If we don’t change we will miss the point

Jonathan Faurie, FAnews Journalist

There is very little that can be said about the current times that we are living in that we haven’t heard before.

We live in a country that has to deal with the dual challenge of an economy that is under pressure and has a high level of unemployment.Further, companies are not making the profits they once made. In some way, shape or form, we are all part of a consumer based economy as some form of your business is based on sales. Yet consumer spending is down.

The effects on business

Even without the challenges that we are forced to work through, employee engagement can often be a challenge. Add the challenges of today into the mix and it can at times be near impossible. Speaking at the inaugural Liberty Employee Benefits Summit, Nazlie Samodien – GM Remuneration and Benefits at Edcon – said that this challenge is becoming more pronounced because of the emotional commitment that employees are struggling to find.

“We need to find a way to align the values and culture of the company with the personal values of employees. Research shows that having committed employees working for a company can increase revenue by 10% and profitability by $2 400 a year. The same research shows that a company with engaged employees outperform those who don’t have engaged employees by an estimated 202%,” said Samodien.

It’s all about culture

A significant influencer when it comes to employee engagement is the culture or value of a company. Do your employees see themselves as product pushers, or do they see themselves as advocates of change and improvement in the lives of their clients. What are the messages you are sending to employees?

“People join companies, but leave bosses. And yet, only 25% of companies in South Africa have employee engagement strategies regarding culture. What is scary is that if given a choice, 66% of employees expect to leave their companies within three years of starting with them if this engagement does not occur,” said Samodien.

From DB to DC

The whole concept of employee benefits has changed because the market has changed. The move from defined benefits (DB) to defined contributions (DC) has shifted the risk away from the employer and has placed it in the hands of employees. This has also changed the responsibility of some employers who feel that offering a pension plan is not a necessity when it comes to employee benefits.

The move from DB to DC has also seen a major change when it comes to the way in which we interact with our retirement funds. In the DB scenario, the employer often made decisions on behalf of the employee. Now, the employee has to make these decisions themselves and there are ample platforms of communication which can provide the employee with the relevant information to make an educated decision.

A new world

Thabo Dloti, Group Chief Executive: Liberty Group, said that in essence, the chance from DB to DC (combined with the challenging times we live in) has seen a complete change in mind set when it comes to the ways in which employees approach retirement.

“Ten years ago, the issue of financial wellness was a foreign concept. Today companies are becoming aware of the importance of this and are engaging with their employees accordingly. Ten years ago, the focus was purely on saving towards retirement, now there is a movement where employees are focusing on wellness programmes so that they can be healthier during retirement. I suppose that this is because in the past, people were looking forward to retirement. Now people are seriously considering offsetting retirement for a number of years. There are a number of people who are currently working well beyond 65. And this number will only increase,” said Dloti.

Future thinking

What will be the future trends that will define the employee benefits space? Dloti said that they will not be vastly different from today’s trends.

Dloti points out that in the future, we will see holistic wellness programmes encompassing physical wealth as well as financial wealth. In addition, we will see significant employee segmentation and benefit differentiation; the days of a blanket offering for employees that enjoy a similar risk profile are coming to an end.

“We need to reshape not only how we think about retirement, but how people will interact with the industry. Funds that are based on traditional norms misses the point,” said Dloti.  

Editor’s Thoughts:
Albert Einstein once said that the height of insanity is doing something in the same way and expecting different results. The employee benefits space needs to change, not only to accommodate Millennials, but to address challenges in the market that affects us all. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.