SMEs – Why You Should Consider Employee Benefit Packages

According to the latest survey into the state of employee package offerings in Africa by locally based global human resources management firm Willis Towers Watson, “only 17 percent of employers in Africa believe that their benefit strategy is effective across all areas…”. This illustrates the general perception of employee benefits among African companies, including South African enterprises.

Providing employee benefits may seem like a daunting task at first glance for many employers but they benefit you as well as your employees.

Businesses of all kinds should consider employee benefits and should study how they stand to gain from including benefits such as life insurance, medical aid and pension plans in their employment policies.

“Human resources isn’t a thing we do, it’s the thing that runs our business” (American real estate developer, Steve Wynne)

An effective employee benefit strategy is more of an advantage to an employer than may at first meet the eye. Although providing benefits naturally comes at a price, it also comes with substantial benefits, plus you stand to regain a portion of your investment from SARS in tax deductions.

Moreover, providing benefits that employees can’t readily access on their own could position you as an employer of choice in your industry, affording you the best pick of available talent. This leads to better products and service, meaning your business wins.

The year-old Africa Insights from the 2019/2020 Benefit Trends Survey shows that employers are getting more creative concerning the mental and physical wellbeing of their staff, as these companies are more aware of the benefits of a healthier staff.

A report by Johannesburg based HR firm, Willis Towers Watson states “A third of African employers are planning/considering stress or resilience management programs. A quarter is planning/considering mental health or substance abuse programs. 23% is planning/considering health coaching.”

Employee benefit packages are not forced by law on business policy; however the World Health Organisation (WHO) has drawn a link between employee benefits and a physically and mentally healthier workforce. The organisation’s Healthy Workplace Framework and Model, which is a guideline to creating a healthier working environment, says “the mind and body are one, and what affects one, inevitably affects the other.”

The document also advises that “If the insurance costs for health benefits in your enterprise keep increasing, even after implementing healthy workplace programmes, that does not necessarily mean the programmes have failed. Look at industry benchmarks for comparison. If health insurance costs have increased by 20% in similar industries, yet have only increased by 5% in your enterprise, that is an indicator of success.”

Five major reasons why SMEs should consider employee benefits

  • The tax advantages via tax deduction of contributions.
  • Health insurance as an employment benefit translates to a healthier workforce, which translates to improved quality of production and efficiency.
  • Improved employee retention, which is key in certain industries where employees have to maintain relationships with specific clients, who may view continuity as a vital consideration.
  • It improves the work culture between employees and employer.
  • Improved staff recruitment, as the employer would be better positioned in the job market.

Changing or initiating an employee benefits strategy involves new financial responsibilities so take professional advice on the best way to go about it.