Full disclosure – as a non-executive director of an employee benefits company (Personal Group plc) and the CEO of a pay and reward consultancy I’m not exactly independent on the question of ‘Who’s the best benefit provider?’  However, over the last six months, we’ve taken a couple of clients through a full benefits tender process and the combination of our knowledge of the industry, and the clients’ expertise, has helped us sit on their side of the table, and produce a great outcome for them.

The process can feel daunting at the outset. From deciding to go out to tender, to identifying your requirements, selecting a longlist, finalising a short list, and finally deciding on your ‘forever’ partner… There are so many potential providers to choose from, and it’s such a big commitment – no wonder many companies feel overwhelmed.  So here is our guide to you, dear reader, in helping you select the right one.

Before you start – Lesson 1 – Find your notice periods

This isn’t the obvious starting point – but learn from others’ experience.  Different elements of benefits tend to have many fathers. HR may hold the contract for salary exchange deals (previously known as salary sacrifice), Finance for pension and Risk for life insurance.  Before you start on the project, find all the contracts in place, read them, note down the notice periods and when they fall due.  There is nothing more frustrating than a new two-year contract being signed by someone else just as you decide to upend all your current plans.

Lesson 2 - Deal-breakers

The hardest part for clients is articulating first, what they really need, and second, what they would like. I’m thinking of our two recent clients, one public sector by heritage, the other a bank with ethical investment principles. Since neither had previously had a linked-up benefits offer, it was a real root and branch discussion.  By involving different teams at this early stage such as Finance, IT and Procurement, you won’t end up with any show-stoppers just as you are poised to sign a new deal.

List 1 – What are the deal-breakers?  Value for money, integration with your existing payroll, data integrity, being able to provide a specific benefit like holiday trading or payslip via phone?

It’s important to get these out first, as these will be the criteria against which you will be scoring the tenders – and it’s only fair to make it clear to potential providers what they are.

List 2 – What are the ‘preferred’ areas? Communication support, providing pension advice, choice of provider? Again, if there is flexibility on these they can go in the ‘nice to have’ camp; otherwise, they need to go in the deal-breakers list.

Lesson 3 – Create your tender document

This is the painstaking bit – exactly what benefits do you offer currently, approximately how much are you spending on them, and what it the current contract you are signed up to? Do you need to replace them exactly ‘as-is’ or can you be flexible? Once you’ve done this, then you can add in the shiny new list – things you don’t currently offer but would like to.  Don’t forget to include your Finance, IT and Procurement requirements too as these may be onerous. Include your scoring criteria so the prospective supplier can understand what you are looking for, and a clear fees structure so you can compare apples and apples on price.

Lesson 4 – Identify a longlist

It’s worth doing some proper research on the potential list of suppliers you might be interested in. Randomly sending out your tender is unlikely to create the best quality list for you, and talking to the potential supplier in advance makes them much more likely to respond to the tender. Remember, from their perspective it is a big task for their company to complete thoroughly, and they need to be confident they have a fair chance of winning.

Wading through the long list of responses will take some time – allow about an hour per tender, and have your scoring sheet to hand. Ask more than one person to complete the exercise to ensure that you are really testing all the responses properly.

Lesson 5 – Shortlist and beauty parade

Pick two or three to shortlist. You should be going for suppliers who you now know could meet your needs – the presentation just helps you choose the best fit.

Make the most of the meetings. Have specific questions based on their tender response and general questions to ask all suppliers.  Make sure your screen, internet connection and room all work – you can’t make a good decision if you can’t see the wares on display. Check that the people you meet on the day are the ones involved in the project, as it’s important there is chemistry and warmth between you.

Finally, let your potentials know what’s happened – don’t let them hear on the grapevine. If they weren’t successful, give them honest feedback and remember benefits is a small world, and you may meet them again at some point.

If you are about to go into a benefits tender exercise and would like someone to walk at the front with a flag, then give us a ring on 020 3457 0894.

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