By Dan Eisner

Thankfully, it appears some economic stability will return after a difficult number of years.  Optimism for future growth opportunities is also returning, but that optimism brings challenges and uncertainty for HR professionals.

Where will the employees come from to support this growth?  What types of labour shortages will we need to manage, particularly with respect to key skills?  Will we return to the labour crisis that we saw only a few years ago?  What role will mature workers play in the broader workforce strategy?  How will four different demographic groups interact in the workplace?  How will HR build programs that are relevant to all these groups and yet still sustainable?

As HR professionals begin to address these questions, they need to consider the role of flexible benefits in achieving those goals.  However, when one speaks about “flexible benefits,” many HR professionals think about historical “cafeteria” plans – broad arrays of plan options, complex credit and price tag calculations, annual enrolment requirements and employee communication issues.  These complexities can overshadow any expected return on the investment in flexible benefits, and ideas for plan design changes drop lower on the priority list.

Rather than thinking about stereotypical flexible benefits, organizations should refocus on something more elemental.  Provide meaningful choice and flexibility to employees, and your benefits programs will play a more meaningful role in attracting and retaining key talent: in turn, a role in achieving organizational success.  Benefits programs can be linked to broader organizational success, but making the link requires significant changes from historical norms.

There is universal agreement that a “traditional” benefits plan (e.g., life, disability, health, dental) with defined levels of benefits does not constitute a flexible benefits program, but there is a debate on how much flexibility and choice you need to provide in order to have a bona fide flexible benefits program.  By providing optional coverages (like life and critical illness) or by adding a supplemental health care spending account, have you created a flexible benefits plan or do you need to move to modular, core-plus, or cafeteria plans to be able to legitimately refer to it as flex?  There is no one right answer, but regardless of what you provide your employees, if the plan is poorly communicated – if they do not understand or value it – the plan can not play an effective role in your human capital strategy. Arguably, the money is not well spent.

It seems insurmountable: the complexity of flexible benefits programs and their administration, the need to communicate the value of these plans, and the all-to-common resource crunch in HR.  Those who have not done so recently should investigate new options available to provide more effective and lower cost forms of administration and communication.  They should also consider the true costs of a more simplified flex plan that provides fewer options but possibly more meaningful choice to employees.  Many organizations have not surveyed the market recently and they might be surprised by what is available.

Rather than glancing backwards and debating the merits of historical flexible benefits programs, we need to look forward to the real opportunities around the future of flex.  With changes to the make-up and availability of employees, organizations will need to be more creative to secure the optimal workforce. At the same time, they will need to be prudent with the money spent in light of increasing plan costs and the pressure to do more with less.  Perhaps there is an opportunity to build a benefits program that is more strategically integrated into a broader workplace value proposition.

Organizations need to be bold and they need to challenge the preconceptions and stereotypes around flexible benefits.  They need to be creative and truly address their unique workforce needs, and move beyond potentially “stale” solutions still being promoted in the marketplace.  By systematically addressing the underlying needs of the organization and how benefits programs can help address those needs, organizations can take advantage of the value that flexible benefits programs can provide.  However, they need to take a long-term perspective focusing on multi-year planning and continuous improvement.

Dan Eisner is a senior consultant with Mercer’s Health & Benefits business in Western Canada. He uses his skills and experience both as a Chartered Accountant and as a human resources professional to work with organizations to challenge the status quo.  He also helps facilitate a more effective dialogue between HR and finance to ensure that benefits solutions are relevant to employees and financially sustainable and predictable. dan.eisner@mercer.com