Benefits offsetting: Are you salary sacrifice savvy?

All organisations look to achieve the maximum return on investment from their commercial operations. But how often should this overarching business strategy be applied internally?

With a business-savvy HR function in place, the answer will be: ‘all the time’. The fact is, it makes just as much sense for a company to be as rational about the return on investment (ROI) from their employee benefits strategy as it is on the ROI from its commercial activity.

This is where logic and a good salary sacrifice provider comes in. Employers save £400 or so in NI per employee on Childcare Vouchers (CCVs). Therefore, the more employees on the scheme, the more profit gained for the business and the greater the return on choosing the right programme. This then gives the HR business function the monetary freedom to opt for a high quality, fantastic value employee discounts provider – as they have neutralised a large part of the cost by engaging the parents in their workforce.

Employee engagement as sales strategy

Practically, therefore, with this dedication to cost-effectiveness, it makes sense to see active employee engagement as a sales strategy – just like the overall company approach to business development. Opting for a provider who will actively sell the benefit into your workforce, taking the time to find the eligible parents and recruit them onto the scheme (rather than just administering the process), will pay dividends whichever way you look at it.

Case studies

Take Transport for London (TfL) as a good example of just how much revenue can be gained by working with a proactive salary sacrifice provider. Since switching to Asperity’s childcare vouchers scheme in April 2010, employee take-up has increased by 65%. This means that the Reward team, aside from their contributions to human capital, are currently generating around £200,000 in NI savings each year – as well as saving their employees nearly £900,000 annually on childcare costs.

On occasion, this increase in engagement can turn around very quickly. Within 8 months of switching their childcare scheme to Asperity, active and modern initiatives from HR business partners at Home Group, combined with a provider commitment to childcare engagement, meant that the number of parents using the scheme (and client revenue) had shot up by 78%.

Benefits of cross-promotion

In practical terms, such an increase in take-up follows predominantly from an integrated package. An integrated package allows the employee benefits provider to cross-promote salary sacrifice along with any other benefits such as employee discounts and cycle to work.

For example, it makes sense to train helpdesk operators to recognise a potential parent from an employee discount query – perhaps they are calling about a Toys ‘R’ Us card top-up, or they’ve mentioned their kids in conversation with the friendly helpdesk operator. The operator can then mention the salary sacrifice benefit to them then and there to a very grateful parent, whilst saving the HR team a few hundred pounds – and funding the benefits package for a lot more employees.

Promoting childcare vouchers to a grateful parent isn’t exactly a hard sell. But getting the employee benefits scheme of your dreams signed off by the FD can be. Winning the pitch can be as simple as relating it back to your overall business strategy. Invest in the whole package, and it could end up paying for itself with the NI savings generated through the salary sacrifice component. This isn’t just employee benefits, after all – this is smart business.

Daisy Hill is Childcare Voucher Engagement Manager for Asperity Employee Benefits.