The benefits of flexible working

Once upon a time a salary, benefits were the added frills which would help land you the right person for that key job. Next, employees started to expect a good package by right and started to consider it as a critical part of a salary package. Nowadays even that is not enough. Welcome to the new world of flexible benefits. Increasingly top employees don't just expect an offer of a pension, private medical insurance, childcare vouchers and gym membership to boost their overall package. They want to choose the benefits which suit them best and be compensated in other ways for the ones they do want.

This is a world where single men with no dependents get cash and gym membership instead of life insurance and a pension and women can trade luncheon vouchers for subsidised childcare.

Nowadays, unless your company can target your company's benefits you could be wasting of time and money and chance to pick the best staff. There's no need to worry quite yet. Flexible working benefits are gaining currency among large organisations but few companies outside of this area. But if you are to lure business managers with strong corporate skills and the best graduates you may have to consider such a scheme. And even if that is not on your agenda then you may want to consider flexible working benefits as a competitive advantage in the recruitment market.

Flexible working benefits schemes give staff a specified budget, or "flex fund", which they can use to buy benefits from a set list. This approach allows staff to choose to choose what suits them best. It can be pension top-ups, annual leave and or health-related insurance or marginal benefits such as childcare or retail vouchers, cash plans, pet insurance and gym membership. These may only win a few fans among your staff, but this could prove a loyal following. Such is the joy of flex.

Schemes operate points systems which ratchet up depending on seniority. A middle manager may be given £5,000 of benefits translates into spending points. These are then used to buy benefits of different values allowing you to decide between platinum gym membership and a weekly massage or stock options and a season ticket loan.

William Astill, rewards manager for DIY chain B&Q, has run flexible benefits schemes at several large companies. He says one-size-fits-all schemes aren't always valued by staff.

"Staff value flexible benefits more because they are actively involved in selecting and purchasing them according to their personal requirements, rather having a set package," he says.

Flexible benefits also help carve out a new company identity, building a corporate culture that emphasises flexibility and individual responsibility. Companies typically insist staff take a core level of key benefits. "The employer has to decide how paternalistic they wish to be, but most insist staff protect their financial future with a basic level of life insurance and pension provision."

You can also push staff towards benefits that protect your company. "You may wish to encourage staff to take private medical insurance, as this should ensure a faster return to work if they suffer a major illness," says Astill.

Staff can also amend their package as their lifestyle changes. A first-time homebuyer may trade one week's holiday for additional salary, while a new parent might trade gym membership for paternity leave. Typically, staff can reshuffle their benefits every 12 months, reviewing their choices at the annual pay round. However, schemes offer a window at certain life events, for example on having a baby, getting married or divorced, or suffering a bereavement.

The professional body for human resources Chartered Institute of Personal Development is a support of flexible benefits and suggests such schemes should be a priority. "Employers who take the time to find out which benefits their employees want will reap the rewards in the form of improved performance and motivation, more effective recruitment, and reduced stress and absenteeism."