As a result of the Covid-19 pandemic, the current business environment can truly be defined as VUCA: Volatile, Uncertain, Complex and Ambiguous – a constant state of flux. No business is immune to these factors, regardless of size or industry.
“While some may hope to knuckle down and wait for the storm to pass, this is no longer an option. Businesses must adapt to survive or face closure,” says Bismark Aidoo, Benefits Specialist at independent advisory firm, AlphaWealth.
With many businesses now forced to make drastic cuts, employee benefits have been first on the chopping block. “Employee benefits are often a way for businesses to attract and retain talent as part of the company’s total reward strategies,” explains Aidoo. “In a fiercely competitive market, employee benefits can provide a competitive edge for firms and form a base for organisational success”.
Optional employee benefits can include: company-sponsored medical aid, life insurance, disability insurance, retirement assistance, longer periods of paid leave and performance incentives. Other employee benefits are required by South African labour law and do not fall into this category: Unemployment Insurance Fund (UIF), and, depending on the employer’s industry and position, a Skills Development Levy (SDL) and Compensation for Occupation Injuries and Diseases (COIDA).
Think Twice
“As a benefits consulting firm, AlphaWealth have seen a number of requests coming through from businesses in various industries to suspend or cancel benefits”, explains Aidoo.
“In taking such a drastic approach, one cannot help but wonder how employees may respond to this, considering the potential implications of not having life insurance or medical aid cover during a pandemic,” he adds.
Employees play an important role in ensuring customer satisfaction and developing sustainable relationships. They are also de-facto brand ambassadors, and how they perceive their place of employment can help to either promote or tarnish a brand’s reputation.
“Another aspect to consider is the larger societal implications of such a decision. The practice of saving, or lack thereof, has long been a significant social issue that continues to have an adverse impact on retirement incomes. Employer-sponsored programmes offer a platform for many South African citizens to access insurance covers and retirement savings that they may not have otherwise,”
Cancelling these benefits carries far-reaching implications and goes beyond cost-cutting exercises, Aidoo says: “We truly believe that the ‘benefits of benefits’ cannot be understated - even in businesses that are facing unprecedented financial challenges.”
Reducing spending while maintaining employee incentives may require firms to shift focus and find the right balance between cost-saving exercises and maintaining the relevant set of benefit programs.
“Expert insights from a benefit consultant could prove to be a crucial asset in ensuring that firms successfully navigate this period of uncertainty.”
PERSONAL FINANCE