By Kevin Jeffrey, FCHRP

Here’s an interesting experiment. Pick a song from the list that speaks to you:

• My Generation
• Don’t You Forget About Me
• Smells Like Teen Spirit
• Wannabe
• Holloback Girl

More importantly, what do you think of the songs you didn’t pick?

While your answer is perfectly reasonable to you, chances are the person sitting next to you at work thinks your answer is just plain wrong. Hmm…might different generations have different perspectives? Might there even be differences within the generations?

Now consider this in the light of the HR person charged with creating a benefit plan that will fit everyone in his or her company.  It probably can’t be done. In most benefit plans, the best you can hope is that 50 per cent to 70 per cent of your employee population will find your benefit plan to be of “exceptional value”—as they define value.

Soft Response to Hard Figures
Benefits cost a significant amount of money: insurance benefits at 5 per cent of payroll, pension benefits another 5 per cent, and other perks at 3 per cent.  Total it all up and you can easily get close to 15 per cent of payroll, plus statutory benefits.  For a $50,000 salary, that can be  $7,500. For every 100 people, that is $750,000—not chump change!  It is crucial to get maximum value for the money being invested.

If you ask most HR people what employees think of their benefit plan, the common answers are: “It’s ok”, “I’m satisfied”  or “I wish we had more.” Not really a ringing endorsement for a sizeable investment.

Benefit Plans Need a Re-boot
Benefit plans were originally designed for the single male breadwinner, married with 2.5 kids and the proverbial white picket fence. While that was the workforce of 50 years ago, benefit plans have been slow to update; witness the fact that benefit plan pricing is still based on Single or Family status. Benefit plans are not designed to reflect multiple income families, young singles or extended families. Moreover, standard plans fail to recognize that a 25 year old may not want the same benefits as a 55 year old—or that the people in the middle might need a whole different set of benefits.

As for the insurance companies, many are still mired in yesterday’s risk management practices. Sure, the bigger companies have had the ability to provide flexible benefit arrangements, but historically mid-size and smaller organizations have been unable to secure flexible plans.

Flash-forward to today—the typical workforce has Boomers (late and early stage) Gens X and Y, extended families, combined families, ESL challenges, vegans, paleo, enthusiastic, coasting, angry, caring. You get the picture—diversity.

The Challenge and Benefits of Diversity
What does this have to do with benefit plans?  Well, the 30-year-old is not thinking much about retirement; the 60-year-old is less concerned with orthodontics and the 45-year-old in the middle needs everything.

How do you craft a benefit plan that will attract and retain a diverse group of individuals, without breaking the bank? It definitely helps to look at them as individuals.

• Mary: Looking forward to retirement, still productive and engaged, but not driven.  Single and enjoys travel.
• Michael: Married.  Kids in college, parent in assistance home.
• Jennifer: Divorced and remarried. Older kids in high school, younger kids in primary school.
• Joshua: On his third career already, has traveled the world, lives in the cloud.

Do all these individuals need the same dental plan?  Likely not.

You could design a great retirement program, but that might not resonate with globetrotting Joshua who is now ready to settle down and buy his first condo.

Similarly, a great orthodontic plan might not cause Mary to rave about her company’s benefits at her next yoga class.

Michael has already gone through two rounds of orthodontics for his kids, he needs more massage and physiotherapy because, well, he enjoys playing old-timer hockey. He also needs help

Jennifer is hoping there might be subsidies for her younger kids music activities.

Time for Flex-ible Thinking
As for making benefits affordable and fit for diversity, the answer is simple in concept—and fortunately, not much more difficult in practice.

First—think holistically. Consider the actual benefits that you are currently providing to your employees. When you think of benefits, what does that include? Most employees and leaders think of insurance benefits,  and maybe pension benefits.

Let’s look at the larger picture.

A New Way of Thinking About Benefits
You might provide allowances for bus passes, gym memberships, parking, on-site cafeteria, service awards, non-work related education, mortgage subsidy, house insurance, concierge service and so on.

While most organizations think of these things as “perks” and don’t view them as elements of a comprehensive “benefits” package, to some employees, aside from direct compensation, these may be amongst the most identified or enjoyed benefits from the company

In fact, most employees would not even consider these benefits as part of their “Total Compensation” package.  Failure to do so though, is just a wasted opportunity to improve your internal brand and perceived value. If you add up your total cost of these “other” perks, I suspect you will be quite surprised.  Add these costs to your traditional pension and benefit costs, and that is your baseline benefits cost.

True Flexibility and Benefit Dollars
The next step is to create a truly flexible benefits plan.  When most HR people think of flex benefits, they tend to think about providing a few choices for health and dental benefits, and maybe a little bit of choice for life insurance.  Flexible thinking around benefits has gone so much further.  Why not include these “perks” into your flex program?

Provide benefit dollars to your employee and allow them to spend the allowances on benefits that matter to them.  Mary wants to spend her dollars on yoga classes, Jennifer needs more child orthodontic coverage for the next few years and more life insurance, Michael feels it is time to boost his retirement saving, and Joshua has decided he does want to buy a condo, so a mortgage subsidy will make him very happy.  Make it truly flexible and allow the employee to allocate the benefit dollars in a way that works best for them. This is true benefit flexibility—allowing employees to create a benefits (think total compensation) package that matters to them.

Of course there are plenty of other details—corporate philosophy towards mandatory coverages, tax efficiencies, cost —but the purpose here is to help you start thinking about benefits in a broader context.  What do employees need and want, and how can we provide it to them?

Bring Value to the the Forefront
Flexible benefits are not just for the big organizations anymore.  Organizations of all sizes can add flexibility into their programs; allowing mid-size and smaller organizations to compete for great employee.
Once you begin to change your thought process it make it easier to think of “benefits” as an investment, not as a cost centre.  This thought-shift is important if you want to drive the maximum value from your benefit plan. Understanding how benefits can be seen as an investment will help your conversation with finance—and you know you will have that conversation.

The objectives for any benefit plan are three-fold: retention, recruitment and supporting organizational goals and philosophies.

In a multi-generational world, customization is a huge lever to help you get and keep the people you want, and to create your unique employer brand.

Kevin Jeffrey, FCHRP is principal of Pointbreak Consulting.

(PeopleTalk Spring 2015)