Employers should take advantage of EB programmes bargaining power

Employee benefit programmes are seldom used by employers as skills recruitment and retention tools. In fact, ask anyone who's recently been through the interview process if employee benefits influenced their final choice of job and the answer is likely to be "no". But employers should rethink this and put employee benefit programmes to work as the valuable selling points that they are. That's according to Herman Schoeman, MD of Guardrisk.

The stark reality is that companies'predominant concern is always going to be the bottom line, with employee benefits regarded primarily as a business expense, rather than a "soft" expense to be shaped and packaged to maximise staff acquisition and satisfaction. Companies generally tend to focus on increasing retirement funding, often at the expense of other benefits, a mindset that doesn't foster a culture of enhancing benefits packages to keep up with the times.

There is no doubt that the competition for acquiring skills in South Africa is brutal, but retaining those skills, and keeping employees operating at optimal productivity levels, is just as important. And innovative employee benefit packages, that underscore the fact that the company values its staff, can certainly help to keep staff happy, says Schoeman.

Take the example of employers who base their group life benefits on a life stage model, where the number of years of group life cover provided is based on the employee's age and number of dependants. The assumption being that as employees near retirement age they need less life cover because they have fewer dependants so the life cover works on a decreasing scale. That's all good and well for younger employees who qualify for multiple years of group life cover, but less so for long serving employees who will almost certainly regard this as inequitable. And while these employees may not actually leave because of this (many would probably be at an age where changing jobs would not be an option) it would almost certainly affect their productivity and commitment to the company. This is not a healthy situation if you consider that many of these individuals would be in senior positions, able to influence the company's work ethic from the top down.

There is a worldwide trend for employers to start bringing employee benefits into the bargaining mix when it comes to hiring and keeping staff. Even in the United States, one of the world's most "fluid" labour markets, there is widespread acknowledgement that attention needs to be paid to retaining skills and that employee benefit programmes can help to raise the stakes for becoming an employer of choice.

But the problem is that the traditional market is fairly inflexible, providing a "one size fits all" model. In this market, risk ratings are applied according to broader industry risks. For instance, a construction company would be rated according to its peers, which could prejudice companies that are proactive about risk affecting issues like HIV/Aids management and prevention.

In the past few years there has been a definite shift towards taking employee benefit programmes to the alternative risk transfer (ART) market, with employers, and their employees, relishing the ability to tailor-make their benefits to suit their employee profile and needs.

In South Africa, most corporates ART facility of choice is the cell captive, and the life cell captive industry has shown significant growth since its inception here in 1999. Today, there are seven registered cell captive insurers in South Africa and in 2007 this sector enjoyed a 50% increase in net premium written over the previous year (R2098 million : 2007 / R1400 million : 2006).

Most companies are surprised to find that the freedom of being able to tailor-make their employee benefit programme within the cell captive environment doesn't come at a premium. In addition to enjoying maximum flexibility, cell owners are able to use their reserves to peg their employee benefit programme's costs.

For further information please contact:
Herman Schoeman, MD of Guardrisk
Telephone: 011 669-1001

Prepared by:
Melanie Davis, PR@Work
Telephone: 011 615-3309 / 083 225 7450