Flexible benefits - Maximising the value for organisations and employees
A flexible benefits plan
enables employees to
choose a mix of pay and
to their individual needs,
while allowing the
organisation to control the
Mercer has designed and implemented flexible
benefits for a range of
specialist work to deliver
solutions to meet
Increasingly, employers are recognising the importance of developing remuneration strategies that will attract, motivate and retain the best talent. Blanket benefit provision is unlikely to be the most effective method of meeting the diverse benefit needs of employees. Instead, more and more organisations are
Traditionally, few employees have appreciated the true value of their overall remuneration package. Employee benefits are often taken for granted with little appreciation of their actual worth. This situation is not helped by the lack of input most employees have regarding the make-up of their benefits.
Typically, the expectation was that the organisation would provide a reasonable level of benefit that might be supplemented in certain cases (e.g. where benefit levels are linked to grade). More recently, however, we have seen that the introduction of flexible benefits can offer distinct advantages against a more rigid fixed benefit approach.
An effective flexible benefits plan can:
Support Cultural Change
Enhance an Organisation’s Profile within theEmployment Market
A flexible approach to benefit provision can help to position an organisation as an ‘employer of choice’, with advantages for attraction and retention.
Maximise the Impact of the Benefit Package
In a cost conscious environment it is important to maximise the value of every euro spent on motivating employees. A flexible benefits plan enhances employees’ understanding of their total remuneration package, and the cost and range of benefits available.
Address Diverse Needs of Employees
Not only are workforces becoming more diverse but individual employees’ needs change over time. Whether it relates to changing family circumstances or employment status, benefit choices that take account of these diverse needs are a key feature of flexible benefits.
Acquisitions and mergers are now common features of business life. Flexible benefits can help bring employees together by offering a harmonised compensation framework within which employees can retain their original benefits or choose other benefits, while reducing the organisation’s need to “cherry pick” the highest levels of benefit from each side.
Mercer provides a wide range of consultancy and administration services that can be tailored to suit your specific requirements. Our consultants can offer guidance and support in the following areas:
The introduction of any type of flexibility will require careful consideration. Mercer uses a well defined process which aligns with Mercer best practices and externally accepted project management principles.
The initial stage of any flexible benefits project typically involves the development of a business case. A well constructed business case will need to consider many factors, including:
Central to the business case is a feasibility study that takes account of the issues involved in the transition to a flexible benefits framework.
Our approach involves five main stages:
The feasibility study can also include several optional elements, such as benchmarking the proposed benefit provision and undertaking contractual audits. The combined aim of all of these processes is to deliver a clear plan covering cost issues and realistic time-scales for implementation.
With the business case approved, work on finalising the design can begin. Issues to be considered include:
Mercer can provide expert guidance and advice in all benefit related areas including pensions, healthcare and share schemes.
A flexible benefits plan has both tax and employment contract implications. Mercer can work with an organisation to develop a flexible benefits structure that maximises any tax advantages available. Similarly, our expertise in employment law will ensure that any contractual amendments required are highlighted
An effective communication strategy is vital, not only to a successful implementation, but also to foster a sense of enthusiasm for change from employees, gaining their active involvement. The communication elements include:
Many organisations have been reluctant to introduce flexible benefits because of the perceived administrative burden that accompanies their operation. The growing use of computerised systems - whether on an outsourced or in-house basis - has helped to alleviate many of these concerns.
Mercer can work with an organisation to identify the administration option that best suits its requirements.We can also assist in aligning HR systems and processes to ensure the flexible benefits structure operates effectively.
In addition to the system platforms, direct employee support is available. This includes helplines and e-mail accounts to facilitate day-to-day flexible benefits management.