Millennials make up a third of the workforce, and are not won over by healthcare and life cover, like their babyboomer parents. These are expected to be part of the package, but they seek extra perks related to overall health, wellness and quality of life. Research has shown that the implementation of well-structured and appropriately priced employee benefits (EB) is good for employees, as well as company profitability, and that flexibility can be a deal-breaker.
According to Gareth Collier, director at Crue Invest, employees who are in control of their finances and their debt are bound to be more productive, display higher attendance and demonstrate greater company loyalty.
“Providing group benefits encourages engagement between business owners and employees, and sends a clear message that the employer cares about the staff and their loved ones,” said Collier.
“We have learnt that group benefits are a key factor in employee satisfaction, productivity and overall staff well-being,” he added. Group benefits generally include a retirement fund, as well as life and disability cover for the employee. They can extend to medical aid, funeral plans, dread disease cover and gap cover, depending on the employer’s commitment to its employees.
“Group benefits are generally less expensive than individual cover because the employee group is underwritten as a whole and well-structured employee benefits assist in attracting top quality people. Well-structured employee benefits can make a company an employer of choice”.
Collier advised that the EB market is highly complex with a range of different products available.
“Without the help of an expert, companies can end up with a set of hodge-podge products that are not well-integrated and poorly structured.
Five tips to business owners for Employee Benefits:
- Employers should firstly look out for a completely independent advisor who is able to provide advice on the full spectrum of products and services available in the market and fully integrate group benefits with your employees’ personal financial provision, ensuring there is no overlap or duplication of benefits. Ensure the advisory firm can implement the full range of solutions including group risk, retirement funding, disability benefits, medical aid, gap cover, financial management, funeral cover and estate planning.
- Your advisor should have in-house finance, tax and legal expertise to help with the correct structuring of benefits. EB is much more complicated than simply life cover, medical aid and a pension fund. An independent advisor should be able to structure one’s risk, retirement and estate planning needs whilst taking into account the individual’s group benefits.
- Look for an advisor who is able to offer a fully-customised solution based on your employee profile, the company needs, the employees’ needs and the strategic vision of the business in terms of staff retention and attraction. An employee’s retirement and insurance benefits are no longer dependant on one another. In other words, the service provider contracted to provide the group retirement funding need not be the same company that provides the group risk cover.
- Construct your Employee Benefits to attract the kind of staff you want on your team. This is industry and level dependent. Flexibility in the design of employee benefits allows employer to add different categories of benefits within the same scheme. For instance, more senior members of staff may be provided with higher levels of life cover or may be able to contribute a greater percentage of their income to the retirement fund. This structuring can be used to attract and retain the desired talent.
- EB benefits that are important to Millennials. Millennials make up a third of the workforce, and they are not won over by healthcare and life cover, like their baby-boomer parents. Millennials seeks benefits that are flexible and which are fully customisable. A young, single employee would have no need for life cover, but would need to protect his future earnings in the event of disability. He would want to be able to customise his group cover to suit his needs. Similarly, a married executive with children, home loans and debt would want the flexibility to increase her life cover to provide for her children should something happen to her. Millennials want online access to their benefits, and want to be able to track their investments without having to ask HR for a benefit statement.
Some life insurance and medical aid companies offer rewards programmes with significant benefits for those who choose to engage fully with them. For millennials, who have a propensity for apps and online functionality, access to these rewards programmes could be a deal-breaker. On the other hand, user-intensive rewards programmes do not necessarily appeal to more mature staff, and employers will be faced with a dilemma – hence the need to offer customisable solutions.
Millennials love the idea of a one-stop shop, and that includes financial planning. Whereas older generations had a life insurance broker, a medical aid broker and sought the advice of the HR manager on pension fund benefit selections, Millennials want fiercely independent financial planning advice from one person or organisation that can provide advice on everything – risk, retirement, medical aid, gap cover, estate planning and investing. An independent financial advisor should be able to sit with a client, help him select the correct employee benefits for his needs, and then help him fill any shortfalls through personalised solutions.
Gareth Collier is director at Crue Invest.