As business costs rise and wages lag behind inflation, helping staff help themselves can be a cost-effective way to boost motivation, says Maggie Williams
In January 2017, real wage growth shrank for the first time in two years: according to the Office for National Statistics, inflation outpaced wage growth. Total UK pay was up by 1.7% compared to January 2016, but inflation was 1.8%.
There may be more bad news on the horizon, with analysts predicting that inflation could be as high as 3% by the end of the year, with no indication that wage increases will meet, let alone exceed, that figure.
Employers have had to absorb higher National Living Wage costs from April, and will face increases to the minimum contribution rates for workplace pensions in both 2018 and 2019. Employees will also be required to make higher pension contributions to the same timescales, while the spending power of their pay cheques decreases.
In such potentially tough times, voluntary benefits can help employers to motivate their staff without breaking the bank on benefits spending. The costs to the employer are low, but the returns from better employee engagement can be significant, provided the benefits offering is right and communicated effectively.
Definitions of ‘voluntary benefits’ vary. As a rule of thumb, it is anything that employees pay for themselves, but that is provided or brokered through the workplace. In some instances, it might also refer to the options provided within a flexible benefits system.
Within that definition, there is an almost endless array of options, from health cash plans, cycle-to-work schemes and discount shopping vouchers, through to learning and development, mobile phone deals and financial education. It can also be a great forum for offering benefits such as income protection and critical illness cover on an employee-pays basis.
“In today’s age there is no reason why every business can’t provide some kind of group risk protection for its staff,” says Katharine Moxham, spokeswoman for Group Risk Development (GRiD). “Access to voluntary benefits is a way to do exactly this.
Technology is revolutionising the sector, with providers such as Perkbox using cloud-based technology to offer staff voluntary benefits in a cost-effective way, and Reward Gateway’s SmartHub building closer links between benefits and employee engagement. Technology also drives personalisation – meaning that it’s easier than ever to create a solution that works for all of your staff.
Five top tips
- Decide why you are offering voluntary benefits. Then, establish what success looks like in terms of take-up, improved employee engagement scores and any other measures.
- Balance want and need: while film vouchers and deals on iPads might be great today, products that look to the longer term, such as financial education and group risk offerings, could prove more important.
- Choice is good; overwhelming people is not. While there’s an almost limitless choice of voluntary benefits and a wide range means there’s something for everyone, making sure staff can find and manage their options easily is essential.
- Don’t limit people to a window. The traditional flex approach of restricting benefits choices to a single annual window is out of kilter with employee needs. Greater flexibility can help improve engagement.
- Look out for changes to legislation. For example, benefits that might have been appropriate for salary sacrifice in the past may no longer be so.