The world of employee benefits has changed. No longer limited to just pensions or death-in-service, there are a whole host of new products designed to support employees throughout their employment – not just at the end.
Chartered Financial Planner, Calum O’Donnell, explains what these new products are, how you can use them to add value to your business and why it’s now more important than ever to understand what your employees see as a benefit.
So to start with, can you give us an overview of what employee benefits are?
‘Employee benefits’ covers quite a wide ranging set of products. Traditionally, it’s things like death in service, group income protection, group critical illness cover or pension provision.
However, the ‘employee benefits’ definition is widening. The products first mentioned would commonly be chosen by employers; now we need to reverse that lens and look at it from the point of the employee to understand what they consider to be a benefit. That will have far wider consequences. It’s changing, whether through the diversification of the workforce that we see today, such as those working later in life and for longer – through choice or necessity – right the way through to the variety of working streams and patterns that we see today.
The position of employee benefits has turned a bit on its head. We need to be more reflective of the employee base rather than trying to fill in the gaps with existing products.
With that in mind, how can businesses find out what their employees consider a benefit?
Most employers seek to find out what their employees find valuable through a questionnaire or survey. In a lot of situations we find that the outcome is different to what the employer expects to be the case – it really highlights the importance of asking the employees.
We’ve found the most important thing is that employers fully understand the scope of what it is they’re trying to achieve before just blindly asking what people want. That’s where we can really help by educating employers around their options and what products are out there. There’s a lot more ancillary support available with higher level products, preventative and support measures that are features of the policy rather than standalone products.
What are the ancillary or support products that are out there?
Looking at more traditional employee benefits and, taking death in service as an example, ultimately it’s of little benefit to the employee. This is because sadly, at the point of claim, they would no longer be with us. So would it be of benefit to their estate, their family, and their loved ones? Well, potentially. But again, looking at the diversification of workforce, not everyone may have beneficiaries or they may have their own arrangements. With that you’re back to that question of “is death in service really a benefit to all employees?”
On the other hand, if we look at something like group income protection, at the point of claim, an insurer starts to pay the predetermined amount of an employee’s salary if they can’t work. This unburdens the employer from the need to continue to pay, and helps the employee at a time of peril.
Ultimately, however, we want to prevent an employee from getting to the point of claim and there’s a lot of support available. That can be in the form of helplines, mental health support and counselling, through to things like physiotherapy. These services are available to ensure that we stave off the need for a claim and reduce what is typically known as ‘presenteeism’ where people are in the workplace potentially unwell or not fully functioning. It’s not healthy for them, and their productivity to the employer has subsequently diminished. The industry is now awash with those preventative solutions which is great. But I think it’s challenging for employers to look at the relationship between what they currently have compared to what they potentially need, and aligning those two things together.
How can Alan Boswell Group help business owners who aren’t sure where to start with employee benefits?
Any employer taking that first step of committing to understanding that they need to do something has to be applauded and welcomed. Many will approach us with an intention or specific product in mind. But our role here is very much to understand what’s driving that decision, and we always look to get an effective strategy embedded for an employer. Often, this is driven around budgetary levels and constraints.
What we also need to understand is how the strategy will actually relate to the physical, mental, financial, and social wellbeing of the employees that they have – this tends to depend on which sector they operate in. Once we understand that, it’s really important we have a clear, defined communication strategy. Some employers already have benefits and a communication plan in place, but the message isn’t landing with employees. If issuing the staff newsletter, or putting information on the intranet isn’t enough, we will work to look other ways to get the message out there. That can be things like group seminars, or even one-to-one sessions.
It’s all about understanding the three key parts; the why, the how, and, lastly, the cost. Once we can piece all of those things together we can all move forward, with a clear brief as to how we want to proceed. We aim to deliver the best value through getting the right package concept before we go for procurement.
How does having an employee benefits strengthen a business?
Well, in many ways it’s about motivation, staff retention and support for employees. What we need to look at is general employee health, whether physical or mental, and how that affects overall productivity. So, if we’ve got someone that’s not at full capacity, then ultimately the businesses isn’t benefitting fully from that individual’s capability. But if an employee’s engaged with their employer, you’re going to get that discretionary effort, people are going to be committed to the cause and really driving and pushing forward. And that will all flush through an individual’s wider performance.
If everyone is performing optimally, collectively, to the business aims and objectives, that can only be a positive thing in terms of business plan and strategy delivery.
If you had to choose just one product, what right now that you would say is the most beneficial to employers?
At the current time, I would say income protection is the primary one to consider. There’s a number of reasons for that, but mainly it’s down to probability of claim. I firmly believe that in the current climate and in years to come, we are going to see an increase in significant pressure on individuals – these are real human people.
Even before this pandemic, the statistical probability of the need to claim on income protection was far higher than on any other product we distribute. So if we just wind it down to an average individual in the workplace, the probability of them dying is fairly slim. The probability of contracting a very serious illness is certainly higher than death – you’re probably four times more likely. But, I think the key thing that we all need to understand is that it’s a regular income that makes the world go round, it’s what pays the bills, and it’s what keeps us whole. In the absence of that income, it doesn’t really matter what else has happened, your whole world is likely to fall down around you and cause you distress.
That protection of income is of most significant importance. Statistically, its the most likely to be needed, and it’s actually the most valuable.
What is your final message to employers who are wondering about employee benefits?
I would say “can you sail this ship alone?” The answer is probably no, because we’re all masters of our own trade. But if you really want to engage your employees and educate them about what’s available, don’t hesitate to reach out. Even if it’s just for a conversation, even if it’s not something you’ve given a huge amount of consideration to. We’re here and are happy to help. Especially in this tumultuous time where the need for employee engagement has never been higher.
About the author:
Chartered Financial Planner, Alan Boswell Group
A fellow of the Personal Finance Society (PFS), Calum has worked in financial services for over 10 years. He has a significant amount of valuable experience across a broad range of advice areas for both personal and commercial clients. Find out more about and get in touch with Calum here.