THE POWER OF FLEXIBLE BENEFITS
AFTER retrenchment has taken place in a company, surviving employees typically suffer from something akin to temporary post-traumatic stress.
In a 2004 a study titled “Perceived Control as an Antidote to the Negative Effects of Layoffs on Survivors’ Organisational Commitment and Job Performance”, researchers from several US universities measured the effects of perceived control on workers one month after downsizing had taken place at a selected company.
The paper reports that remaining employees were more negative when retrenchments were thought to have been handled unfairly, trust in management was low, survivors were emotionally close to those retrenched, and the threat of future lay-offs was relatively high.
However, in all cases, if staff felt they had some form of control over their circumstances, they were less haunted by perceived threats to their well-being and were better able to resume working normally.
With their budgets being constrained, an ideal option for employers is to offer workers more say over how they are remunerated.
Flexible benefits is a remuneration model that allows employees to restructure their contributions to benefits on a sliding scale. This means they can decide what percentage of their pay to allocate towards compulsory employer provided benefits.
Under post-retrenchment circumstances, the approach empowers employees to take control of something important to them; in the midst of a situation over which they may have little say.
Employees whose lifestyle needs change over time or even suddenly, are now equipped to deal with their circumstances as they see fit.
For example, a chief executive whose wife was retrenched was able to continue paying his bond by temporarily reducing all compulsory pension savings contributions to a minimum amount, thereby increasing his take-home cash.
A single person may want more cash for entertainment; a newlywed couple may want more money for a home deposit; nursing mothers typically need better medical scheme cover for their babies; those suddenly afflicted by a chronic illness may want to increase their healthcare benefits and dread disease insurance cover; and people nearing retirement might opt to go for the tax benefits of increasing their pension contributions.
Flexible benefits can be mixed and matched accordingly to each employee’s personal and financial requirements.
The types of benefits an employer offers are also important. An educational bursary scheme, for instance, allows employees or certain classes of their dependent children to get a tax break and thus increase the employee’s take-home pay.
Employers should keep abreast of benefits that can legally be structured into their remuneration package which would assist their staff to gain value more from their pay.
In addition, the fact that an employer offers flexible benefits, also makes employees feel valued as it underscores the unique circumstances of each employee.
Employees can also receive training from a remuneration specialist on understanding flexible benefits and the direct impact on their package and take-home pay.