John Greenwood talks to Adrian Matthews, employee benefits director, MetLife about:
- How important staff retention for SMEs? And how it can actually be more challenging for them when things go wrong
- How advisers can structure a proposition small firms can afford
- What MetLife’s research on intermediary attitudes to the SME sector has revealed
(transcript below)
JG: Staff retention is a crucial issue for SMEs. So how can employee benefits help small or medium-sized organisation make the very most of their most important asset. Here to discuss this issue with me is Adrian Matthews of MetLIfe.
Adrian, just how important is staff retention for SMEs, and is it more challenging for them that it is for bigger organisations?
AM: The first thing we have to do is to understand what an SME is. There are many definitions, but at MetLife we classify it as any organisation with up to 300 staff.
Within that there is a whole range of segments. It is important to understand that there’s not a one-size-fits-all approach as far as SMEs are concerned: you’ve got long-established family businesses that have been running many years, and at the other end of spectrum there will be small start-up businesses who are going through their journey. They will all have slightly different needs and nuances.
But what we believe at MetLife is that they all face a significant challenges when it comes to the attraction and retention of staff.
It’s something that has come through very high in recent surveys we’ve been doing. In actual fact, in one survey we ran this year, this was the second biggest concerns among business owners, the first being Brexit, of course.
I think within the SME sector, there is a double whammy effect or double blow.
First of all you have got the loss of staff. If you’ve got a firm that employs thousands of people, then the loss of one or two people probably goes largely unnoticed. If it’s a small business through with 10, 20 or 30 people, then losing two or three critical members of staff could be a huge loss to productivity, but also in terms of the experience and knowledge they that each member of staff brings with them.
The second aspect to this is that you’ve then got to recruit new people to replace them, and again, typically with the smaller businesses they don’t have fully-fledged fully-functioning HR departments where you can just offload it to a specialist team. It falls on the business owners and managers to really go through all of this process, which again is a distraction and can be a drag on their performance.
JG: We know that for SMEs cost is real challenge. So how advisers structure a proposition that works for them, and what will this look like.
AM: I think there are a couple of things that both providers and intermediaries can do with this. The first is to publicise group benefits a more structured format.
There was some research that the industry body GRID did earlier this year, that said there were common misconceptions about the propositions that are on offer the limitations of them, but also the cost of it as well. Typically we can provide group life or group income protection for less than 0.5% of a year of salary, which is not expensive. It’s not so much of a case of can you afford it, but can you afford not to buy it, when you look at some of costs of bringing new staff in.
A quick Google search shows the spread of these costs. This is not MetLife research, just a quick internet search but it shows that it can cost anywhere from £10,000 and £30,000 to recruit one member of staff. If you put that against fraction of percentage of salary, it’s easy to see the benefits.
JG: I guess included within that is the cost of getting these new members of staff up to speed and the time it takes for them to become productive in the workplace?
AM: Yes you’ve got the hard costs that go out of the door in terms in recruitment fees, newspaper adverts and all the rest of it, as well as the actual training. And then you also have the downtime, the opportunity costs for the managers to actually invest their time, trawling through list of potential candidates, as getting the right people is absolutely key.
JG: So with regards to the cost issue what is it that providers can actually do to help?
AM: I think providers can help set basic entry level benefits as a starting point. And then perhaps we can use those as a way to scale up, so as the business matures, the benefits mature.
So what I’m thinking about here, for Group Life, for example, is starting with lower multiples of salary. This keeps it nice and cheap as the entry level in, but still provides a valuable benefit.
With something like Group Income Protection, rather than insure through to state pension age, or age-65, you can insure for a limited term. We know that a two-year limited term is 70% cheaper that insuring to State Pension Age.
Or you can tweak the deferred period as well. So a 26-week benefit period is 20% cheaper than 13-week benefit period. This also allow the provider’s EAP services to really, really kick in.
I think other thing that the provider can also do then, is to help the employer communicate the benefits package, because these things often come with telephone helplines, employee assistance programmes and so on, and that is the real values of some of these benefits.
JG: So I understand you’ve been carrying out some research on intermediary attitudes to SME sector. What has that told you?
AM: We’ve done a whole year’s worth of research specifically with the SMEs. But we’ve been looking at it from an SME-broker point of view, as well as a SME-employer point of view.
It was really interesting as there were three traits to come out of this research: and two of them were very similar.
The first one was that both wanted these products to be easy to understand. So really simple and using plain English. It’s something I think the industry can do, we can really simplify lot of the language used.
The second point that came out strongly from both a broker and employer point of view was the claims record, I still think there is a bit of a misconception that providers are out there not to pay claims – but we are actually proud to pay claims, and pay them efficiently as well.
The third element was where the was a slight disparity. The broker research really focused more on ‘easy to onboard’, in other words to get the policy on the books as quickly and as efficiently as possible.
Whereas the SME employer favoured an ‘easy to service’ approach. In other words, once it is onboard, how do you contact us. A lot of face-to-face support and expertise was wanted. Those were the sort of themes that were coming through strongly.
JG: Adrian thank you very much for your time, thank you for watching.
