Employee benefit structures have witnessed sustantial change over the last few years. These are being shaped according to what the employee wants rather than what the employer can give. Moreover, many companies are offering innovative benefits in order to retain talent.
However, in some firms, there has been a significant reduction in some of the employee benefits. Shruti Ambegaoker, principal consultant, Human Capital Group, Watson Wyatt Worldwide notes, “As per our recent survey results, only about 44% of companies offer Superannuation as compared to over 60% four years ago; 35% offer housing loan as compared to 60%;
27% offer club membership as compared to 54%;
32% offer car loans as compared to 62%,
company accommodation is provided mostly at top management levels.”
She further adds, “On the other hand, more companies are offering flexible benefit programs and group term life insurance as compared to few years ago.”
Over the course of years, medical and insurance benefits have gone through a change.
“Most employers used to offer medi-claim benefits to the employees’ nuclear families, but today progressive employers provide benefits to dependent parents also.
This is highly valued by employees as medical care for the aging is a need, especially in younger organisations where the individual himself being young, does not avail this facility himself,” notes Sugata Dutta, executive vice-president, Kotak Life Insurance.
“Most employers had some form of accidental death and disability benefits earlier, but today progressive employers provide group term life insurance which covers death/disability by any cause,” adds Dutta.
So what has driven these changes? “Primary drivers for changes in the compensation structures have been the changing income tax rules in India, changing employee expectations with demand for cash compensation, introduction of fringe benefit tax and movement to viewing compensation on a total remuneration basis,” asserts Ambegaoker.
The key to designing effective employee benefit programs is to understand the employee requirements and recommend programmes aligned to their expectations, market practice and most importantly, the company’s compensation philosophy. Companies use employee surveys to assess satisfaction levels to their benefit programs and determine if any changes are to be made. They also track market practices to see what other companies are doing to design innovative programmes.
The typical challenges faced in re-designing benefit programmes is more on the implementation side. That is where you need to transition employees from one benefit program to another, explain to them what has changed and how it has impacted them and show the overall value proposition to them.
This is where companies need to make significant investment in terms of developing detailed communication strategies to facilitate a smooth transition of employees from old to new benefit programs. Innovation in benefits acts as an important tool in attracting and retaining talent. In fact, many companies are offering innovative benefits to their employees.
“The flexible benefit plan is one of the most innovative programmes offered by companies to their employees wherein the employees have a choice of choosing compensation elements from a pre-defined menu,” notes Ambegaoker. Apart from this, some companies provide differentiated leave programmes depending on the employee’s tenure in the organisation or sabbatical programmes after completing certain duration within the organisation.
"Financial Technologies" has implemented many such innovations wherein, the performers / achievers get recognised. “Unlike other organisations, we give out business cards to our employees right on the first day of joining. In addition to this, people who are entitled to certain priviliges like a Blackberry or a laptop are given the same on the day of joining. Moreover, employees who get a mobile connection are also given the option of choosing their own numbers. We also give our senior joinees a special meal of their choice,” confirms Dr. Chandra Mauli Dwivedi, group head – HR, Financial Technologies.
Employee benefit schemes therefore are designed to provide facilities to reward and recognise employees for their contribution to the organisation. For example, the significance of flexible benefits is that it gives employees the choice of deciding their compensation structure depending on their needs.
So an employee in the age group of 40-45 can choose to contribute to a retirement benefit whereas employees in the age group of 25 to 30 can choose to take that money as cash in hand. So, have you benefited from any of the above schemes yet?