Despite an extended period of record low unemployment, businesses are not competing for workers by increasing wages as most economists would predict.
That makes creatively developed and personalized employee benefits an increasingly powerful tool to capture and retain talent. In the longer term, thoughtfully chosen benefits, not necessarily high-cost perks, heighten a company’s profile among competitors by promoting values that align with employees’ priorities. Given that benefits represent nearly one third of employers’ total compensation cost, and considering the vast array of incentive options out there, crafting a package is no simple task.
The good news is most workers are not looking for unconventional incentives, such as cryonic body preservation or a $20,000 wedding reimbursement. Today’s diverse workforce, spanning more generations than ever before, calls for a tailored approach to benefits packages.
One size doesn’t fit all
“The war on talent is real,” said Beth Thomas, CEO of Ohio-based Change 4 Growth Consulting and author of “Powered by Happy.” Attracting and keeping what she calls “high potentials” goes well beyond job title, salary or a corner office. “It’s about emotions evoked,” she told CO—. “Are you part of a bigger community within the workplace? We believe it is so much more about building your tribe. Your vibe attracts your tribe.”
Thomas often polls her staff to ensure culture and benefits reflect what they care about most. “We ask employees: ‘What motivates you? What inspires you?’ Some say, ‘I am a puppy dog. I just want the kudos.’ Others say, ‘I want days off.’ Still, others say, ‘Money, money, money.’
To address such varied needs, her company’s Happiness Committee, comprised of employees spanning all generations, brainstorms social and professional development activities to augment perks like peer recognition prizes, spot raises, paid pet sitting, unlimited vacation and a fridge full of food and libations.
Robert Swatland, senior principal at Korn Ferry, agrees smart companies seek input from the workforce before designing benefits packages. “One size does not fit all anymore,” he said. “Younger generations want pet insurance and older generations are worried about elder care. It’s so competitive in the job market and [benefits] is a great spot to offer something unique, to set yourself apart from others when wages are tighter.”
Benefits have to be based on your goals and objectives, who your workforce is and who you want it to be.
Gary Kushner, president and CEO, Kushner & Co.
Self-selection keeps costs down
A tailored offering of incentives doesn’t have to be pricey when employees “self-select” the perks they want.
The emerging category of consumer-directed benefits (CBDs) are attractive because they connect workers with reliable, convenient resources such as legal services, financial counseling, pet insurance and identity theft coverage.
Group discounts on concierge services such as dry cleaning, pet sitting, auto maintenance, spas and salons can be arranged at little or no cost to employers. Stipends for workers who own hybrid cars, join gyms and participate in bike share programs are not costly because only a subset of employees are eligible – and yet the good will generated goes a long way.
Granting paid time off (PTO) so that employees can volunteer – for example, Timberland offers 40 hours per year – is another popular, low-cost benefit.
While unlimited vacation days, ushered in by Netflix’s unorthodox talent and culture manifesto, was hot for a while, it’s not viewed as favorably today. Because unlimited PTO lacks the use-it-or-lose-it incentive of allotted vacation days, and a phenomenon known as “vacation shaming,” workers are discouraged from taking full advantage of the benefit.
Insurance company Unum will try out a novel approach next year, when it allows employees to trade unused vacation days for student loan assistance, a perk that appeals not only to recent graduates but also older workers who’ve taken out loans for their children’s education.
Revisiting ROI
Employers need to review offerings frequently so they can weed out benefits that are no longer valued to fund those that are.
“Accidental Death & Dismemberment is not an expensive benefit but the question I would have employers ask is how many employees have they attracted with that?” said Gary Kushner, president and CEO of Kushner & Co., the Portage, Michigan-based human resources and benefits consultancy. “I get why it’s offered but maybe we ought to put the whole total rewards package on the table, pull it all apart, do a strategic review and put it back together to decide what should we keep and what we should we discard.”
Kushner advises companies to examine not only the mix – but the design – of benefits, particularly in the areas of healthcare and retirement. If the employees’ share of medical costs is so prohibitive that they forego care, he said, results can be disastrous and costly for both the employer and employee. While offering medical coverage, even if not legally required by the Affordable Care Act, may seem nice, it comes with liability. “A general violation of the ACA carries with it penalties of $36,500 per employee per year. So, if you are going to offer it, make sure you are following all the rules.”
Retirement plans structured on the basis of employee longevity when the average tenure is only 4.2 years may warrant a design overhaul, he added.
“The whole reason employers should offer benefits is as part of a total rewards strategy that is linked to the organization’s goals and objectives,” Kushner said. Stay on top of healthcare trends, what competitors are offering and make benefits part of the conversation during recruitment.
“Benefits have to be based on your goals and objectives, who your workforce is and who you want it to be,” he added. “Employers should take an objective view, really look at how are we spending our dollars in the benefits world and are we getting value for our dollar. Are we meeting our strategic goals?”
Read more on which employee benefits to offer here.
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