The winners then choose their reward, which may be something connected with the organisation’s own products and services.

But such a scheme must be seen to be fair or engineered in such a way that eventually most, if not all, employees are rewarded.

In other words, small employers need to find a cost-effective way of rewarding their staff that fits with their culture and business circumstances. The more that flexible benefits are aligned in this way, the more SMEs will get from the limited resources they may have to spend on reward.

Peter Reilly is director of HR research and consultancy at the Institute for Employment Studies

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• The starting point for any organisation considering flex is to judge its suitability for the workforce.
• SMEs should consider banding together with industry peers to increase their buying power, or to access technology.
• Employers can exploit local business links, rather than relying on national benefits suppliers.

Read more from the flexible benefits supplement