Research for Practitioners: The Growing Complexity of Benefit Design

Abstract

Benefit strategies are undergoing a major transformation and repurposing as organizations shift their focus from attraction and retention to engagement and performance. This research brief highlights the variety of innovative offerings now in play, the strategies that drive them, and key issues HR and compensation practitioners need to address.

Keywords

diversity well-being multigenerational multicultural benefits

Once the staid understudy of the total rewards show, benefits are rapidly taking on bigger and more significant roles in helping organizations attract and engage a multigenerational, culturally diverse workforce.

At a time when merit raises are nothing to write home about, many organizations are turning to more complex, creative approaches to benefits. Plans once limited to a few standard elements—a 401K, health insurance, vacation/sick leave, etc.—have rapidly morphed into broad assortment of options, from childcare to eldercare to pet care and from maternity leave to in vitro fertilization and lactation/well-being rooms.

Such programs, benefit experts are quick to point out, are not only integral to maintaining a strong employment relationship but also enhance the physical, emotional, and financial well-being of employees. That, in turn, leads to a more engaged, productive workforce.

According to the 2019 World at Work Total Rewards Inventory, a variety of innovative benefit offerings are emerging today including •

flexible work (hours and work location),

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financial planning services,

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identity theft services,

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paid time off for volunteer work,

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expanded parental leave,

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eldercare resources/referral services, and

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student loan assistance.

The offerings themselves are not all that have changed. So have the business strategies that drive them, moving beyond attraction and retention to engagement and performance, and from the employees’ perspective, from entitlement to ownership. They have also become more proactive and forward-facing, emphasizing, for example, wellness in healthcare offerings and stability and growth in financial programs.

What that should look like in terms of specific offerings, however, depends on the generational and cultural mix of the workforce. In most organizations today require meeting the needs of a highly diverse population spanning five generations–Gen Z to Boomers. Understandably, the needs of a 22-year-old college graduate saddled with hefty student loans are quite different from those of a 60-something company veteran who is on the cusp of retirement and caring for aging parents.

While detailed analysis of workforce demographics and diversity is a necessary first step in developing an effective benefits program, finding the right mix for your organization also requires a comprehensive understanding of the current and emerging trends.

Financial Well-Being

401K remains the backbone of investment/retirement plans, with employers typically contributing some level of matching contribution. But given today’s multigenerational workforce, the focus has been broadened beyond retirement to overall financial well-being. Some organizations, for example, are giving younger employees with student loans the option of using their matching funding to pay down their debt rather than going directly to their 401K. Other organizations are paying off a part of the loans in lieu of a bonus or helping employees refinance their educational loans at a lower rate.

Wellness

Gone are the days of the one size fits all PPO/HMO healthcare plans. Increasingly, organizations are offering a buffet of choices designed to meet the needs of the individual. Today’s programs often include multiple medical, vision, and dental plans. In addition, many organizations are offering a variety of ancillary options designed to help employees, no matter where they are in life and career.

The focus of today’s health plan is proactive—keeping people mentally and physically healthy. For younger workers, the emphasis is on healthy living, physical, and mental fitness. For those in their 40s and older, the focus also includes early detection of those ailments that often plague the older workforce.

Organizations are also attempting to reduce the stigma traditionally associated with mental health, promoting emotional wellness, making resources easier to access, and encouraging employees to use them.

As the head of HR at one global organization told us, “our wellness program is not merely an insurance program but a benefit to keep you well. By removing any financial and discriminatory barriers to care, we make access easy and affordable so that our employees have access to high-quality preventative health care that will keep them healthy, safe, present, and productive.”

A focus on wellness also helps reduce costs. “Our preventive metrics are through the roof; more than 70% of our workforce are getting their annual exam. We are preventing those heart attacks, we are catching those cancers before they become stages two, three, or four. And given that we can cover 10,000 preventative exams for less than treating a single stroke or heart attack, we are keeping our costs in line.”

Personal Well-Being

Just how dramatically benefits are changing can be seen, the emergence of a variety of gender-spanning, lifestyle-supporting perks designed to help employees better manage the work versus life conundrum. Some of the more progressive of these offerings include: •

Caregiving. What began primarily as a benefit for working moms has been transformed into a more universal offering designed to help all employees, no matter gender or age. Perhaps the most significant of these is eldercare—support for aging parents and other family members. These programs include providing resources to help employees find affordable care givers and subsidizing the cost of emergency care should an employee have to be away on a business-related assignment. Some organizations also subsidize the cost of providing an outside HR-compliant service to handle the payroll and paperwork related to home care.

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Maternity care. Maternity benefits also continue to expand, with organizations offering longer maternity and parental leave, flexible work schedules upon return and bonuses for receiving both healthy pregnancy and postpartum care.

With many young working women holding off on starting families, organizations are also providing comprehensive in vitro fertilization coverage as well as financial support for some adoption services such as legal fees and travel costs.

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Pet insurance. The list of benefits now in use seems to be endless. Although clearly not yet a trend, some organizations, for example, are providing access to affordable insurance for pets. While perhaps not ranking up there with caring for the others we love, they are for many an important aspect of personal well-being.

Implications for Practice

As the variety of benefit options increases, so does the complexity of designing a program that fits your organization. Before you start, it is critical to understand both the options available and the unique dynamics of your organization: its values, culture, and workforce demographics.

Given those dynamics, consider what you need in a benefits package that is inclusive, nondiscriminatory, accessible, and meets the needs of both your workforce and the organization.

Finally, consider the ROI you expect from the program you implement, not just in terms of potential cost savings but also in context of a more engaged, focused, and productive workforce.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Tom Flannery is a senior client partner for Korn Ferry’s Executive Pay and Governance practice, based in the firm’s Boston office. He has guided executive, physician, faculty, and employee compensation and benefits reviews as well as organizational issues including succession and development, performance management, organizational design, and human resources best practice. Dr. Flannery has extensive global experience, including Europe, Latin America, the Middle East, and Southeast Asia.

Brian Bloom is the Vice President of Global Benefits for Korn Ferry’s human resource department, located in Los Angeles. Bloom leads the organization’s global benefits team covering nearly 60 countries and 9000 employees. He also leads the health, welfare, and retirement benefits strategy, manages global stock plans and deferred compensation programs, and chairs the safety and well-being committee.