{"id":2623,"date":"2014-07-17T14:43:50","date_gmt":"2014-07-17T13:43:50","guid":{"rendered":"http:\/\/sjbealehrconsult.co.uk\/blog\/?p=2623"},"modified":"2014-07-17T14:43:50","modified_gmt":"2014-07-17T13:43:50","slug":"building-an-attractive-benefits-package-for-a-small-to-medium-sized-business","status":"publish","type":"post","link":"https:\/\/sjbealehrconsult.co.uk\/blog\/building-an-attractive-benefits-package-for-a-small-to-medium-sized-business\/","title":{"rendered":"Building an attractive benefits package for a Small to Medium Sized Business"},"content":{"rendered":"

The law requires all companies to offer certain benefits, but they can go above and beyond \"benefits\"<\/a>statutory requirements, this includes small to medium sized businesses – the SME market.\u00a0 An SME is defined as a small to medium enterprise with 250 employees.\u00a0 Employee benefits are also known as fringe benefits or perks offered in addition to a basic salary.\u00a0 Traditionally an attractive benefits package was only possible for larger companies with large budgets, however, as time has progressed and benefit provider costs have come down it is possible for even the smallest SMEs to be able to offer an attractive benefits package.<\/span><\/p>\n

The reasons for creating an attractive benefits package are to recruit, retain and reward employees; this provides competitive advantage and helps to meet external as well as internal pressures.<\/span><\/p>\n

At the heart of all forms of employee reward, including benefits, is motivation.\u00a0 Employees need to be sufficiently motivated by the reward on offer so that employee engagement is encouraged. \u00a0 Hardworking employees can be spurned on by a worthwhile incentive and, hopefully, those that do the bare minimum will strive to work harder.\u00a0 Improved productivity will increase profits.<\/span><\/p>\n

When designing a benefits package there are key issues to consider.\u00a0 The main aim is to meet the aforementioned criteria so the SME has sufficient high quality committed employees. \u00a0\u00a0Value for money is particularly important as an SME does not have loads of cash to splash around and waste.\u00a0 Tax efficiency is important whilst refinement and tailoring is essential.<\/span><\/p>\n

The first step is to decide the objectives of an employee benefits package.\u00a0 It should certainly meet the requirements of the employer but also the requirements of the employee.\u00a0 The objectives may look at matching benefit philosophy to SME strategic objectives.<\/p>\n

Employees\u2019 opinions can be sought in a variety of ways.\u00a0 A few years ago I drafted a reward survey for a charity that included aspects of both financial and non-financial reward.\u00a0 The results were illuminating as the most sought after forms of reward were non-financial and top of the list was flexible working.\u00a0 Opinions could also be gathered from focus groups and\/or interviews.\u00a0 This process may be time consuming to gather and process the information, but is essential to develop a truly tailored package that employees will value.<\/p>\n

Having collected the internal data related to benefit requirements, the next step would be to analyse what the competition is offering.\u00a0 There are many benchmark reports available offered by the CIPD, Xpert HR and IDS for example.\u00a0 By purchasing a report the data is readily available and all the hard research work has been done.<\/span><\/p>\n

SMEs can also club together to create a pay club to share information on a confidential basis.\u00a0 They are an attractive and cost effective way to gather information on benefits.\u00a0 Membership can be tailored geographically, industry or company size, but a disadvantage is that it might be difficult to find SMEs to take part.<\/p>\n

The internet can offer a wealth of information but this is also time consuming to find out where to look then sift through all the data available.<\/span><\/p>\n

The next step would be to design an employee benefits system.\u00a0 The variety, extent and type of benefit needs to be considered along with tax efficiency.\u00a0 Employee benefits can come in all types of guises \u2013 both financial and non-financial.\u00a0 Financial benefits obviously have a cost attached to them so budget and affordability is quite key.<\/span><\/p>\n

Such benefits can include private health insurance, occupational sick pay, profit sharing, death in service benefit, income protection, life assurance, dental insurance, pension contributions (including enhanced contributions), interest free season ticket loan, car mileage allowances, annual Christmas bonus, annual bonus in cash or vouchers, critical illness insurance, mortgage assistance, relocation packages, company discount on products, professional fees payment, gym membership, long service award, overtime, unsocial hours payment and retirement benefits. \u00a0Since October 2012 companies must comply with pension auto enrolment according to their staging date. \u00a0SMEs have been affected since January 2014. \u00a0A company may choose to comply using the basic government package, NEST, but has the option to use a private pension provider provided the company size is large enough for the pension provider requirements. An employer can choose to pay in more than the basic contributions. \u00a0\u00a0<\/span><\/p>\n

The company car has long been seen as a worthwhile benefit, but tax can be high so many companies now offer a car allowance and\/or free fuel on a card which may be more tax efficient.<\/p>\n

Tax free benefits include employee meals, child care in workplace nurseries, luncheon vouchers, Christmas parties up to the value of \u00a3150, small gifts to third parties, training, outplacement and redundancy payments up to the value of \u00a330,000.<\/span><\/p>\n

