7 Pillars of a good flexible benefits plan
16 de January, 2024
Retaining talent is considered by most HR managers to be the main challenge for 2024, according to a Randstad study.
In a job market that is more dynamic and competitive than ever, companies’ Employee Value Proposition (EVP) must invariably include the provision of flexible benefits to employees.
Having a robust flexible benefits plan results in significant advantages for organizations: it favors attracting and retaining talent; it increases the satisfaction, motivation and productivity of professionals; it improves employer branding.
But what are the main aspects to consider when defining a flexible benefits strategy? Here are seven pillars that characterize a solid, adequate and competitive flexible benefits plan.
1 – Considers individual needs
Personalization is one of the key elements of a flexible benefits plan. Depending on the stage of life they are going through, their expectations and needs, each employee will value different aspects when it comes to the extra salary benefits they are granted.
Early career professionals may value benefits linked to training and professional growth, while people in older age groups may prefer benefits linked to health and social support, while childcare benefits will only be useful for those with young children.
It is essential that companies get to know their employees and understand their needs, so that the benefits they offer can meet them effectively. Adopting a generic, “one size fits all” approach will make your benefits plan unhelpful and ineffective.
2 – Contributes to people’s well-being
A flexible benefit plan should not be a mere list of disconnected initiatives presented without a clear purpose. That purpose must be closely linked to promoting employee well-being in all its dimensions: physical, mental and emotional, social and financial.
The benefits granted must demonstrate that the company cares about people in all aspects of their lives. Therefore, aspects such as maximizing purchasing power, access to health care, professional training opportunities, promoting work-life integration, among others, should be ensured.
3 – It’s differentiating and competitive
The truth is that although the concept of flexible benefits is relatively new to some people, many companies already recognize their importance and include them in their value proposition for employees.
If your non-wage benefits plan is differentiating and competitive in the job market, it will be an additional reason to:
- Candidates choose to work for your company over others;
- Employees prefer to continue working for your company rather than looking for or accepting other professional challenges.
Find out what your competitors, or other companies in the same industry as yours, are offering employees. This will give you an insight into good practices and allow you to adjust your company’s strategy if necessary.
4 – Compliant with legislation
With the exception of Decree-Law no. 26/99, of January 28th (amended by Law no. 82-E/2014, of December 31st), which enshrines social vouchers for the payment of crèches, kindergartens and nurseries, there is no specific legislation on extra-wage benefits in Portugal.
However, since the granting of social benefits has associated tax advantages – both for the company and the employees – it is essential that organizations properly frame the benefits granted in the applicable tax regime and that they comply with the Labour Code, the Personal Income Tax Code, the Corporate Income Tax Code and the Social Security Contributions Code.
5 – Take into account the principle of equality
This is a fundamental aspect to consider in extra-salary benefit plans. Their allocation must not be discriminatory or give rise to unequal treatment for people in the same circumstances (employees in the same job, the same professional category, etc.).
Ensuring that the benefits policy is equal, and that all professionals receive the same benefits (for which they are eligible), is key to avoiding feelings of discrimination and injustice.
In the case of childcare benefits, this principle of universality is a legal requirement, i.e. childcare vouchers only have the associated tax benefits if they are granted to all eligible employees (with children up to and including the age of 6). If they are not, they are considered supplementary remuneration and the corresponding taxes apply.
6 – Transparent communication
Communicating benefits to employees is a step that some human resources managers end up neglecting. However, it is also fundamental.
Workers need to know, clearly and unambiguously, what benefits are available, what values are assigned, when the assignment is made and what choices they can make.
Use your internal communication tools to present the flexible benefits plan effectively and transparently, explain what people need to do to access the benefits (if anything) and reinforce the communication if there are deadlines associated with it.
7 – Provides a positive and intuitive experience
Employees’ expectations of their employers are also reflected in the experience they have in managing and using their flexible benefits. In this sense, companies must take advantage of technology and digital platforms to provide a comfortable, intuitive, consistent and relevant experience for employees.
Technology reinforces the very flexibility of the benefits, as it allows them to be used anywhere and at any time: examples of this are the possibility of using the meal card on home delivery platforms or the possibility of paying the monthly fee for a nursery school completely digitally.
In addition, the digitization of benefits must be applied to the entire process, i.e. also to the management and allocation phase by those responsible for human resources. This reduces the administrative burden, streamlines procedures and mitigates any operational risks.