Going Beyond the Myths to Create More Effective Benefits Strategies
By Stephanie Wainwright
A basic, if unwritten, rule of Employee Benefits Design 101 is to benchmark, early and often.
After all, that’s the most systematic and logical approach to creating a benefits lineup that aligns with, or is better than, all the other employers in a competitive cohort – one that ultimately will both attract and retain good people.
It’s hard to argue with a time-honored rule, but the reality is that benchmarks – at least, the way they are typically structured – are somewhat old school. That’s especially so, given the need for a fresh perspective on benefits design in the evolving employee environment and populations.
The prevalence of certain myths, like those about benchmarking, can hold organizations back from creating benefits strategies that really matter to their people – that are individualized and meet people where they are in their work and personal lives. Here are three myths to think about, and ways to consider moving forward.
Myth #1: Benchmarking is imperative.
As noted, benchmarking isn’t the end-all/be-all to a benefits strategy, at least when cast in the “one size fits all” mode. We know one company whose employee benefits plan looked great on paper for being fully aligned with benchmark standards. But a deeper dive showed a disconnect with people, given dismal participation rates of 20%.
Benchmarking is increasingly complex, especially given all the data available. Employee populations are more diverse from the aspects of generations, gender, ethnicity, life, and work stages, all of which influence plan design. The regulatory environment is another influential complexity.
When it comes to employee benefit programs, many leaders look to their competition for guidance on what’s working and what’s not. But have you considered that just because others are doing it doesn’t mean the same programs are right for your workplace? In fact, your employee population is unique to your organization, and that should be the primary basis of a benefits program. Customized benefits are the big differentiator for employee recruitment and retention. Getting there takes customized data inputs and a more customized approach to benchmarking, too.
Myth #2: Our medical plan costs are our biggest expense.
Nobody is arguing that the cost of sponsoring a medical plan causes many businesses a lot of pain. But offering benefits that alleviate the causes of employee pain can also alleviate pressures on the plan that may be a bigger long-term burden.
Productivity, for example, plummets in the face of disengaged or absent employees. In turn, use of medical and pharmaceutical benefits and disability rise. Recruiting and training expenses are sub-optimized. Consider: It will cost between $25,000 to $100,000 in hiring and training to replace a single, $50,000 wage earner.
Addressing such cause-and-effect scenarios makes a good basis for a more strategic benefits strategy that understands and responds to what’s at play in individual employees’ work and home lives. Offering solutions that help with their life-stage concerns – financial, emotional and/or family stressors – have any number of payoffs, such as improved loyalty and engagement, and, over the long-term, medical costs, too.
Myth #3: It’s medical benefits that attract people.
No, the real draw is an organization’s culture. Over 80% of a company’s value is tied up in intangible assets, namely its people, who can make or break a culture. As many as 80% of American workers say they would quit their jobs due to bad managers; 50% have left.
Savvy employees are looking for more than traditional medical programs. Employees want to feel valued by their employer, and it all starts with their direct manager. Managers are the first line of offense to ensure an organization is driving employee engagement and delivering a quality employee experience, which is vital to the success of your organization.
The crux of the matter…
What really matters today is a benefits strategy with a human-centered basis, one that understands the forces influencing employees’ life and work experiences and responds with more than just a cookie-cutter lineup of benefits.
Data and analytics are necessary for drilling down to a more individualized level. It’s not enough to look at claims data and who is using which programs, but how much they are being used – and why. Analysis is key for establishing where people are in their work and life journeys and relationship with benefits. A 20-something in his first job is in an entirely different place than a 60-something manager nearing retirement.
Looking for “lifequakes” that can impact an individual personally and on the job is important, too. The value that many place on pets, for example, might suggest adding pet loss to the bereavement policy. And offering parental and/or family leave is a start, but more than time, employee needs can span lactation and diaper services, child and adult daycare, and mental health resources.
Benchmarks are fine for developing an employee benefits strategy. But they shouldn’t be the ultimate arbiter. It’s the human-centric approach that makes them effective.
Stephanie Wainwright is an Employee Benefits Strategist for Hub International insurance brokerage in Florida, consulting with clients to develop successful benefits programs. She has led alternative funding arrangement and cost containment solutions; and understands the needs of aligning a client’s long-term EB engagement and cost control objectives to the member experience and organization’s culture.
Stephanie can be reached at Stephanie.Wainwright@hubinternational.com.
Hub’s website is www.hubinternational.com.