Emotional capital worth paying for

Group life can go a long way to strengthening the emotional contract between employer and employee argues MetLife UK employee benefits director Tom Gaynor

The onwards march of workplace pensions auto-enrolment is turning the spotlight on the employee benefits market with many employers taking the opportunity to review the benefits they offer staff as they launch pension schemes.

Implementation of auto-enrolment continues until February 1st 2018 but already all companies with 60 or more employees are expected to have offered pension schemes as implementation moves deep into the SME sector. It is recommended that preparations for auto-enrolment should start 18 months out from the staging date, which ought to mean firms with 30 or fewer staff are starting to look at pensions now.

Evidence from research and experience in the field shows that it is having an impact on employee benefits – our own study among employers found 21 per cent of companies are planning reviews of their wider employee benefits offerings. Further analysis of the research shows that among companies employing between 50 and 250 employees that percentage rises to 25 per cent.

Companies planning to review will look at all the employee benefits on offer including life cover, group income protection and private medical insurance and improve their offering either by adding new services, reviewing their existing providers’ offerings or by changing provider.

It is a real opportunity for advisers and employee benefit consultants – and of course for providers – but there is also a challenge for providers. We know that employee benefits can play a major role in helping employers improve their reward packages and staff retention and loyalty.

The challenge however for group life providers is that the product has become so price driven that it is seen as little more than a commodity. Price is clearly very important and cost control is essential for employers considering their employee benefits package but providers and advisers need to make a wider case for group life than just talking about price. That should include making the case for how employee benefits in general and group life cover in particular can strengthen the emotional contract between employers and employees.

The challenge with any long established product is thinking how to evolve it to keep it relevant to changing needs whilst not losing sight of the fundamental need it was conceived to satisfy.  Life today has changed in ways unimaginable just 30 years ago.  Additional services as part of a group life package can plan an important role and enhance the core benefit. Employee assistance programmes will become increasingly important in group life just as wellness and rehabilitation services are becoming increasingly expected in the group income policy market.

EAPs provide employers with a reliable way to offer staff access to counselling services, further assistance and information on a wide range of issues. They help highlight the value of protection of group life while further strengthening the emotional contract between the employer and the employee.

For group life the obvious service of most value is bereavement counselling and help with probate. Our research among employees found that staff who have taken time off due to family bereavements have taken an average of just over three days off. In fact the numbers of days off taken for dealing with deaths in the family is equalled by average days off taken by staff suffering from stress.

The emotional impact of bereavement can be devastating and it will hit different people in different ways. Some may want to carry on working following the death of a loved one as that gives them comfort while others may find it difficult to function as before.

Quite apart from the emotional impact, people will have to cope with making funeral arrangements, registering the death and wrapping up their loved one’s financial affairs such as bank accounts, property, possessions and so on. Few people will have experienced a death in the family before and coping with all of that can take its toll resulting in absence from work or serious distractions if the employee is in work.

Offering employees counselling and practical help as part of group life policies has a business benefit as the support provided enables people to continue at work and really makes a difference to employees at a time when one of the most traumatic events a family can experience occurs.

It underlines the point that group life policies are not just about paying claims but also about helping employers help their employees and their families which supports the view that other elements of cover are as important as price.

Group life schemes of course have to be competitive, comprehensive and flexible and quick in payment of benefits. Providers have to have efficient payments systems and simplified administration. 

It’s clear that the relationship between employers and employees is changing rapidly as companies begin to review pension provision and employee benefits offerings. I anticipate real opportunities for employers to develop an emotional contract and sense of value for employees in what is an intensely competitive and fast-moving job market. Group life policies add value beyond merely paying claims, that’s helps maintain a bond of trust and value that’s all too often overlooked by companies.