Impact of employee benefits post covid-19 pandemic 

Now let’s look at what is traditional and what is flexible benefit? ​​

In case of traditional benefits, employer decides on benefits, absorbs the future cost increases and employees undervalue the cost of benefits.  One size fits all approach is adapted. Example of traditional benefits include on-site childcare, commuter benefits, meal benefits, travel and perquisites, etc. On the contrary in case of flexible benefits, employees decide their benefits, employees co-share the cost of benefits and understand the value of benefits since they choose the benefits that matter to them most! Example of flexible benefit include customized health, well-being and insurance, work flexibility and personalized time off, new childcare / eldercare support, etc.

Top 5 reasons for providing flexible benefits to employees:

1. Attracting and retaining employees
2. Meeting the needs of diverse workforce
3. Allowing employees autonomy over their benefits
4. Increasing market competitiveness
5. Enhancing employer branding

To attract and retain top talent, organizations are offering benefits programs that suit individual needs and life stages in addition to providing transparency and portability.​ Today’s employees not only expect more personalized benefits, but also guidance on how to use them in an easily accessible way. ​

​​Here are two main reasons why the flex benefit trend is here to stay:​

1. Employees are allowed to opt for individual plans or top-up plans: This allows individuals to match their benefits to their needs (no one can deny that the world is moving towards personalization, so why should employee benefits be any different?). The one-size-fits-all approach to medical benefits will no longer be fit for purpose in the future, as employees want more control around their benefits and are looking for perks that can be customized to suit their lifestyles.​
2. Cost Sharing Approach: The added advantage for employers is that this flexibility allows employers to share some of the cost of employee benefits with employees. If employees want to enhance their benefits, they can do so - but will need to contribute to this. This cost-sharing is going to be critical. The cost of health insurance is only going to be a bigger issue and the HR managers in the organization need to address this effectively.                                                                    

Employee benefits and changes post Pandemic:  Overall, the COVID-19 pandemic has accelerated the trend towards a more holistic approach to employee benefits, with a greater emphasis on supporting employees' physical and mental well-being, as well as their overall quality of life. The pandemic has also brought about changes in the way companies offer employee benefits, such as:

1. Mental health and well-being: With many employees experiencing stress and anxiety due to the pandemic, companies have been offering more resources and support for mental health, such as access to counseling services, virtual support groups, and mindfulness and meditation apps.  In addition, a lot of companies to retain their employees have started offering perks such as unlimited vacation policy, more remote working options, unlimited sick leaves, and more robust parental leave policies.
2. Expanded use of technology: With many employees working remotely or in hybrid environments, companies have been leveraging technology to provide virtual benefits such as virtual fitness classes, telemedicine, and online financial planning services
3.  Work, workplace, and workforce: Flexible working and working from home arrangements have become more popular since then. Employers have also expressed that “Employees have clearly realized the flexibility work from home provides and if you ask them to come back to work, 30% or more may even quit, if there are options available”. Therefore, many companies have adopted remote work policies and are offering more flexible schedules to accommodate employees' needs. This has led to an increase in the popularity of employee benefits such as childcare assistance, eldercare assistance and pet care assistance
4. Time off policies: The pandemic has also highlighted the need for more robust leave policies. Many employees have had to take time off to care for loved ones who were sick, or to care for their own children while schools were closed. Some companies have started offering paid special leave / special sick leave, as well as expanding their family leave policies to provide more support for employees during this difficult time
5. Employee assistance programs (EAPs): The pandemic has also increased the need for employee assistance programs (EAPs) to help employees cope with the stress and uncertainty caused by the difficult situation. EAPs typically provide employees with access to counseling and other support services and can help employees address a wide range of personal and professional issues
6. Diversity and Inclusion: Companies are also offering more benefits to support the diversity and inclusion of their employees, this is not only a moral imperative but also a business one as companies with more diverse and inclusive environments have been shown to have better financial performance.

It's important to note that these are trending benefits practices across different industry segments, the specific benefits offered by a company may depend on the company size, location, business growth and other factors. As per Mercer study, here are few benefit practices in India that are trending across different industry segments.

High Tech:  85% tech leaders plan on getting hyper-personalized to ensure benefits attract/retain talent. Flexible working arrangements, remote working options, generous leave policies, education assistance, are some benefits trending among technology companies in India. Many also offer employee stock options, training and development opportunities, rewards and recognitions for upskilling / reskilling and other incentives to attract and retain top talent.

GCC (Global capability centres) / Shared Services: 75% GCCs companies surveyed in India are offering flexi-benefits, diversity related, benefits such as health insurance, dental / vision insurance, paid family leave. 6/10 GCC companies also offer tuition reimbursement and other educational opportunities to their employees for upskilling/reskilling, some companies also provide incentives for upskilling / reskilling. These centres also often offer flexible working arrangements and remote working options to their employees. Employee retention has been a challenge and according to our Mercer study indicates this industry segment has witnesses the highest percentage of attrition in 2022 and towards this there is a trend of companies moving their approach from standardization to personalisation when it comes to employee benefits.

Manufacturing: 81% of manufacturing companies surveyed in India provide benefits such as health and wellness, family and parenting, retirement savings plans, paid time off and other work-life-balance. Most organization also provide transportation and housing allowances, employee recognition programs, as well as other incentives to attract and retain employees.

Automotive: 67% of Automotive companies surveyed in India offer employee benefits that includes Paid sick leave, paid holidays / vacation, paid self-care days or time off for mental health, disability Insurance, flexitime, financial wellness, career progression, team outings, learning and development programs, company car benefits at certain level and above.

Life Sciences: 80% Life Sciences companies surveyed said their employees value companies that encourages achieving outcome over production. Encourage and incentivize building skills to enable employees to upskill and re-skill, offer work flexibility, health insurance, paid leaves, tuition reimbursement, etc.  Although organizations are encouraging their people to return to the office, flexible work is here to stay, and companies must adapt management styles and total rewards accordingly. Life sciences companies are under pressure to be creative with total rewards. Part of this initiative will include helping employees understand what is involved in total rewards, particularly employee benefits so they can develop benefit packages with their employers that are meaningful and valued.

Most employers in India have updated or planning to update employee benefits and allowances to stay relevant to existing times.

Check out how relevant are your employee benefits when compared to market practice!