Clearly in the current market, all businesses
are taking a keener look than ever before at
areas where they can reduce their costs. As
staff costs account for circa 85% of a typical
business’s total expenditure, this area tends to be
one on which they focus first and foremost.
The response of many businesses has been to
reduce staff numbers or to cut salaries. Either route is
uncomfortable for both employer and employee alike.
Staff reductions in particular can be counter- productive
when, at a later date when the up-turn (hopefully!)
comes, it becomes necessary to recruit people again.
The points below are just some of the simpler ideas
we at Lighthouse Group Employee Benefits use to help
our corporate clients reduce or manage staff costs in
these difficult times;
- Childcare Vouchers. It costs an average of around
£850 per month for a full time nursery place. An
employer can help their employee save up to
£2,390 per annum by operating a childcare voucher
system – and it costs the employer nothing!
Group keyperson cover
Lighthouse GEB now has an exclusive arrangement enabling us to write
keyperson cover on a group underwriting basis. Previously, such policies
have always been written on an individual basis which is time-consuming
and fraught with potential underwriting foibles which might even prevent
you getting the cover on risk at all.
We are now able to bring the advantages of group risk underwriting
to the keyperson market. This means we can immediately secure
significant levels of life cover without the need for individual medical
questions. This helps get the cover in place far more quickly and with
less hassle for all concerned. Additionally, as the chance of any loadings
is reduced premiums will also often be far lower than for an equivalent
series of individual policies.
- Voluntary Benefit Arrangements. Here the
employer uses their bulk buying potential to secure
discounts on a wide array of different items (such
as shop vouchers, gym passes etc). The discount
is passed on to the employee who can then save
large amounts on both everyday and indeed luxury
expenditure. It’s common for employees to save
between £50 to £100 each month using voluntary
benefit arrangements.
- Salary Exchange on Pensions. The average
employee could save as much as £165 each year
by switching their pension to salary exchange. At
the same time their employer can save, on average,
around £200 each year per employee.
- Private Medical Insurance. It is common for an
employer to pay to cover just their most senior staff
with PMI. However, opening up the scheme to
other staff, where they pay to join, can be beneficial
for employee and employer alike. The employee
benefits as group premiums are generally 30% or
m o re cheaper than individual PMI costs. The
employer benefits as the larger group will attract
lower premiums per head, so it will cost them less
to cover the group they are already insuring.
- Absence Management Programmes. The
average annual cost of sickness absence is
estimated by the CIPD at £601 PA per employee.
Clearly any form of intervention that can reduce the
number of sick days that staff take is worthy of
consideration. There are plenty of examples of both
early intervention and sickness management
schemes which deliver cost effective reductions in
staff absence.
There is rarely a silver bullet which will provide an
instant fix. The ideas above are just a few of the
strategies that we know prove very effective in helping
to reduce staff costs, and may help prevent or limit
redundancy or wage reductions.