This article was original published on HRExaminer and is republished here with the author’s permission.
New Benefits Thinking
Times are changing. In the past, an employer could offer a one-size-fits-all benefits program and satisfy nearly everyone in the workforce. Then came healthcare reform and a workforce stretching across four generations. Today, the emerging model for a world-class standard benefits program is one for one: benefits increasingly personalized to the needs and interests of the individual.
The benefits that make sense for a recently divorced sixty-year-old grandmother are unlikely to engage a recent college graduate, and vice versa. Neither is meaningful to the mid 30s gay couple who recently adopted their second child. We are entering an era in which the diversity of benefits a company offers is an important way to harness the full attraction and retention capabilities of those benefits.
The meaning and utility of benefits is changing. While they can and should be used to attract and retain employees, the reality is not so simple.
Since the idea of the Employee Value Proposition is growing in importance, it seems logical to incorporate it in the benefits conversation. The benefits a company offers should confirm and amplify its Employee Value Proposition (EVP).
Great HR Departments focus on consistently delivering both messages and realities. The EVP is at the heart of this strategy. According to Edelman,
“The EVP serves to define what the organization would most like to be associated with as an employer and defines the “give and get” of the employment deal (the value that employees are expected to contribute with the value that they can expect in return).”
“Employee Value Proposition (EVP) is the jargon commonly used to describe the characteristics and appeal of working for an organization. An EVP describes the mix of characteristics, benefits, and ways of working in an organization. It is the deal struck between an organization and employee in return for their contribution and performance. This ‘People Deal’ characterizes an employer and differentiates it from its competition.” (TalentSmoothie)
Describing a fully professional EVP development project is beyond the scope of this note. Suffice it to say that a well crafted EVP and Employment Branding project is an essential part of the communications between company and employee. Since benefits are a critical part of that communication loop, they must be articulated in ways that amplify and focus the EVP.
The EVP itself is a short, text-based statement that gives a framework for the relationship between employer and employee. According to the CEB, a well thought out and executed EVP can:
- Increase the commitment level of new hires by 20%.
- Reduce new hire compensation premiums by 50%.
- Increase the likelihood of employees acting like advocates from 24% to 47%.
Benefits is HRTech
For some reason, Benefits Administration has not really been considered a part of the HRTech universe. That’s just weird.
Meanwhile, companies like BenefitsFocus and PlanSource (both based in Charleston, SC) are shaking things up. And still, the pace with which benefits are exploding is hard to contain. What used to be the province of insurance companies is now the heart of company strategy regarding where and how work gets done. For many workers, the most important benefit is flexibility.
The array of benefits is exploding. For example, Pet Insurance has come from being a laughing matter to a predictable part of the offering at progressive firms. Driven by wildly shifting demographics and increasing diversity in the workforce, companies are busy innovating the types of benefits they offer.
It’s how they show employees that they care.
Here are the five primary categories of benefit and examples of the way they can be used to improve retention:
- Table Stakes (Health Care, Insurances, 401K, Equity)
Employees who say their plan meets their needs are much more likely to intend to work for the company until they retire. 49% of younger workers whose plans meet their needs intend to work for the employer until retirement, versus 30% of younger workers whose plans don’t meet their needs. Conversely, younger employees whose plans do not meet their needs are more than twice as likely to plan to leave their employer within the next two years. (Towers Watson)
- Personal Development (Tuition Reimbursement Internal/External Training, Wellness, Gyms, Yoga)
PepsiCo overhauled its tuition program so that the benefit became a strategic tool for building the skills of the workforce while improving retention. PepsiCo also believes that its new education assistance program can be a tool for underscoring the company’s focus on education and improving the lives of its employees. (EDAssist)
- Organization Membership Benefits (Discounts, Company Specific Perks)
Companies retain employees when employees feel their needs are being met. Meeting these needs has an effect on groups as well as individuals. If the majority of employees are engaged and motivated, this motivation can pour over into other departments, further promoting a culture of engagement. Special, company-specific perks go a long way toward projecting concern for employees. (perks.com)
- Workplace Enhancements (Lunch, On Site Services)
26% of workers said that providing special perks is an effective way to improve employee retention. When asked to identify perks that would make their workplace more enjoyable, 20% mentioned an on-site fitness center, and 18% liked the idea of wearing jeans to work. Others listed things like daily catered lunches, nap rooms, massages, snack carts, and on-site daycare. (CareerBuilder Workplace Survey)
- Workplace Flexibility (Schedule, Location, Unlimited Vacation)
Only half of all unhappy workers have access to a flexible work environment, while 70 percent of happy workers report having some workplace flexibility. By offering flexible working options, such as telecommuting and ensuring employees feel free to take a break when they need to, employers can build a stronger bond of mutual trust with their employees. Employers who offer the most flexibility experience the least employee churn. (Staples Workplace Index)
Currently, the HRTech market is missing tools that easily explain to employees the complexity and value of the offerings they receive as benefits. This is one of those areas where there are serious unmet needs.
This is part one in a series. You can read part two here.