However, with budgets being slashed left right and centre, the cost of employee benefits is being scrutinized more and more within businesses. How do you ensure you have the most cost effective and valued employee benefits programme for your people? How can you manage the cost of benefits? How do you get the most out of what you have? Are there smart ways to reduce costs?
Below are 5 smart ways that could help you manage and reduce your employee benefits spend.
1. Review the ‘whole’ of the market
As with everything, it’s a good idea to get a check-up from time to time. When was the last time you reviewed the whole of the market in relation to your existing employee benefits plans? By regularly reviewing the whole of the market, you can get an idea of the price differences between various insurance/plan providers, as well as their scheme details. By carrying out a review, you could lower your premiums, increase key features, as well as get a better service standard or even a great introductory rate.
A benefits broker can carry out this review for you, which will save you hours of research.
A broker can either be fully independent, which means they are not associated to any provider or they can be linked to a handful or just one provider. Each has its own advantages and disadvantages, but on the whole, searching the whole of the market will give you more of choice and the flexibility in finding a plan/provider that offers exactly what you are looking for – rather than trying to force a square peg into a round hole.
DGS Employee Benefits Solutions are totally independent (and Chartered!)
So, if you are setting up employee benefits from scratch and would like an idea of costs, or if you just want a review of what you currently provide to identify any potential cost saving, we provide a free ‘Employee Benefits Review’ for businesses in London, the South East and the Midlands. For more info CLICK HERE
2. Adjust what you already provide
Within most plans there will be various scheme options and key features. Maybe you are aware of all the key details or maybe you’re not? By having an understanding of the options and the features, this will allow you to make some informed choices on what you may or may not want to provide in the future. Obviously it’s important to take some HR advice if your employee benefits are linked to your contract and you want to start playing about with them.
For example, if you are offering Private Medical Insurance (PMI), when the scheme renews you will have the option of setting limits on what it covers. Maybe you have a feature on the plan that isn’t used or appreciated by your employees. By removing this feature, you could save money on the next year’s premium. Maybe your hospitals list is UK wide, but all your employees are now based in one geographical area. Therefore do you need this expanded feature? Could removing this lead to a cost saving? It's worth checking!
The same applies for benefits such as income protection, where by revising the payment period could reduce the annual premium.
Many employee benefits schemes are often in place for years without being reviewed. Therefore, it’s often the case that the person managing the schemes doesn’t fully understand how they are costed and whether the features are still relevant and competitively priced.
By talking to us at DGS, we can drill down into the key features of your benefit schemes and help you decide which features you could alter or remove to reduce your annual premium.
All these factors can be discussed at your free employee benefits review with us.
3. Look for providers who can offer additional key features
Insurance and product providers will be trying to attract businesses to sign-up with them. Some of them do this by offering additional features that are not offered by others. Sometimes you may not even realise the additional features that you currently have with your existing provider.
For example, some Private Medical Insurance providers offer deals like 50% off gym membership at large national chains for scheme members. Another example is that some income protection schemes offer a free Employee Assistance Programme (EAP) as part of their key features.
By reviewing what is available in the whole of the market, you could be adding to your existing benefits provision by being smart around which provider you choose. Or if you are currently offering these additional features under separate arrangements, by merging into one plan, you could potentially save on costs.
4. Be smart with how you pay
With most schemes /plans, if you pay annually rather than monthly, this generally reduces the annual premium.
If you are setting up a Private Medical Insurance (PMI) scheme, you will be given the option of setting an excess on the scheme. By increasing the excess you generally see a reduction in the annual premium. However, it’s important not to go too much the other way when reducing costs. You don’t want to have loads of benefits that are swayed too highly in the employers favour, else it defeats the purpose of providing them.
Another health related benefit is the Health Cash Plan scheme where some employers will pay for the basic cover and employees can elect at their own expense to top-up the cover to a higher level.
Also you should be considering at what point in the employee lifecycle a team member becomes eligible for which employee benefits. By staggering employee benefits based on length of service, this will provide you with potential savings, as opposed to providing benefits from day one of employment.
As well as this, it could be that you decide that different levels of employees receive different benefit entitlements. This has the potential to reduce the costs, by not automatically giving all employee benefits to all employees. i.e. only providing senior management with private health care etc.
5. Find out what benefits are valued and which are not
There’s no point paying for a library of employee benefits if they are not valued or utilised by your employees. Employee benefits should be used as a way of attracting, engaging and retaining your people. If the benefits are not relevant, then it’s not going to help you achieve that and it’s costing you money just the same.
Therefore, before you embark on an employee benefits shopping spree, get an understanding of your employee demographics, your culture and what you want your benefits to achieve as part of your reward strategy. It may be you have a young workforce who would not at this point value private medical insurance, but instead would want more annual leave and a bigger bonus pot. However, it’s important to note that as a business grows and you start wanting to attract talent from larger competitors and your demographic starts to change, your reward strategy (which includes your employee benefits) will need to change with it.
So, these are just some areas to think about which can help you manage and reduce the cost of employee benefits.
If you are setting up employee benefits from scratch and would like an idea of costs or if you just want a review of what you currently provide to identify any potential cost saving, we can provide a free ‘Employee Benefits Review’ for businesses in London, the South East and the Midlands. For more info CLICK HERE.
Author: Andy Selway, MCIPD, HR and Corporate Engagement Consultant