What does the future hold for employee benefits product design?
The key premise for employee benefit providers has not changed:
“It is common sense to ensure that, wherever possible, the people who make up organisations feel good about themselves and their working environment”.
This means that relevant and effective employee benefits must play a key role in delivering good work environments.
The employee benefits industry is still suffering from too few new ideas and little innovation. Jack Trout a leading strategist said “Good business is always the result of great ideas but great ideas don’t always result in good business”. The employee benefits sector is littered with the debris of broken products, product proliferation and complexity. This is especially true of financial services products, with companies having to pay out significant amounts of compensation in recent years.
Despite the opportunities that the changed landscape in pensions has offered in recent years, health and protection providers are not moving quickly enough to seize the moment and meet the needs of both employers and employees.
The protection gap has become larger according to the latest Swiss Re reports and too few providers are focusing on the delivery of tangible practical benefits. The traditional protection industry is still focused on designing products by internal committees and failing to really engage with customers, which means that the great opportunity presented by pension products has not been seized upon.
Research conducted by many organisations keeps telling us that employees want practical and tangible products that make an immediate difference to their lives. Since the 2008 financial crisis, employers have been under constant budget pressures in terms of managing their staff costs and are keen to find new ways of providing affordable employee benefits to ensure that they protect and support their employees. Employees themselves are becoming less satisfied with their benefits; in its recent annual survey, Willis PMI Group, part of Willis Towers Watson, found that only 44% of employees are happy with their packages and this is 7% down on the previous year.
The product area that has received less attention is that of salary sacrifice schemes. These offer immediate solutions to employees’ needs and can help to create family friendly work environments.
There are many small employee benefits providers which offer a wide choice of services ranging from childcare vouchers, nursery provision and retail discounts to environmentally friendly services such as cycle to work schemes. All of these products can be consumed by employees immediately and therefore drive employee engagement from day one. These products are also clear and transparent so that employees understand what they are buying and that it fits their needs at present and into the future.
Family friendly benefits are increasingly important as employees give a greater focus to work-life balance concerns. Women now account for nearly half of the workforce in the UK, and with over 80% of them becoming mothers during their working life, these sort of benefits have a vitally important role to play.
Employers offering high quality employee benefits and childcare provision often see it as one of the most effective ways of supporting and rewarding their employees. This can be combined with employee assistance programmes to deliver wider support and advice around other dependants that the family may need to look after. Salary sacrifice is a fantastic way to engage with employees and save money both for the employee and organisation, by making savings in tax and national insurance contributions.
A significant opportunity exists for all employee benefit providers to work with other companies to develop and launch new products that integrate and deliver financial protection. The key ingredient in this will be empowerment and inclusion of the employee in the design of the solutions.
Managing Director of Busy Bees Benefits
Managing Director of Busy Bees Benefits