Could Personalized Benefits Be Your Retention Secret Weapon?

With open enrollment season not far off, you may be considering enhancements to your organization’s benefits strategy to make your offerings more appealing to current and prospective employees.

Amy Spurling, the founder and CEO of perk management software company Compt, discussed some ways to leverage personalized benefits to differentiate your company as an employer of choice and bolster employee retention in an episode of HRMorning’s “Voices of HR” podcast.

“We surveyed the employees who use our platform. Sixty-five percent of them said that they were more likely to stay at their current employer because they had certain benefit offerings,” said Spurling, who also has experience as a CFO and COO.

The Underutilization Risk

While 80% utilization of benefits would be great, the reality is utilization of most individual fringe benefits ranges from 3% to 5%, she said.

When nobody uses a benefit, that’s a negative return on investment, which also results in missed opportunities to engage employees.

Understanding Personalized Benefits

Personalized benefits go much deeper than traditional offerings such as health insurance, allowing employees to select benefits that align with their individual needs and lifestyles. This approach not only caters to the diverse expectations of a multigenerational workforce but also enhances employee satisfaction and retention.

Spurling also said that while competitive salaries are essential, personalized benefits often provide added value that can influence a candidate’s decision to join a company.

“That’s where companies find everything from fertility benefits to childcare, to student loan repayment, to food, to you name it,” she said. However, the sheer volume of benefits options that are out there can be overwhelming, which can lead to disengagement and underutilization of benefits.

The Role of Stipends

According to Spurling, to address these challenges, more companies are exploring benefits stipends as a flexible and fiscally responsible solution.

During the COVID-19 pandemic, the shift toward stipends became more pronounced as traditional benefits like gym memberships lost their relevance due to the mandated gym closures at that time. Companies began to rethink their approach, focusing on broader categories like wellness (the most popular type of benefits stipend offering, according to Spurling), professional development or family support, without dictating specific vendors.

“So [a family support stipend] could mean some sort of fertility benefits. It may not, though. Maybe it means something for your aging parents. … Maybe it’s for something for you and your partner,” she said.

Stipends allow employees to allocate a set budget toward benefits of their choosing. This flexibility empowers employees to tailor their benefits package to their unique circumstances, leading to higher engagement and satisfaction.

“Say an employer includes a family stipend and what your family needed was financial wellness, or even a wellness stipend that includes financial wellness. If you have student loans, you could get reimbursed for that. All you have to do is show proof that you paid your loans and you can get reimbursed. But somebody who doesn’t have loans could then use it for emotional wellness or physical wellness instead,” Spurling said.

“We’ve seen a lot of companies shrink their budgets through this but still have so much more impact because employees have that choice. Companies that are thinking ahead of the curve realize they can do this with less money.”

Implementing Personalized Benefits

For HR pros considering a transition to personalized benefits, the process typically begins with an audit of current offerings. This involves assessing the utilization and impact of existing benefits and identifying opportunities for reallocation. Companies can then introduce stipends alongside core benefits.

Spurling advised that personalized benefits should reflect the company’s values and culture and remain within the parameters of the budget.

By allowing employees to choose how they spend their stipend, companies can enhance employee well-being and promote a sense of ownership.

“They’re saying, ‘Hey, you’ve got $100 this quarter,’ or ‘You’ve got $1,000 a month,’ or whatever their budget is, and then employees go and spend where they want. … What we found through our data is that on average, every employee has three unique vendors they would like to use,” she said, noting that wherever possible, people tend to choose local vendors in their community.

By providing the freedom for employees to choose benefits that matter most to them, companies can advance a more supportive work environment. This not only aids in attracting top talent, but also in retaining existing employees by addressing their evolving needs.

And with the promising potential for optimizing benefits spend, the shift towards personalized benefits may be a necessary evolution in how companies support their workforce.