If you didn’t already realize it, one-size-fits-all benefits packages really are (finally) fading into obsolescence.
Employees are demanding more personalization in their benefit options, and In their place, personalized benefits are becoming the de-facto choice of today’s workforce.
But, knowing this, and making the change are often two different things, and meeting this call for more personalized benefits is not always a simple as it sounds.
A significant problem benefits/rewards chief face still, is that benefit structure in most organizations is built almost entirely around the provision of group benefits, a model that lacks the flexibility required for genuine personalization.
Take life insurance as an example. A group life plan is the same for every employee in its coverage level, terms, and exclusions. In contrast, an individual plan offers complete customization since it is underwritten to the needs of an individual rather than a group.
So, to overcome this, HR professionals must devise new benefits structures that can deliver individualized benefits to their workforce.
Not only this, they need to convince their organization’s C-suite executives that this transformation is both necessary and achievable.
Later I outline exactly what you should do to pitch more personalisation – including suggesting a radical change to the accepted norm.
Before this though, it’s important to explain just why personalization matters:
The fact is desire among employees for more personalized benefits isn’t a mere fad. It represents the new normal in benefits expectations, brought about by a generational shift that continues to gain pace with each passing year.
As more Baby Boomers reach retirement age, the younger millennials and Gen Zers that replace them have very different ideas of what work should be. To attract and retain this emerging workforce, organizations must adapt their benefit offerings to meet these evolving expectations. And at their core, personalized benefits are about catering to the individual needs and preferences of employees.
If companies could provide employees with the ability to customize their benefits packages, this would provide a huge boost to job satisfaction, as employees would now be able to create benefit plans that perfectly align with their personal and professional needs.
That leads to a powerful sense of feeling valued and cared for, which is exactly what today’s employees want above all else from their employers. In return for this, the employer gains a more committed, loyal, and productive workforce.
To my mind, there’s no question that the key to bringing personalized benefits to a workforce is the use of lifestyle accounts.
Lifestyle accounts represent a novel approach to benefits in which an employer makes a set annual contribution to benefits for each employee. The employee can then allocate these funds on the benefits that matter the most to them.
Let’s say the annual contribution per employee is $1,000. Employees can then go on the individual insurance marketplace and purchase whatever they need, be it life, disability, vision, dental, or pet insurance.
Since employees are purchasing individual products, the carriers can underwrite each plan based on the specific needs of each employee.
That’s about as personalized as you can get. Moreover, individual plans come with the advantages of full portability, greater coverage, and almost no policy exemptions.
Benefits aren’t just about insurance. There are many other benefits that can be of value to employees, such as financial counseling, stress management programs, and fitness training.
Employees can also opt for these personal and financial wellness through lifestyle accounts.
In the journey toward reshaping an organization’s approach to benefits, HR professionals need to convince their C-suite executives that implementing lifestyle accounts is not only imperative for staying competitive but also achievable without the need for new budget outlays.
The biggest challenge will be getting the top brass to stop focusing on the group health insurance plan when determining the annual budget allocations for benefits.
Health insurance tends to suck up most of the benefits budget, leaving almost nothing for the other benefits.
Employers know this, yet they feel trapped by this prevalent belief that they must provide their employees with the best possible health plan.
But this mindset is becoming less viable with each passing year as health premiums continue to outpace inflation.
As such, HR teams should begin their pitch by outlining how much their companies are currently spending, per year, per employee, on benefits.
This is not just health insurance, but all benefits.
For example, let’s say that figure is $10,000, of which $8,000 goes entirely toward the health plan.
That leaves just $2,000 for the lifestyle accounts, PTO, and other non-health insurance benefits, which isn’t enough.
My advice is not to start with the health plan when determining budget allocations.
Instead, begin with what’s necessary to cover the lifestyle accounts and other benefits.
In this example, that figure comes to $2,500, leaving the remaining $7,500 for the health plan.
This reallocation strategy is how an organization can fund the use of lifestyle accounts without increasing their total benefits spending.
It’s entirely likely there will still be resistance from the C-suite executives to the idea of reducing health insurance spending, which will inevitably mean higher payroll deductions for employees.
But I can assure you that most employees are unlikely to be significantly affected by a minor increase in their payroll deductions, especially now that they are receiving high-value personalized benefits through their lifestyle accounts.
This is the key point HR professionals need to emphasize when advocating for the adoption of lifestyle accounts.
The shift towards personalized benefits is not a fleeting trend, but a fundamental transformation in employee expectations.
To adapt to this evolving landscape, organizations must embrace personalized benefits, and the best way to do that is by implementing lifestyle accounts.
But to implement this change successfully, HR professionals must convince their C-suite executives of the need to reallocate benefits spending.
By reducing the focus on health insurance and putting more money into benefits that actually matter to employees, organizations can create an enticing benefits structure, one that will ensure their organization can maintain a competitive edge in the future.
