Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Wednesday, July 20, 2016

Are You Offering Your Employees The Right Benefits>

Are Your Employee Benefits a Waste of Money?

“I don’t believe in Christmas bonuses.”

As you can imagine, that goes down like a lead balloon when I’m talking to people about coming to work for me. But in fact, I use it as a way to lighten the mood during interviews, because it’s not that I don’t like benefits – far from it.

It’s that I only like benefits which are both valued by employees and directly help the employer, because they motivate their staff or help grow the company.

In too many cases, I find that companies do not spend their money wisely, by offering benefits which answer neither of those criteria.

I’ll never forget a gentleman I used to know, who in the early 1980s had a company car. At the time, this was a benefit companies loved offering, because they were very tax efficient.
Well, this senior manager didn’t even have a driving licence, and it was his wife who used the company car. He came to work on the train each day…..

While that’s lovely for the family, it’s a waste of money for the company.

Similarly, many companies stock up on food and drink in their kitchens which never gets eaten. They think they’re offering a ‘benefit’, but if it’s not something employees really want, it’s not money well spent.

And then there’s those Christmas bonuses. I find that because they’re automatic and expected, employees tend to undervalue them, and they do n
othing to motivate anyone to work any harder or increase their loyalty to the company.

So what benefits work best? I believe in performance-based rewards. Employees will work harder for your company if the result is tied to a financial bonus or additional leave. They will also appreciate the benefit more if they have earned it.

I do like Christmas parties (proving I’m no Scrooge!). The value staff place on fun, team-building events tends to be much higher than their actual cost (like a lot of benefits other than cash), and the morale boost is good for everyone involved.

It can be a case of weighing up what employees value versus what benefits the company. For example, private health care is good for companies because it gets a sick employee back to work quicker. But on the other side, it may not be hugely valued by employees because they may never take advantage of it, and never expect to.

One way to avoid that, and make sure benefits answer both of my criteria, is to have a benefit pool. People choose what they’d like from a menu, up to a certain value. Life insurance will appeal to some and gym membership to others. Because they’re things employees really want, it’s money well spent….

…So everyone wins.

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