In the developing world, employees have realized the value of having benefits as a part of their pay package. Employees can be cushioned against inflation in other ways, for instance by having employers take up some of their direct expenses and also as a means of retaining talent. The traditional option of increasing pay as a retention strategy and increasing engagement score is gradually slipping from the lead position. Benefits are the new currency and employees are not afraid to push for benefits. So what can employers do to ensure they are offering a competitive range of benefits that attract and retain the best talent?
What are benefits?
Benefits are indirect and non-cash compensation paid to employees. They include but not limited to healthcare benefits, subsidized interest rates towards purchase of a home or a car, school fees refund, club memberships and related expenses, retirement schemes, paid holidays. In some organizations there is a section within the human resources department who handle this function only. Their key role is to continually design or improve existing benefits and also administer the same to the employees.
The design of benefits is reliant of some factors which include culture of the organization, the employee value proposition (EVP), the industry practice, budget allocations to design of a benefit scheme, the external environment that has a direct impact internally and generational disparity.
Culture of the organization
This greatly influences what an organization will pick as a benefit to support its culture. For instance, world IT giants Google and Yahoo!, one culture that stands out is the ability of employees to deliver no matter their physical disposition. As such the employers have allowed for flexibility of work time schedule. This is where employees choose what time to report to the office, a departure from the traditional 8 am to 5 pm work schedule. Needless to say, this culture has led to high productivity.
Employee Value Proposition
Employee value Proposition (EVP) is the non-monetary rewards offered to employees in return for their contribution and performance. EVPs seeks to enhance the employer brand as a unique employer and also manage employees experience. Typical EVPs may include organization’s commitment to employee growth, management development, ongoing employee recognition and community service in return for the performance and commitment to an organization strategy. Having benefits grounded on EVP makes it a sustainable process which recognizes, attracts, engages and retains quality people.
Industry practice of the organization
Peculiarities which have a positive impact on the life of an employee will ofcourse be a magnet for talent. It is common practice to find some type of benefits confined within an industry and mostly so when it’s directly related to the industry. For example in the airline industry it’s common to find staff have a fixed number of subsidized tickets to enable their travel and their families.
External environment
They say we are a product of nature and nurture. The same principal seems to apply to organizations and the nature may determine to a large extent the benefits available in such organizations. For example, the agricultural sector tends to have farms located far from urban/settlement areas where means of transport for employees would be a challenge, such organizations could consider including bicycle purchase /ownership benefits for the employee or use of staff bus as a means of enhancing movement.
Generational gaps
Many times questions have arisen on the suitability of benefits which are designed for all generations in the organization. The practical remedy to this would be to design a benefit scheme that enables flexible benefits where employees get to cherry pick the benefits they desire to have. For example staff in their youthful age could take career development benefits while staff in their advanced age could opt for paid holiday benefits.
Designing the Benefits scheme
All factors considered, designing of benefits scheme is quite a painstaking process. The influence of very fast communication is not helping the process, employees already know what their counterparts elsewhere in the world are earning and even before the design is complete, new demands are flowing in. It is key for employers to gather data from staff before they can present benefits to employees and whatever is designed should be what the employees want.
Unfortunately, that balance of what the employer can afford vs employee demands can be a tight wire to walk. The cost saving from abandoning the pay increase strategy must be ultimately converted into benefits whose desired effect is improved employee productivity and loyalty.
As the employers seek to enhance the value of benefits offered, we must not lose sight of the goal of establishing the organisation. Employee benefits are just but a vehicle to deliver the organisation’s vision.
The author is a Senior HR Consultant with Aon Hewitt (A HR consulting Division of Aon Kenya Insurance Brokers Ltd.)