Personal needs can be addressed with employee benefits.\u00a0 These can include annual leave, maternity leave, paternity leave, adoption leave (all of which can be enhanced over and above the statutory requirement), compassionate leave, pre retirement counselling, financial counselling, canteen, and sports\/social facilities, living accommodation, mobile phones.<\/span><\/p>\n

Having non financial employee benefits in the mix is very cost effective and can vastly improve morale as well.\u00a0 Non financial benefits can include flexible working, appraisal, training and development, career development opportunities, an employee lunch, Friday afternoons off, career breaks, promotion opportunities, free car parking, free tea\/coffee\/water, an employee assistance programme, free pension planning, long service certificate, employee of the month certificate, suggestion scheme, and an employee recognition scheme.<\/p>\n

For cost effective purposes an SME may decide to design a flexible (or cafeteria) benefits system where employees can choose the benefits they take up.\u00a0 The advantages of this are that costs can be controlled more efficiently and employees can tailor their own packages to suit their needs.\u00a0 The benefit requirements of a young male employee with a growing family might be quite different to that of an older woman who is facing retirement for example.\u00a0 Employees are provided with a shopping list of benefits and allocated a spend.\u00a0 At the heart of flexible benefits there will be core benefits which all staff enjoy such as pension, life insurance, income protection and holiday entitlement.<\/span><\/p>\n

Flexible benefits offer greater individual freedom of choice and an employee appreciation of the value of the benefits provided to them.<\/span><\/p>\n

In recent years salary sacrifice has grown in popularity which helps to fund flexible benefits.\u00a0 With salary sacrifice there are tax and national insurance savings.\u00a0 The employee gives up part of their salary in return for a non-cash benefit.\u00a0 The most popular types of salary sacrifice are childcare vouchers and pensions.<\/span><\/p>\n

Flexible benefits can be introduced on a simple basis. \u00a0For example one of my clients allows their employees to buy more annual leave once they are fully qualified.\u00a0\u00a0 With a very simple system it is possible to manage this on spreadsheets and wordprocessed documents, but for a larger offering, an SME may need to consider using an in house or outsourced computerised system.<\/span><\/p>\n

Another type of benefit includes voluntary benefits where an employee can choose to pay for a certain type of benefits.\u00a0 These include cycle to work, pension contributions and childcare vouchers, retail and leisure discounts, gym membership and discounts at local shops and restaurants.<\/p>\n

Consultation with staff before finalising the benefits package is essential and, where possible, changes can be made before final implementation.\u00a0 Consultation can be undertaken using focus groups or with one to one interviews so that opinions can be sought.\u00a0 Consulting with staff will ultimately get buy into the finished product.<\/p>\n

Following design of a benefits system it is important to set out in writing the framework in which it will operate \u2013 who gets what and the circumstances. Employees will need to be informed as to their entitlement and what they will gain from the package.\u00a0 Details on monitoring and costing are also important to document.\u00a0 \u00a0Using total reward statements can help to show pictorially, the benefits value to individual employees.\u00a0 Using graphs or pie charts the benefit offering can bring a package to life so that it seems more worthwhile and understanding is greater.\u00a0 Total reward statements can be made available online or in paper format.<\/p>\n

Whatever benefits system is implemented, it is important to monitor how much is spent on each benefit and how much it is used.\u00a0 There should be regular surveys undertaken with employees to ensure it is fit for purpose.\u00a0 Corrective action can then be taken if the budget is being exceeded or certain benefits are not being taken up. Also some benefits may become less tax efficient so SMEs need to keep abreast of HMRC changes.<\/p>\n

The introduction of a benefits system needs to be well planned.\u00a0 Employees should know what is happening, why it is happening and how it will affect them.\u00a0 This can include the use of media and face to face discussions.\u00a0 Booklets, posters, newsletters, presentations and online communications can all be used to get the message across.<\/span><\/p>\n

SMEs can now truly take advantage of employee benefits and design an attractive tailored package that will improve morale and ultimately the bottom line allowing them to effectively compete in the market.<\/span><\/p>\n

\u00a0<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

The law requires all companies to offer certain benefits, but they can go above and beyond statutory requirements, this includes small to medium sized businesses – the SME market.\u00a0 An SME is defined as a small to medium enterprise with 250 employees.\u00a0 Employee benefits are also known as fringe benefits or perks offered in addition […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[434],"tags":[518],"class_list":["post-2623","post","type-post","status-publish","format-standard","hentry","category-employee-reward","tag-benefits-package-for-a-small-to-medium-sized-business"],"aioseo_notices":[],"yoast_head":"\nBuilding an attractive benefits package for a Small to Medium Sized Business<\/title>\n<meta name=\"description\" content=\"Building an attractive benefits package for a Small to Medium Sized Business\" \/>\n<meta name=\"robots\" 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