02 Dec

Employees demand next generation of holistic benefit planning


holistic benefit planning

In the war for talent and skills, employee benefits form an integral part of the total rewards strategies that businesses use to attract and retain talent. Organisations need to ensure that every effort is made to retain skilled employees who are critical to the future of their businesses, and yet at the same time the HR function is under tremendous pressure to prove its value by creating a more productive, results-oriented workforce, while simultaneously reducing operating expenses. As markets remain under considerable pressure and businesses seek to optimise their operations, HR will need to get more from its human capital with less—and provide measurable results to prove it.

holistic benefit planning

Ndivhuwo Manyonga

The good news though is that sub-Saharan countries including South Africa are faring significantly better than their global counterparts when it comes to having the highest levels of employee engagement.

“Engagement is defined as the emotional and intellectual involvement that motivates employees to do their best work and contribute to your organisation’s success. But in return for these levels of engagement, employees are increasingly expecting more value from their employers, particularly as the world economy shrugs off the after-effects of the recession and confidence levels increase. As employees start weighing up their employee benefits packages, coupled with increased levels of job creation in many global economies, we could begin to see an increase in high-value employees applying for positions both locally and abroad,” explains Ndivhuwo Manyonga, Executive Head of Aon Hewitt.

“Employees are expecting more from their employers when it comes to their financial security. Essentially, the traditional employee benefits of pensions, healthcare and death and disability insurance form the backbone of financial security for employees, but increasingly there is a need for greater innovation in benefit design and wider product offerings. A properly constructed package of employee benefits could include additional benefits such as wellness programmes, financial planning, budgeting, insurance group schemes and discounts and so on. The need to make employee benefits more effective, deliver better returns and more easily understood by employees is vital,” adds Ndivhuwo.

Moreover, the need to design an integrated package of benefits that is flexible and broad enough to meet the needs of individual employees is crucial. Employers that are able to demonstrate through their benefit designs that they understand the challenges faced by their employees and are seen to be actively taking action to assist them will certainly garner their fair share of staff loyalty.

The Power of Group Buying

Group Insurance schemes, for example, are increasingly becoming part of the overall corporate benefits and wellness equations, with more employers taking an active role in supporting their employees’ financial fitness too. “The reality is that South Africans are under tremendous financial pressure, exacerbated by fuel price hikes, water and electricity price increases, high education costs, the rapidly increasing price of food and basic necessities and so on. By adding a group insurance scheme to the host of other employee benefits such as retirement and healthcare, employers get to help remove or at least mitigate employees’ anxieties about protecting their personal motor and, household assets, usually with preferential premiums and better benefits than they could obtain on their own,” explains Mandy Barrett, Manager of Marketing and Sales of personal lines insurance at Aon South Africa.

Obviously, group insurance schemes are not the be-all-and-end-all solution for employees’ financial concerns, and they form part of a much bigger picture of employee benefits. But they do address some of the major financial anxieties among staff, by assuring them that their private assets are protected and will be replaced in the event of a loss. Being under-insured in the event of a total loss can have devastating financial consequences for them. This, in turn, will impact on their work performance and productivity if their personal finances are in upheaval.

“Providing this peace of mind has to be seen as part of the overall wellness equation which includes physical, emotional and financial aspects. These benefits, along with other HR interventions obviously, are discernible for companies in lower staff churn, greater productivity and skills retention and in turn, better service delivered by a more stable and loyal employee base. Without a doubt such a comprehensive employee benefits offering complete with all the frills plays an important role in improving the marketability of a company as an ‘employer of choice’ among job seekers, which is a major asset in skills-starved South Africa,” adds Mandy.

Given the fact that South Africans have high levels of debt and credit-worthiness issues, it’s now a moot point whether employers can sustain the pace of increased workplace demands without more support for financially strapped employees. The question that HR professionals have to ask is whether the staff is thriving under the demands of today’s fast-paced changing business environment, or whether they are they struggling to cope against a backdrop of increased personal financial pressure where they may not be in proper control of their finances, debt and savings.

“Given this scenario, it’s obvious that being able to offer more benefits and greater cost-savings for employees on the road towards greater peace of mind and productivity is a win-win for all concerned. Given the direct and indirect savings in cost offered by group insurance schemes, they are ultimately not only the more cost-effective choice for employees, but the rewards go far beyond what money can buy,” adds Mandy.

Innovation in Benefit Design

We are living in a new age of risk and we need to balance innovation in benefit design with providing solutions that meet the realities of the evolving financial environment faced by employees. These cannot be flavour of the day; they need to be sustainable, practical, integrated and deliver long-term returns. An employer’s ultimate goal has to be to take some of the financial risk away from employees, and give them security in return. However, it is essential that benefit improvements are applied in consultation with employees and need to be relevant to the unique needs of a diverse workforce, rather than ‘template-type, one-size-fits-all approaches. Clearly, single employees will have very different requirements to employees who are married with children. Those companies that understand the needs of their employees and react appropriately are best placed to retain their key talent.

Providing employees with professional advice

For many employees, having access and interaction with a professional broker to guide them in their financial planning will happen for the first time through their place of work. It is an invaluable opportunity for them to get input into their financial fitness and various aspects of their insurance portfolio. This is especially important in the current economic conditions where risk management of insurance premium increases is essential.

“The secret lies in risk managing your insurance portfolio. By providing your employees with a well-conceived insurance program achieved by consulting with a professional broker who can assess their unique needs, risk profile and budget, they will access to a tailored insurance offering that gives them peace of mind knowing that their hard-earned assets are safeguarded in the event of a loss and, most importantly, that they are paying the right price for the right amount of cover,” explains Mandy Barrett, Aon South Africa.

holistic benefit planning

Mandy Barrett

“For many people, insurance is often seen as a grudge purchase, so often it’s the first thing to get chopped when under financial pressure. It’s human nature to believe that we won’t ever face a worst case scenario, but if your home burned down to the ground, would you have enough money in your savings to rebuild it, replace all your household contents such as furniture, appliances and clothes and maintain your standard of living? Would you recover if your financed vehicle was written off in an accident and be able to cover your outstanding debt, plus replace your vehicle? It’s highly unlikely, and that’s why people take out insurance policies.”

One of the most important factors in managing premium levels is to improve your risk levels and take steps to prevent or minimise losses.

The drive to save costs in the current environment is totally understandable. Insurance is one area where consumers often believe they can save. But the emphasis must be on right-sizing covers and seeking economies where they are to be found, and to avoid under-insuring.

“By working with a professional broker, your employees benefit from sound risk management advice that will help them reduce the incidence of losses and thereby benefit from a segmented rating where low-risk clients enjoy lower premium levels than those with higher risks. While premium increases may be unavoidable in some instances, they can be managed,” concludes Mandy.


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