The World Bank states that formal SMEs contribute up to 60 percent of total employment and up to 40 percent of national income (GDP) in emerging economies, and these statistics would be significantly higher if it considered informal SMEs. SME sector of India is no different and is considered as the backbone of the Indian economy contributing to 45 percent of the industrial output, 40 percent of India's exports, employing 60 million people, creating 1.3 million jobs every year and producing more than 8,000 quality products for the Indian and international markets.
Despite such large requirements of employees in this sector, SME benefits have not been given prominence in the past due to the muffled understanding of the risks and risk management solutions for employees. Employees are the backbone of any business and it’s important to ensure that good talent is protected and retained, however according to a FICCI-KPMG report, only 10 percent of employees of SMEs have health cover. Lack of awareness, coupled with thin margins, makes insurance a low priority and so it is often neglected by SMEs. Since this sector is prone to several challenges starting from getting the right talent, giving a good working environment with competitive benefits and having a more fit and productive employee population a holistic health insurance protection and wellness is the need of the hour.
The importance of employee benefits
Why is there a difference between the growth trajectory of Big Successful Organizations Vs Stretched Average Performing Organization? They all started small but retention and attraction of top talent led them to becoming big successful organizations. It’s common to see large organizations having the best in industry employee benefits because they can appreciate the importance much earlier and invest heavily into employees to make a highly productive and delivering organization.
Research has proven that a happier workforce is a more productive workforce and people will stay longer in their jobs resulting in better performing organizations.
The 8th Annual Study of Employee Benefits Trends by MetLife found that employees perceive their workplace benefits as to help them establish financial security. Although the primary motivation was to perform their job functions, employees are also motivated by the need for financial stability. The financial products of employee benefits include health and other insurance products and retirement savings. These benefits, according to the survey, are referred to as “foundation of their personal safety net”. Employee benefits (EB) play an important part in what is known as “people strategies”. Improving the overall well-being of employees will help them establish better work/life integration. Consequently, the performance of the companies will also be improved.
And in the need to protect margins, sometimes the entrepreneurs and businesses forget the basics – protecting and providing for the very asset that is going to grow and propel their business!
For multinational SMEs, the challenge is very different. Due to global operations and operating in mature markets the need for employee benefits is established and they are happy to invest in the employee benefits, however the Indian market has not been able to stitch the solutions to its requirements. These businesses need the best of the talent from the industry and want to indulge the employees with world class benefits and work environment. The insurers have started to now understand this requirement and offer products tailormade to multinational enterprises helping them offer strong insured benefits to its employees.
From employees perspective, benefits can serve to provide for employees various needs such as to provide certain level of living standard based on employee’s relative position and job responsibilities; to incentivize employees performance; to provide protection against loss of income due to critical illnesses, disability or premature death; to provide protection against medical expenses; to provide retirement income; to offer opportunities for capital accumulation; sound retirement, financial and tax planning programs and services to assist employee planning for a secure retirement.
In a research it was established that employees who receive benefits over and above the statutory benefits their organizational commitment tend to be higher. Therefore, the employers should not only provide mandatory benefits as required by law, but also provide discretionary benefits in order to strengthen the employees’ organizational commitment
SME Benefits insurance cover is now intensifying and expanding in India, partly driven by well-funded startups and MNCs setting up local offices in India. An SME Package cover gives the flexibility to combine covers of one’s choice in a single policy and have expanded benefits and wellness options for a rounded delivery of competitive benefits for its employees.
SME Insured Benefits Covers in the market:
- Group Health Insurance
- Group Personal Accident
- Group Term Life
- Global Expat Covers
- Wellness & Health Plans
The above plans are tailor-made to the requirements of each corporate and today insurers are more than happy to offer plethora of options and benefit choices to SME customers.
Some of the key highlights of SME offerings from insurers to customers:
- Starting from a minimum employee size of two Employees
- Option of covering parents even with low headcount with no age restriction
- OPD Option available at extremely low price starting at INR 1,000 Per Employee
- Best in class Health & Wellness Options
- Infertility cover, Air Ambulance cover, Psychiatric Cover, Lucentis Cover, Domestic Partner/LGBT Cover, Lasik Cover, Ayurvedic Treatment cover
- OPD Cover, online doctor appointment, doctor consultation on call, claims submission online
- Dedicated National Relationship Manager and Portfolio Management Reports
The Way Forward
Employee Benefits is part and parcel of employment practices. Employers would rather spend to retain existing employees rather than keep recruiting new employees due to high costs and time consumed. The dynamics of the SMEs and workforce have given rise to the awareness of the role of employee benefits as a conduit for employers to be socially cared, while employees focus on their job roles. It is a win-win contract of social exchange as both employers and employees gain their intended objectives. With high investment in technology, new products and solutions are being built for SMEs and with a high degree of awareness coming in this sector we shall see a range of new covers and methods of managing this portfolio in the future along with juicy offerings from insurance companies and brokers. By providing and adapting to new age tech and benefits solutions, there is little doubt that SMEs can and should increase their benefit offering to its employees and remain amongst the fastest growing and contributing factor to Indian economy.