Article: Flexibility in employee benefits

Benefits & Rewards

Flexibility in employee benefits

Employee Benefits is a critical attribute of and organizations EVP and it provides employee economic security.
Flexibility in employee benefits

With Millennials entering the workforce in large numbers and the work force comprise all age groups, time has come for Indian organizations to look at offering flexibility in benefit administration. Individual needs of employees are different, then why not give them what they want. Such plans are given in certain organizations in senior level, but companies needs to look at extending it to all levels. In most organizations a 30 year old and 50 year old at the same grade or level gets predominantly the same benefits. Benefits here refer to non-cash benefits and not variable or performance pay.

Employees should be allowed to choose from a bouquet of benefits within the allowed budget. For the employee, it is value for money. For eg. Gen X employee may prefer a critical insurance benefit or another pension plan, while Gen Y may prefer child care reimbursements and a Millennial employee may prefer Health club membership.

Most common benefits relate to insurance, child care, retirement plans, car schemes, health & wellness, housing etc.

Business case for flexible benefits

  • For employers it will be a firm attribute in their EVP and leading to higher engagement level among the team which results in better productivity, retention, customer service etc thereby leading to reduction in future recruitment and training cost

  • Respecting diversity as many benefits unique to diverse section of employees can be introduced particularly to singles, single parents, married women, members of LGBT etc.

  • Company will be seen to foster creativity and innovation
  • The overheads with respect to employee benefits can be leveraged more beneficially

 Advantages for Employees

  • Employees can choose the benefit which is more in tune with his lifestyle, interest and requirement
  • The employee can plan his tax, insurance and pension plans better


  • Flexible benefit administration is a complex process and the organisation needs to get it right the first time as it may affect the brand reputation
  • There may be certain unforeseen contingencies which may come

  • Additional administration and IT cost may have to be incurred by the company

  • Communication challenges in building awareness and participation of the workforce also requires time

 Action Plan

  • Get the buy-in of senior management by highlighting the strategic reasons for switching to a flexible benefit plan

  • Consultation and communication with the employees through various means like surveys, emails, mobile tools, presentations, AV’s and company newsletters. The range of benefit option should be researched well and selected so that it is in tune with the time and demography

  • Test a working model. It can be implemented in a phased manner depending on the maturity of the organization

  • Checking the tax, insurance and compliance issues carefully

  • Review is periodically in the light of experience and learnings

Employee Benefits is a critical attribute of and organizations EVP and it provides employee economic security. They will become a potential tool to attract and retain critical employees. By providing employees individual benefits which matters to them shows that the company cares for them. 

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Topics: Benefits & Rewards, Employee Engagement

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