There’s something missing in the benefits strategy at most companies.
As someone with more than 30 years’ experience advising organizations on their benefits, I know first-hand how important it is to have a comprehensive benefits strategy that aligns with the needs of both a company and its employees.
Yet what I’ve observed (time and time again), when I walk into these companies is that senior management hasn’t been involved in setting the benefits strategy in the first place.
Instead, the C-level executives have delegated strategy to the HR department.
This may sound like the most obvious thing to do, but this is not the way to run a business.
Direction on strategy needs to come from senior management. It’s these people who are the only ones with a top-level view of where their company is, where it needs to go, and how employee benefits fit into that vision.
Without such a holistic perspective, the organization’s benefits programs will fail to align with its overarching goals and the dynamic needs of its workforce.
The most important message I could impart to any C-level executive who’s reading this is that they need to stop waiting for HR to come to them with a benefits strategy.
First of all, it’s not the HR department’s job to set strategy.
And even if HR has a strategic mindset, they likely don’t know the entire overall company strategy, and how benefits fit in.
That means it’s executives that need to take responsibility.
The sort of questions the C-suite needs to ask is what is the overall strategy around employee benefits is, and how can the C-suite work together with the HR department and benefits brokers to execute on this strategy.
This isn’t a question of choosing Blue Cross or Cigna. These are the kinds of tactical questions that should be left to the HR team.
What the C-suite needs to do is decide what your organization wants to achieve through its employee benefits.
Start with the money. How much is your organization currently spending per employee, per year, on all the benefits combined?
Knowing this number can give you a lot of insight into your current allocations and whether they make sense from an investment standpoint.
For example, what are you spending on health insurance: 75% of your benefits budget? Or is it 85%?
Or are you getting a good return on that investment? Or would it be better to reallocate some of that spending toward other benefits such as life, disability, or dental insurance?
Now would be a good time to bring in your HR team and make them a part of this conversation.
They need to be told the C-suite wants an assessment of the company’s benefits: everything from how well they retain and attract talent, and if there are better options.
This is what I’m getting at when I say executive leadership needs to set the benefits strategy.
The HR team now knows what the company is aiming for in terms of benefits: improved benefits and budget allocations that will lead to high returns in the form of increased talent attraction and retention.
From there, the HR team can get down to the tactical side of things, such as conducting surveys and one-on-one sessions to better understand employee benefit needs and expectations; looking at the company’s demographics and how they compare with wider industry trends; and compiling a list of new benefit programs or new approaches to existing programs that will more effectively resonate with the workforce.
While this is going on, senior management should be involved in a series of learning sessions that will bring them up to speed on the current benefits landscape.
Benefits brokers would be ideally suited for leading these sessions. And there may be a lot of ground to cover as many organizations can go a decade or more without making any major changes to their benefits programs.
A lot has changed in the benefits industry in that time, with new programs and innovative approaches to organizing benefits.
For example, lifestyle accounts are a relatively recent arrival on the benefits market whereby an employer contributes a fixed sum – say $1,000 – to each employee. The employee is then free to spend that money on any benefits they choose from the individual marketplace.
This allows for full personalization in benefits selection and continual coverage even if they switch employers.
Additionally, the fixed yearly sum paid into each employee’s lifestyle account offers predictability for employers, facilitating straightforward benefits spending forecasts.
Another sea change that senior management must get to grips with is the ongoing demographic transformation in the US workforce.
As more baby boomers retire or approach retirement, their positions are being filled by young Millennials and Gen-Zers.
These employees have very different ideas about what constitutes a valuable benefit.
Younger generations tend to prefer flexible and customizable benefit setups, like the aforementioned lifestyle accounts. They also tend to change employers more frequently.
Rather than resisting this trend, my advice is to embrace it by providing flexible and portable benefits. You’ll attract a lot more of these workers with this approach.
It’s the HR team and benefits broker that will present the new benefits strategy to the board for final approval.
But to ensure clarity in their decision-making, board members should avoid getting lost in the intricacies of how certain policies function.
Instead, they should focus on what the company wants out of its benefits programs.
Will most of the workforce be satisfied with these policies?
Do they align with the most pressing needs and concerns of today’s employees?
Do the policy vendors have a solid reputation for providing service excellence and employee satisfaction?
Whatever decisions the board comes to, they should be aligned with the initial benefits strategy management sketched out from the beginning.
Additionally, the board must maintain a forward-looking perspective.
As the business landscape evolves, periodic reviews and adjustments to the benefits strategy may be necessary to ensure the company remains adaptive to changing employee needs and industry trends.
For any business, having a cohesive, top-down benefits strategy is essential to ensuring employee benefits are aligned with both the needs of the company and its workforce.
Yet somewhere along the way, many companies forgot this and instead delegated strategy to HR.
It’s time to recalibrate.
Executives must reclaim their role in setting the benefits strategy, to ensure employee benefits do what they’re supposed to – which is creating a high level of employee satisfaction that will elevate talent attraction and secure long-term retention.
