Employee benefits programs – making them cost effective

by 15 Sep 2009

Given the current economic climate, how can we improve the value of our employee benefits without a significant increase in costs?

A. The increasing cost of employee benefits and the shortage of qualified and skilled resources are the two biggest global human capital challenges organisations believe will impact them in the next three years, according to findings of Aon Consulting’s 2008 Benefits and Talent Survey.

Recognising this, organisations should change the way they approach employee benefits to maximise the value to their employees.

Traditionally employee benefit programs were put together then rolled out year after year without review. Benefits were usually dollar- based, ad hoc and delivered internally by HR. The result was a short-term, reactive program that fails to distinguish the organisation from its competitors.

A more long-term, sustainable approach considers benefits as an intrinsic part of your HR strategy.

And in difficult economic times consider ing or enhancing the use of non cash bene fits can in fact become a cost effective al ternative to traditional cash based increases.

Keys to a successful Employee Benefits Program (EBP) are:

• Partnership approach with supplier: Be selective, ensure your supplier is not only delivering value to your employees but also to your company.

• Cover all the key benefit areas: A com prehensive EBP must address lifestyle, financial and health and wellbeing ben efits. Education on key benefits is also critical and EBP should actively support the work/life balance of employees.

• Build in flexibility to adapt to existing and future needs: Program should interact with existing benefits, eg. super, em ployee assistance program, share plan. Allow for future changes or additions to the benefits. Brand the EBP – it’s yours after all.

• Communicate effectively and frequent ly: Engage employees on the program with a well planned communication and education strategy. EBPs work best when employees are fully aware of what is available to them and the value of the benefits on offer.

• Actively manage the program: Appoint a program champion within the compa ny. Monitor usage and trends to measure return on investment. Regularly enhance EBP to ensure ongoing relevance

By Lee Dureau, principal at Aon Consulting Australia. Tel: 02 9253 7534 or email lee.dureau@aon.com.au