Where to start?
Be clear about the bene? ts you want to provide and which ? t your strategy. Do you want to run an in-house scheme or outsource to a specialist provider?
Do your Research...
What does talent in your industry expect from a good employer and what is cost-effective for you?
Ask your employees which core bene? ts they expect around health and pensions, ? tness, death bene?ts and holiday. But it shouldn’t be all about the product, warns Mark Futcher, partner at consultancy Barnett Waddingham. “Don’t let a product drive your needs,” he says. “Many employers waste money on employee bene? ts which do not add value to their status as a good employer or the needs of their workforce.”
Begin your search
An online search will reveal many providers so re?ne your bene? t needs. Engage with providers early to get some free advice. “Employers must get an early indication of a provider’s consultancy, technology, administration, communication capabilities, experience and skills in the UK – and potentially internationally,” says Jon Bryant, director at provider JLT Employee Bene?ts.
Make a shortlist
A shortlist of between three and ? ve providers enables an effective comparison.
Invite providers to your of? ce to pitch their schemes to discover how they connect
with the culture of your organisation, your industry and employees. “Providers can be very polished in the sales pitch so get under the surface,” advises Andrew Erhardt-Lewis, a senior manager at Deloitte UK. “Ask them to pitch on the same day and invite other function heads as well as the HRD to get their input.”
You should keep in mind that reducing costs to a minimum should not be the only measure, says John Ritchie, CEO of UK digital group risk insurer Ellipse. “It is easy
for an adviser to say ‘I can reduce your bene? t costs’, and probably as easy for them
to achieve apparent savings, but there may be hidden costs in terms of time taken
and added expenses to run those bene? ts,” he warns.
Carry out financial due diligence
A pension scheme actuary must be appropriately quali?ed and insurance providers are subject to regulation. Study at least three years of accounts and consider the ?nancial strength ratings issued by agencies. Ask your accountant or audit ?rm to comment on the provider’s business. For an employee discount website or a cycle to work scheme, a less intense assessment is needed as these contracts tend to be shorter. Be clear about the bene? ts you want to provide and which ?t your strategy. Do you want to run an in-house scheme or outsource to a specialist provider?
Don't forget to assess other risks too
There are other risks to consider. Philip Smith, head of de? ned contribution and wealth at Buck Consultants, says a ? ex bene?t provider handling sensitive personal data with a high level of systems integration with the client would require detailed risk assessment. This would cover data security, infrastructure security, physical location, personnel security and disaster recovery. With auto-enrolment of pensions, assess the technology and time-critical service risks.
Ann Brown, HR director at Capgemini, says you also need to think about potential risks for employees associated with certain bene? ts. “Look carefully at the bene?t structure and make sensible choices,” she says. “For example, would a payday loan service be appropriate or not?”
Contact other clients
If a provider is unwilling to let an existing client speak up, you should be concerned.
Talk to its clients after the face-to-face presentations. Ask three customers about the
key individuals who will be managing your relationship. Request to see a service-level
agreement and question actual performance against it. Ask questions about staff turnover and the provider’s knowledge of the client’s industry and its business.
Make sure the provider's culture matches your own
Only by meeting a potential provider’s own bosses and staff will you know if the chemistry is there for a long-term working relationship. Assessing the human touch must be part of the assessment process. Do providers share your values? Visit the provider’s site and meet the people who will actually be delivering the service. They – and not the
provider’s sales staff – will be representing you as the employer when interacting with your staff. However, warns Futcher: “If you go for the cheapest option you cannot be as fussy about culture ?t.”
What about flexible benefits?
Once you have chosen a provider, ask them to select the most appropriate ?ex solution.
Start small and build up the offer over time. Consider the cost implications. Think about why you are introducing ?ex bene? ts. Is it to raise awareness of current bene?ts
and their value through the use of total rewards statements?
Be careful not to pay a large licensing fee for software to manage a small tail of bene?ts
when the main take up is around the core bene?ts. The cost saving from not having
to license a platform can pay for an extra universal bene?t such as discounted shopping vouchers or extra life cover. Use a staff survey to ask which ? exible bene?ts your staff would appreciate.
What about the contract?
Use a staff survey to ask which ? exible bene?ts your staff would appreciate. But small business should think twice before opting for ?ex, says Derek Miles, MD of Aspira Corporate Solutions. “Flexible schemes can be a big administrative headache for SMEs with minimal reward,” he says. “People will always want something that’s not offered or a bit more than the limits allow. Once you launch a ?exible scheme, you’ll have the devil’s own job withdrawing it.”
Don’t be afraid to ask your bene?ts provider for help and ask plenty of questions before and after the contract is signed.
What if the relationship turns sour?
It is important you own all the data and are not tied into exit charges or data handover
fees. Check the supplier’s terms and conditions before signing the contract. HRDs should run a scenario analysis and prepare for the relationship to fail so there are no surprises.
What if your provider goes under?
Business relationships do fail so agree clear disaster recovery procedures and arrangements for backing up data. Problems with a bene?ts provider can damage staff
morale and engagement.