Making flex work: How employers can optimize benefits strategies in challenging times

In conversation with Katie Goodwin, Chief Customer Officer at Benifex

We recently sat down with Katie Goodwin to explore how employers can get the balance right between offering flexibility within benefits, while keeping within tight budgets. She shares how employers can ensure their flexible benefits strategy works for them.

What trends or changes have you seen within flexible benefits schemes lately?

There are some trends that we’re continuing to see such as more employers introducing allowances to provide employees with greater flexibility and choice. And in many regions employers are offering more health and risk benefits like health cash plans, PMI and critical illness insurance—often on a flexible/voluntary basis—so employees can select the cover they need and add dependents.

However, there’s also a shift in emphasis from simply offering a wide array of benefits to focusing on the support, engagement and communication around those benefits.

Traditional offerings like PMI and critical illness cover are usually enhanced with value-add services like mental health support or counseling. However, the value of these benefits is only realized if employees know they exist. Developing the right communications strategy to drive engagement and ensure employees know how to make the most of their benefits has become a significant area of focus.

Employers are recognizing that it’s not just about offering a wide variety of benefits—it’s about embedding them into the employee experience and demonstrating how they form part of a meaningful employee value proposition (EVP).

How can employers find out what benefits their employees want and ensure their flexible benefits offering is meeting the needs of broad employee demographics?

Although post-enrolment benefits surveys still have a place, more employers are starting to use dynamic and in-the-moment feedback. For example, enabling employees to rate their favorite benefits within their platform provides HR and Reward leaders with insights on how benefits have been received by their people—beyond just looking at views and selections.

It’s also important to recognize that there’s no one-size-fits-all approach to benefits. Forward-thinking organizations are increasingly looking to understand the full lifecycle of their workforce – recognizing that employees at different life stages will have different needs. Employers can segment data by demographics, creating a richer understanding of varying preferences across age groups, life stages, and locations. For example, younger employees might be more interested in financial wellness support that can help them get on the housing ladder or pay off student loans, while parents might need childcare support or be more focused on health and risk benefits.

What type of benefits work best in flex schemes in terms of appealing to a large and diverse workforce?

It’s important to avoid the assumption that everybody wants the same type of benefits.

The most effective benefits are those that deliver true flexibility and are relevant to an individual’s life stage—whether that’s a pot of money, an allowance, a reimbursement account, the ability to flex benefits, or select new ones.

We’re seeing a growing preference for benefits that support financial wellbeing, sustainability, and mental health. Cash plans, dental coverage and wellness allowances tend to resonate broadly and can make a real tangible difference to employees’ lives. And EVs and green initiatives are also popular, bringing cost savings and supporting environmental consciousness.

How can employers strike the right balance between offering a wide range of benefits and ensuring that this falls within budget, particularly in challenging economic times?

While mandatory benefits like pensions are the baseline, many employers are introducing more self-funded flexible benefits that employees can select via salary sacrifice. This keeps costs down for employers, but delivers the choice that employees are looking for while enabling them to take advantage of tax-efficient arrangements where these are available.

Employers should take a strategic approach to designing their benefits schemes, considering what benefits will support the organization’s EVP and help attract, engage and retain the very best people. In other words, which benefits will help move the needle on key organizational success metrics? Benchmarking can help employers to evolve their schemes in line with this. For example, a tech startup might want to offer a card-based allowance that enables people to spend on trainers, paddle memberships, or whatever matters most to them.

However, while many organizations like the idea of offering a benefits allowance or flex fund, it’s important to consider how that’s going to be funded—sometimes employers might need to amend levels of existing or core benefits to be able to provide that if there’s no additional budget available.

To decide how they’re going to design their scheme, HR and Rewards leaders should ask the questions:

• What do we want to be known for as an employer?
• How can we better align benefits with our values?
• How can we give employees greater choice and flexibility?

What are the major challenges employers tend to encounter when trying to put together an effective flex benefit scheme and how can they be overcome?

One of the biggest challenges is managing complexity, particularly in organizations with diverse, multi-generational or global workforces—or those that are acquisitive and inherit multiple legacy schemes. Harmonizing these into a single, coherent structure takes careful planning in order to meet the expectations of both employees and finance stakeholders.

Employers also need to make sure they’re using technology in the best way to reduce benefits costs, remove risk, eliminate manual admin, and stay compliant.

Organizations need to be mindful not to cut costs in the wrong places and end up exposing themselves to risk; it’s essential that employees have the right cover at the right time. Because benefits only matter in the moments that matter. People tend not to think about their private medical until they need to use it. In high-stress situations, benefits simply need to work—that’s why clear communication, user-friendly tech, and proactive engagement are critical.