In these uncertain times, employees are feeling stressed and increasingly relying on benefits offerings when deciding where to work. That’s why employers can no longer afford to treat employee benefits as an afterthought.
Nowadays, firms need to strategically develop or update employee benefits options to manage cost, and increase employee retention and satisfaction.
The following steps can help employers create a benefits strategy:
1. Identify your organization’s benefits objectives
Don’t start with a specific list. Rather, consider how your benefits can complement and mesh with your business and workforce strategies, as well as the state of your competitive environment.
Then ask yourself:
- Do you want to be a cutting-edge competitor who attracts the best talent?
- What’s the purpose of providing benefits?
- What’s the advantage of doing so to your company?
- How broad do you want the benefits menu to span?
- How robust and complex can, or should, your plan be?
- If you write out your objective in offering employee benefits, what would it say?
If you don’t currently have a benefits program, you may want to think of building up your offerings gradually in terms of breadth and depth.
2. Conduct an employee needs assessment
Determine what employees need, want and to what extent they value associated variations.
Just as important as the collected information, is the way it’s collected. For example, employees can be surveyed anonymously using various mechanisms, and supplemented with interviews and focus groups. And today’s technology allows firms to execute synchronous or asynchronous polls, as well.
It’s also vital to track HR inquiry logs to better understand what questions and concerns employees have had over the past year. Similarly, review candidate questions about benefits options, as well as exit interview comments that may be relevant.
Conduct a utilization review of current benefits usage to see which options are being used and to what degree. In conjunction with this evaluation, analyze workforce demographics to consider the needs of various types of employees. For instance, some employees may value paid time off, while others may place more value on retirement income plan availability.
3. Draft your preferred employee benefits program
After solidifying your company’s benefits objective and completing the employee needs assessment, outline your desired program. Determine relative benefits priorities based on employee input and company perspective, finding associated commonality. Consider taking a menu-driven approach regarding dollar amounts and number of choices. Research vendors to determine options and costs.
Also, consider association or other group plan availability and get multiple provider quotes. And, from a legal perspective, be sure to differentiate between required and optional employee benefits. Consider whether to have eligibility variations for part-time versus full-time employees and options for potentially outsourcing administration or packaging of benefits options. Map different options into inherent dollar value ranges, and seek out guidance or review from an accountant and/or attorney.
Keep in mind it’s just a starting place. While it’s important to seek feedback from a sample of employees, be careful about creating unrealistic expectations.
Reductions and refinements of your benefits draft are likely after budget consideration. Be sure to include a discussion of trade-offs in draft presentation when seeking others’ reactions.
4. Reality check program characteristics against budget
Engaging accounting personnel or an outside CPA is essential. Strong financial acumen is needed to determine the cost of providing prioritized benefits, comparing the total aggregate benefits costs against your budget and considering what proportion of benefits costs you as the employer will subsidize.
Other things to consider:
- if underused benefits or those not valued by employees, can be eliminated
- administrative costs of benefits provision
- what employees need to contribute (will it vary)
- will employees of different pay levels be able to afford the options, and
- how the plan will be administered – in-house, third-party administrator or broker.
5. Communicate resulting options to employees
When, how and what you communicate to employees is imperative. Adhere to legal obligations and comply with disclosure rules. Employees need to receive an easy to digest summary plan description that goes beyond legal obligations and provides a high level of understanding of the benefits offered.
Create awareness and appreciation of the new or existing benefits and improved employee financial security by communicating through multiple channels. Make use of call centers, health fairs and out-of-pocket simulation calculators. Include the ability to create an annual statement of total compensation for each employee showing the costs of their benefits, along with their inherent value. Most importantly, ensure that questions can be answered accurately and appropriately.
6. Periodically review and reassess benefits needs
At least annually, review and assess your benefits package by looking at ongoing forces driving industry and business changes. Consider current and expected future trends in the business climate, the state of the economy, the regulatory environment and general workforce dynamics. And keep a pulse on your competition and what they offer.
Finally, continue to touch base with employees through workplace satisfaction and engagement surveys, and other methods. Understand how personal priorities and obligations are shifting while you simultaneously develop goals and measurements to assess your current program’s cost and effectiveness. Be sure to look at actual financial costs, but also implicit costs and benefits.
Want to better learn how to address benefits options during and beyond the pandemic? Find areas of cost savings? Better understand evolving innovations? Join me for a 60-minute workshop on September 10th. For registration information, click here.