Employee Benefits in a Downturn (July 2009) |
Employee Benefits -> EB Article Library
MANAGING EMPLOYEE BENEFITS IN AN ECONOMIC DOWNTURN
In the current economic climate employers are, even more than usual, conscious of their costs and therefore their employee benefit schemes come under closer scrutiny. In times like these receiving proactive, independent advice is imperative if an organisation is considering changing their benefits structure to reduce costs.
Reduced turnover and increasing pressures on cash flow can result in organisations reviewing their benefits provision with a desire to immediately reduce costs. However it is important that benefits are considered as part of the overall picture in order to avoid a “knee jerk” reaction that could have a negative impact on employees’ perception of the employer and their appreciation of the range of benefits provided. This could have a detrimental effect not only at the time of cost cutting, but also in the future.
Taking advice from an experienced, independent employee benefits consultancy enables an objective re-evaluation of an employer’s objectives within a changing economic environment.
In our opinion, the key areas for consideration include:
Aims and Objectives
Before a change of benefit structure is undertaken it is important that an understanding of employees’ perceptions of their benefits is gained to enable consideration of what could be changed. It should be noted that if there are likely to be amendments to employees’ contractual terms and conditions, advice from a legal perspective should be sought as early in the process as possible.
Independent Review
A market sector review can be undertaken to establish the competitiveness of the employee benefits package, and terms and conditions benchmarked against competitors within the same business sector.
A review of the schemes that make up an employee benefits package can provide opportunities to noticeably reduce costs, whilst maintaining the value to staff.
Salary Sacrifice – a possible way to reduce costs
The introduction of salary sacrifice can help fund the provision of employee benefits, whilst also generating a reduction in the employer’s NI liability and enabling both the employer and the employees to share in the savings.
Please see our article on salary sacrifice for more information.
Communication
Effective communication and access to advice are vital in the process of reviewing benefit schemes and making any changes to benefits. Whenever possible, it is important that the perceived value of the benefits is maintained. As the range of benefits offered by an organisation will carry differing levels of importance for individual members of staff, ensuring they understand any changes and appreciate the rationale behind those changes has, in our experience, helped maintain a positive perception of an employer’s benefits package.
Cartlidge Morland
When we undertake a full audit of an organisation’s employee benefits package, we evaluate each scheme against three different criteria: cost, performance and value.
Due to our size and reputation, Cartlidge Morland are able to negotiate preferential rates, terms and conditions for our clients to ensure that they receive the most appropriate schemes available.
Contact us to find out how we can help you manage, and even improve, your employee benefits package in an economic downturn.
Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services.
Phone us on 020 7709 5560 or complete the online contact form
