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Flexible benefits on the increase, says Industrial Society


A survey from the Industrial Society finds that twice as many companies now offer flexible benefits schemes for staff, compared to four years ago.

The survey, carried out as part of the Society’s Managing Best Practice series, finds that over half of the organisations which responded now offer a menu of benefits to their staff, either to help retain staff, as a recognition of the employee’s individual requirements, to respond to competitive pressures or a need to increase cost-effectiveness. The most common benefits offered to staff on a flexible basis are healthcare, additional holiday and company car. Other options may include life insurance, medical insurance, share plans/options, dental care, optical care, gym membership, childcare vouchers and nursery vouchers. The benefits of flexible schemes do not always apply across-the-board, though – in 19% of companies the benefits only applied to middle managers and above and in 5% of companies, only the top 10% of employees are covered.

Christine Garner, The Industrial Society’s head of organisational development, says that although flexible benefits remain relatively uncommon, take up is increasing rapidly: “Organisations introduce flexible benefits for a variety of reasons. They show that a company is forward thinking and they allow employees to choose benefits suitable for their needs. Parents may want to take extra holidays to be with their children. Older people may want extra medical benefits or life assurance and younger staff may want extra money rather than extra holidays. For employers they are a way of increasing employees’ satisfaction and also of attracting the best recruits.”

Some of the companies responding indicated that introducing a flexible benefits scheme had attracted some scepticism from staff. Other problems are also identified – 55% of respondents said that administration is costly, 38% said that employees would rather have their basic pay increased and 36% said that flex benefit schemes are difficult to manage. Cadbury Ltd introduced flexible benefits two years ago and found that initially staff approached the scheme with caution, although word of mouth reporting from staff who have found the scheme helpful has encouraged people to start to use the scheme. PricewaterhouseCoopers also found that enthusiasm was slow to build, citing the provision of more information about the way the scheme works as key to getting an increased take-up.

Christine Garner says that communicating exactly what is available and how it can be accessed is vital to the success of a flexible benefits scheme: “We recommend a sustained, targeted campaign that makes use of a mixture of methods such as staff meetings, posters, e-mail and intranet sites. We also recommend that organisations regularly monitor the take up for each benefit.”

The Industrial Society’s latest Managing Best Practice report contains further details of the survey. Copies of Managing Best Practice no 75, Flexible Benefits, are available from The Industrial Society website or by ringing 0870 400 1000, price £60 plus p&p. An annual subscription to the Managing Best Practice series costs £450 and covers 12 issues.

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