This article was originally published on HRExaminer and is republished here with the author’s permission.
Essence Of A Benefits Strategy
Benefits programs typically account for 1/3 of employee compensation costs. It is critical that the benefits strategy accomplishes three things:
- It should clearly align with the company’s business objectives. Wherever possible, benefits should be tied to performance. This helps ensure that benefits are flowing to the people who drive the company’s success.
- It should ensure compliance, control costs and be effectively communicated.
- it should be tailored to the demographic sectors of the company’s workforce.
Top 3 Benefits in Every Desirable Package: Table Stakes
The anabolic steroids are always at the heart of any world class benefits program. But, increasingly, the retention value comes from demographically specific benefits. The trend is towards the delivery of individually tailored benefits packages that allow employees to set their own terms.
The Affordable Care Act (ACA) leveled the Health Care benefits playing field in some ways. Health Insurance used to be a way to ‘lock-in’ employees. Since not all companies offered the benefit equally, having a health care benefit used to make leaving harder. Today, portability is the name of the game. With a few exceptions (mostly very large companies), health care no longer differentiates one employer from another.
This leaves employers scrambling to demonstrate their uniqueness while showing deep concern for the workforce. Health insurance has moved from being a retention facilitator to something that can be a thorn in the side of the employees who get it.
The timing of this change is interesting. The meaning of a benefit varies significantly by the age of the group in question. As the median age of the workforce creeps up, the range of benefits required to invent and motivate continues to expand.
The EVP in Retention (How To Use Benefits for Retention)
Benefits increase retention in direct proportion to their relevance to the individual receiving them. The more precisely a set of benefits meets an individuals wants and needs, the bigger the consequence in loyalty. You can amplify the value of a benefit by communicating it well in the light of the EVP.
- Lock In
When someone finds the value of a benefit to be so great that they stay, it is called ‘lock in’. Benefits optimized for retention can be so effective that people ‘retire in place’. In government agencies, where the pension benefits generate an enormous retention value, you can see the extreme case of lock in from benefits.
- Why People Stay
Retention involves a mix of internal and external forces. Every day an employee can experience ways that the organization attracts her and ways that it repels her. Good friends and workplace flexibility may attract her while a bad boss will tend to push her away. The same is true of external factors. A hot labor market or new family responsibilities can pull her away while changes in living conditions could pull her closer. From the perspective of voluntary termination, retention happens when the forces drawing her towards the organization are greater than those drawing her away.
- Benefits provide stickiness, they don’t fix problems.
Again, the value an employee gets from a benefit varies in relation to its personal importance. That changes over time. No matter how good the benefit, it will not be universally seen as valuable. It is not likely that we will see a replacement benefit as effective as health care once was in this regard. At some point, no benefit is good enough to keep an employee on the job. The factors that drive a person from their job, like really bad bosses, harassing environments, dramatic family or health changes, will outweigh any imaginable offer. Benefits will not solve an organization’s larger problems. They are better understood as amplifiers of good feelings and a demonstration of the company’s care and commitment toward its employees.
- Considerations when designing Benefits Strategies for Retention
The key to success is the depth to which you understand the entirety of your team. Getting the mix and the message right involves a lot of very creative work. Individual benefits providers will be able to give you insight into the audiences that get highest value from their offerings. They will also be able to help you describe that value in your communications.
This is part two in a series. You can read part one here.