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5 Steps to better, more effective employee benefits

26 March 2015 Alex Cook, GCI Wealth
Alex Cook, CEO of GCI Wealth.

Alex Cook, CEO of GCI Wealth.

The case for employee benefits is a strong one, but many employers perceive them to be a huge challenge. As a result, many simply don’t offer them, or allow their schemes to languish. It doesn’t have to be like that.

We are always being told that the war for talent is hotting up, and that companies’ ability to attract and retain the best skills is their major competitive advantage. There’s a lot of truth in that: technology and “secret formulas” are now too easy to copy, so all that really distinguishes a company from its rivals is the way in which its employees use its resources to service customers.

A shortage of skills is one feature of the HR scene, especially in South Africa. The other is the greater propensity of employees to change employers more frequently.

All of this makes a strong case for a company to offer a well-run and attractive employee benefits scheme. Indeed, a survey by McKinsey Quarterly[1] indicated that the major reason companies offer employee benefits is to attract and retain staff.

An excellent employee benefits package won’t trump all other considerations when it comes to making your company attractive to top skills, nor will it make them ignore an abusive boss or poor salary increases. But other things being more or less equal, it can play an important role in setting your company apart, and offer a cogent argument for joining (or remaining) with it.

Employee benefits is a pretty wide term, and could be said to include a whole range of things like the free bowls of M&Ms that one celebrated high-tech company offers its staff, crèches, flextime, chill rooms, free cappuccino and even generous paternity/ maternity leave. But the core of an employee benefit programme is the medical aid or health plan, disability insurance, death and funeral benefits, and retirement funding.

Generally speaking, all these feed into an individual’s ability to create wealth, and ultimately his or her ability to retire safely and securely with the desired level of income. However, not all employee benefit plans are equal, and some of the key points to look out for include providing employees genuine one-on-one counselling to ensure that their retirement portfolios are properly structured to meet their targets for retirement funding. In GCI’s opinion, this means looking beyond the company scheme to look at the total retirement-funding strategy holistically.

This willingness and ability to tailor the investment portfolios to the needs of individual employees is one of the hallmarks of a top-ranking employee-benefits scheme.

Another important component of a superior employee benefits strategy is an annual review of the scheme itself. Too often, once the scheme is set up, advisors leave everything to the administrators. The investments need to be benchmarked regularly against the market to ensure the fund is getting good value, and the benefits aligned with the actual risk profiles of the members.

GCI follows this five-step plan to ensure the process is both comprehensive and effective:

1. Understand what the company wants to achieve through its employee benefits programme.
2. Find the best fit for the company in terms of provider (medical, risk and retirement fund), and to ensure that the retirement fund has the right asset mix in terms of its goals.
3. Implement any changes required on the scheme.
4. Provide independent counselling to the company’s members.
5. Report regularly to the company’s management as agreed.

Using this framework, we give our clients the peace of mind that comes from knowing that they are offering their staff the best possible benefits, and that they are being properly managed. In so doing, we’re also confident that the company will be improving its employee retention and making itself more attractive to the talent it needs to compete successfully.

We at GCI are passionately focused on ensuring our clients are able to retire in line with their expectations, safely and securely. Employee Benefits is a separate division within our Wealth Management business, with the aim of providing advisory services to companies and ensuring their employee benefits really set them apart.

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