Employee benefits has been the topic of the century in all HR circles. They are said to be a tried and tested way to improve employee engagement.

Indeed, businesses that have a great benefits package with a top pension scheme, healthcare, flexible working, and soft staff benefits such as gym memberships enjoy more success in keeping employees engaged and motivated at work.

The questions for employers are: what will their workers best respond to, which will attract the top talent during recruitment, and which will match their competitors without proving too expensive or time consuming? 

All we want is choice
Research has shown that there is one thing employees respond to when it comes to benefits, and that is choice — something that a tailored, flexible benefits package can provide.

In fact, 56 per cent of employers reported a significant improvement in employee engagement as a result of having flexible benefits, and a quarter also noted that flex promotes the company culture. 

More than 40 per cent of companies now offer some form of flexible benefits, with a further 12 per cent looking into it. This increase in popularity has got to be due to both their success at engaging workers and availability of affordable benefits software and benefits providers. 

What exactly are flexible benefits?
Because flexible benefits are all about employees’ choice, they tend to sit on a spectrum, rather as rungs on a ladder, but there are a few aspects of such schemes that make them more flexible than others.

A ‘benefit allowance’ or ‘flex pot’, for example, is a percentage of salary of fixed value on top of pay and benefits which the employee can put towards the cost of their selections. 

Some schemes also feature the option for employees to sell company-funded benefits, as well as ‘buy’ benefits using their own salary. 

The argument for flexible benefits
With employee engagement commonly quoted as one of the key concerns for companies and HR professionals, the potential of flexible benefits to provide this cannot be overstated. Furthermore, it seems the improvement in engagement achieved by flexible benefits is largely down to the employee’s involvement in the process.

How do employers benefit?
Employers using flexible benefits could also enjoy direct cost savings. There are several areas in which benefit spend can be slashed through the introduction of flex including salary savings through the purchase of additional holiday and cut benefit premiums where flexible benefits facilitates harmonization. 

Benefit harmonization
According to research, one-third of companies cite flexible benefits as having supported some form of harmonization. There are varying degrees of harmonization, ranging from ‘employee choice’ through to ‘formal consultation’. However, one of the biggest advantages of flexible benefits is that you can offer all the same options to all employees. Gathering feedback from employees can then help to identify areas where there are too many unpopular benefits, which can then be cut to save money. 

Keep up with the Joneses and improve recruitment
Two other solid arguments in favour of flexible benefits are keeping up with competitors and improving recruitment. Indeed, 27 per cent of companies surveyed claimed that their competitors having flexible benefits influenced them to introduce the scheme in the first place. What’s more, 20 per cent said it improved recruitment.

These are all great reasons to look into offering flexible benefits to staff, but employee engagement should really be the driving factor. It has been proven time and time again that engagement will not just foster a better company culture and a happy workforce, it will also improve productivity and quality of work. And there is no denying that every boss wants their employees to want to come into work in the morning.

Thomsons Online Benefits are experienced in flexible benefits scheme design, pensions and employee communication, our team of highly experienced consultants develop innovative programmes with clients that maximise the value of their reward spend.