A diverse workspace is more than a necessity. However, many businesses forget that inclusion is a vital core value. Without an inclusive workforce, a diverse workforce might not thrive.
The Harvard Business Review report on diversity and inclusion highlight the importance of businesses having strategies and plans catering to employees, which is a must to utilise the best from the change.
This is where flexible benefits programs come to the picture. The strategic move helps lead to higher rates of employee satisfaction and retention. It also offers advantages to both employees and employers.
The FBP is increasingly popular, especially among HR looking to offer customisable benefits packages that suit the diverse workforce, ensuring that they meet their unique preferences and needs while also benefiting the organisation.
Here is an in-depth explanation of implementing a flexible benefit program, including what challenges the HR team may need to tackle.
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What Does a Flexible Benefits Plan Mean (With Examples)?
A flexible benefit plan or FBP is a program for employee benefits that allows them to choose from a variety of pre-tax benefit options. It’s also known as the Cafeteria plan or Section 125 plan.
From customising their benefits to choosing what aligns with their personal needs, the employees have access to select their preferences while enjoying the potential tax savings on their eligible expenses.
For example:
- The employee can choose the health plans that suit their lifestyle, such as HMO, PPO, and high deductible plans, including the coverage options.
- The program allows them to pick lifestyle insurance and coverage, including the basic, supplement, or dependent life.
- Retirement plans help allocate employer-provided funds for the employee’s retirement savings with matching contributions.
- Some plans also allow the employees to use their vacations to buy or sell or take unpaid leaves through Paid time off or PTO.
- The employee can choose dependent care assistance and set pre-tax income for their childcare or eldercare expenses.
What Are the Key Components in Flexible Benefit Programs?
HR managers need to understand the range of components that the program includes, enabling the best structure for their employees.
Each component serves its own respective purpose, which is to help employees maximize their tax-saving potential and contribute to leverage for engagement, retention, and productivity in the workspace.
The FBP includes the key components such as:
- HRA or House Rent Allowance is an important part of the program, especially if the employees are living in a rented place.
- LTA or Leave Travel Allowance allows employees to travel within the country, providing a tax-free solution if they travel as per the income tax rules.
- Medical expenses up to a set limit are also a crucial component of reducing their taxable income and providing health coverage.
- The conveyance allowance covers the expenses that employees spend commuting from their residence to their workplace.
- Another is offering vouchers or meal coupons to provide non-taxable and a set amount spent on specific outlets or shops to buy their meals or beverages.
How Does Flexible Benefit Plans Help in Catering Diverse Workforce?
An FBP is a great way for HR managers to look for beneficial customisation that caters to a diverse workforce.
The program allows flexibility to ensure everyone in the workspace, regardless of their gender, age, religion or culture, is meeting their personal needs.
According to the Global Benefits Attitude Survey, the flexible benefit resulted in an improvement of 78% in employee retention rate.
Also, it reduces time and money spent on employee benefits which aren’t in use. It helps boost the interest in the company during the recruitment process, leading to the attraction of top talented individuals.
Alongside, here are some of the key benefits of implementing the flexible benefit programs for the diverse workforce such as:
Addressing The Diverse Needs & Requirements
In today’s workplace, HR has diverse employees, and a one-size-fits-all approach may not work effectively.
Having diverse workforce perks aligns and addresses the diverse lifestyle and preferences, whether it is for childcare support or physical or mental health benefits.
For example, flexible leaves and scheduling can inclusively support the diverse backgrounds in the workspace.
Improves Employee Satisfaction
The program makes employees feel seen, appreciated, and valued in their workspace, allowing better employee satisfaction.
Also, it improves employee satisfaction strategies with happy employees, which can create a positive space to improve performance and employee engagement.
As for employees, knowing their financial, health, and retirement plans are covered makes them feel more confident and sensible about stability, contributing to the commitment to higher results in the organisation.
Allows Hassle-Free Customising Perks
With benefits customisation in perks helps in simplify the process of selection and management for both HR teams and employees.
Having educated and well-informed employees can choose and manage their benefits based on their preferences without requiring intervention from HR.
Cost Control Over Benefit Plannings
The FBP helps the HR team to understand which benefits and perks are most valued. Cost predictability contributes to reducing the money spent on irrelevant perks, so the company invests in what’s actually worth spending.
It also helps to ensure the organisation has employee benefits without compromising their long-term financial efficacy and sustainability.
Which Challenges Should HR Require to Tackle?
The biggest concern is the cost of designing, implementing and maintaining the flexible benefits program. Unlike the traditional ones, this plan requires investment in customisation, integration and updates.
To tackle this, HR managers can consider the phased rollouts and get employee feedback. Once it’s done, they can proceed to refine the plan and set the budget. Analysing ROI can track employee satisfaction and show retention rates and turnovers.
Also, consult the lawyer and the professionals to ensure the benefits align with legal and regulatory complements, avoiding any issues in the future.
Besides this, the lack of understanding can lead to confusion among the employees, resulting in under utilisation and dissatisfaction or difficulty in choosing the right benefits.
For this, workshops like one-on-one meetings and webinars with benefit guides should be conducted to educate the employees about the plan.
Conclusion
Flexible benefit programs are indeed a win-win scenario for both employees and the organisation.
While it caters to diverse needs, HR can focus on boosting employee retention and pride and achieving a well-structured program.
The personalised benefits offer a better position for attracting top talent, retaining talent, and entanglement in a diverse workspace.
However, it requires tuning in to evolving needs and leveraging the technology to ensure the solution is tailored to the company and its employees.
HRone offers a cloud-based, secure, and simple interface HR software solution for boosting productivity and employee retention. Book your free trial right now.