Regulation & Compliance
December 11, 2024
Employee demands have evolved significantly over the past few years, transforming the employee benefits ecosystem and disrupting a field traditionally dominated by standardised packages. Worldwide, companies recognise that employee benefits are more than just a monthly salary, and innovative platforms are now available in the marketplace that can improve talent retention, enhance productivity, and boost morale through personalised benefits, instant payments and rewards, and more.
The COVID-19 pandemic was a key catalyst for the changes we currently witness in the modern workplace. Employees, especially in Europe, have made it clear that they want greater flexibility concerning how they are compensated and where they work. This shift is not a temporary response to the pandemic but a reflection on the long-term movement towards a more holistic approach to work and life. Employees now look for benefits that support their lifestyles, values, and personal goals, including health and wellness programmes, future professional opportunities, and financial incentives.
Therefore, businesses are shifting away from traditional compensation packages as they no longer adequately address employee preferences. Companies now increasingly offer flexible, personalised benefits catering to a diverse workforce, including gig workers, full-time office employees, and remote workers. As competition grows for top talent, this shift is becoming increasingly important to remain desirable in the marketplace.
Traditionally, managing employee benefits has been cumbersome, involving complex paperwork, limited transparency, and manual payment processes. However, advancements in digital platforms have revolutionised the distribution of and access to benefits.
Digital platforms now allow employees to view, select, and manage their benefits in real time through user-friendly interfaces, simplifying the process for both employees and employers. For employees, digital platforms provide greater clarity and control over their benefits, allowing them to make informed decisions that support their health and well-being. For employers, digital platforms enable real-time insights into engagement and costs, empowering them to make strategic decisions about their benefits programmes.
Modern employee benefits platforms are also heightening their focus on payments, utilising API-first integrations to embed automated refund and expense payment workflows within employers’ comprehensive benefits management hub. Advancements in payments have also produced next-generation payment technologies, enabling employee benefit platforms to protect payments with network tokenisation, link payment cards to digital wallets, and issue virtual cards, to name just a few innovative features.
Automation and AI are also playing a critical role in transforming employee benefits. Automated processes for benefits enrollment, claims processing, and tracking have increased the speed of requests and claims and reduced the administrative burden on HR departments. Furthermore, AI is being used to analyse employee feedback, track engagement, and tailor benefits to individuals’ demands.
The concept of a “one size fits all” approach to benefits packages is quickly becoming obsolete, and instead, employers are increasingly offering a wide range of options to best meet their employees’ needs.
One example is Coverflex, a compensation management tool that allows employees to select from various benefits, including meal allowances, health and wellness programmes, insurance, investment opportunities, and more. The flexibility of these new platforms means that employees are changing their personal benefits based on their needs throughout the year rather than being locked into a rigid plan. This level of personalisation is a powerful tool that attracts and retains talent because it shows employees that their employer is invested in their happiness and well-being.
One of the most significant trends is the rise of earned wage access (EWA), which allows employees to access a portion of their earned wages before their regular payday, giving them greater financial flexibility. This benefit is particularly important for workers in the gig economy who may face financial instability. It also reduces the need for employees to rely on high-interest loans or credit cards, therefore improving their well-being.
Another important technology shaping the future of employee benefits is AI. AI-powered platforms can analyse employee data to make personalised recommendations for benefits, such as insurance plans or wellness programmes, streamlining processes, enhancing personalisation, and improving overall employee experience.
AI has also enabled extensive automation of routine tasks, including verifying and reconciling payments, reducing errors and accelerating transaction times to create a smoother experience for employers and employees.
The future of employee benefits will continue to be shaped by consumer demands for personalisation and digital-first platforms. As workforces continue to become more diverse and globally distributed, companies will need to offer benefits that are flexible and accessible to employees across a wide range of locations, integrating automated digital payments, rewards and other features within a comprehensive platform. Companies pursuing top talent in a competitive global market must embrace innovation and adapt their benefits to meet the needs of a modern workforce. By adopting digital employee benefits platforms, they will create a more engaged, satisfied, and productive workforce in a rapidly changing global economy.
Paymentology’s “Employees with Benefits” report, in collaboration with FTT Embedded Finance and VC innovations, offers valuable insights for organisations looking to stay ahead in the global economy.
For more information or to download the full report, please visit: https://bit.ly/3ML8IAa
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