Getting the Best Bang for Your Buck in Employee Benefits
No business that wants to win with talent can undersell the importance of valuable employee benefits, but if HR leaders and insurance brokers spring for every trend or try to find the most comprehensive possible coverage in every situation, those costs can quickly balloon to the point where they become a strain on the organization.
The vast majority of businesses don’t have Fortune 500 HR-budgets, and that means scaling employee benefits with the bottom line in mind requires an understanding of how to maximize the value of what you’re offering employees while keeping costs in check.
Moving forward, we’ll be exploring how HR leaders can maximize the two-way value of their benefits offerings to delight talent and finance alike. We’ll discuss:
• Why more isn’t always better in the world of employee benefits
• Why an emphasis on plan design is crucial to controlling costs
• How to understand which benefits have the greatest value and why
• Why you must leverage employee benefits education
• Why your relationship with your broker is crucial to success
Why “More” isn’t Always Better
One of the biggest mistakes HR departments in organizations of all sizes make is piling on perk after perk and program after program in the name of being employee-centric. While that kind of stacking makes an impressively long list on paper, it doesn’t always translate to actual increased employee benefit, and it invariably ties the organization up with a variety of financial obligations.
Lost Value, Lost Profit
Benefits that aren’t understood by your employees and used with high satisfaction aren’t benefits at all – they’re just costs.
While the big, long list of benefits offerings seems like a valuable tool when you’re trying to land a potentially impactful hire, it immediately transforms into a heavy and costly anchor once they’re on board and elect to only take advantage of traditional coverage or insurance options.
Never Losing Sight of Mutual Benefit
To be a great HR leader, you need to understand the humanistic side of everyday work within your organization in a way that most other senior leaders simply don’t, and advocate accordingly. At the same time, you’re also responsible for making sure human costs are scaled in a way that turns results from your talent into business growth.
That means your benefits can’t just be employee-facing offerings; they must be planned and chosen with workforce maximization in mind. Which wellness programs will keep your employees and their family feeling ready to succeed in work and school? Which retirement or life insurance offerings will make people feel truly supported in a way that builds authentic company buy-in? Which workplace cultural values or perks will keep people energetic and motivated from day to day?
Employee benefits are indeed employee benefits, but when it comes time to select benefit offerings, it’s a useful exercise to ask yourself: “How will this program improve our team members’ lives in ways we’ll be able to observe and celebrate in the workplace as well?” When you can answer that question, you’ll have a much better understanding of which benefits are truly impactful and mutually beneficial in a way that supports business.
The Importance of Plan Design
Ultimately, creating a benefits program that attracts, delights, and motivates employees while remaining scaled to company growth objectives comes down to plan design.
Although benefits plan design is one of any HR department’s most important responsibilities, it’s often treated like a chore. In fact, if you’re stepping into an early-stage organization, there’s a high chance that things have always been handled on the fly and there’s never been a consistent, well-articulated approach to benefits or employee compensation.
Impactful leadership that supports the team while keeping the organization primed for growth is the gold standard. If you can create that alignment, you and your organization are both primed for all-star status. To get there, though, you will need to leverage the expertise of some key colleagues.
The Power of Partnership between HR and Finance
Your CFO, director of finance, or controller may not seem like a natural human resources ally at first blush, but their understanding of the company’s value proposition, business goals, and overall financial operations is crucial to any business leader’s work creating a mutually beneficial benefits program.
When you bring finance into the plan design process, you arm yourself with the expertise of some of your organization’s most important and plugged-in leaders, and you can create plans that are built with alignment in-mind from step one.
Of course, from an HR perspective, it’s also your responsibility to serve as an advocate for your team throughout this process. Working with finance doesn’t mean letting them design your program in a way that reflects their values and sensibilities; it means using their valuable perspective as a lens through which to demystify how plans should be scaled to bottom line goals.
Understanding What’s Valuable to Employees
“Know your audience” is a valuable axiom in comedy, business, and life in general. If you’re creating a program that’s of real value to your team members, you can’t possibly do it without a deep understanding of their actual needs, goals, and insecurities. In fact, if you’re planning on sitting down with finance to talk about plan design, a great first step is to conduct a little research to figure out exactly which benefits your employees truly need and value.
Employee Surveys
Workforce surveys are a quick and easy way to build a data pool around overall satisfaction with your existing benefits program or to build a better understanding of what employees say they need to feel supported and do a great job. Thanks to technology, surveys are quicker and easier to create and quantify than ever before.
Of course, getting good data from an employee survey requires asking the right questions and providing your staff with a clear, easy way to express themselves. Measuring satisfaction for your benefits program on the whole or for individual elements using a 5-scale or 10-scale can be useful, as it creates easy-to-digest quantifiable data.
At the same time, any employee survey about benefits must also embrace the qualitative and humanistic. For example, if you have team members whose lives (or whose families’ lives) have been changed positively by a program you offer, or whose lives could be changed by the addition of new offerings, you need to hear those narratives and take them into account.
Workforce Healthcare Utilization Data
While surveys are a great tool for learning what’s on employees’ minds and what they’re willing to tell you, they don’t tell the full story. The good news is that you can fill in many of those gaps using workforce healthcare utilization data from your insurance providers.
Specific, granular medical records and information are protected under HIPAA, but as employer, you can still access a wealth of usage and billing data that helps you gain a fuller understanding of how widely your health benefits are being used, what they’re costing your employees, and what they’re costing you.
Your employee benefits broker can be incredibly valuable in helping you mine these numbers for takeaways to inform your plan design process. Ask yourselves:
• Which aspects of these programs are actually being used?
• What do the average healthcare needs within your organization look like?
• On average, are employees doing a good job selecting the program that’s most beneficial to them?
• Are we currently offering any packages that are largely unused or just plain inefficient cost-wise?
Benchmarking/Industry Research
Once you’ve leveraged employee data to build an internal understanding of needs, gaps, redundancies, and excesses in your own benefits program, it can be useful to look outside your organization to understand the trends and common benefit practices among your competitors.
As we said at the outset, buying into every trend and jumping for every perk that sounds good at first blush is a crucial mistake, but if you’re trying to build value for your organization and your team members, there’s nothing wrong with seeing how businesses of comparable size and goals are doing the same. The exercise also gives you a better understanding of what you’re competing against in talent recruiting and retention scenarios.
Once you have an understanding of what your employees want, need, value, and actually use, you have the information you need to understand what value and benefit at scale for you and your team members actually looks like.
The Incredible Value of Employee Education
Employee benefits are only as valuable and useful as they are accessible. By maximizing each team member’s understanding of their benefits, you significantly increase the chances that they will select the plan that makes the most financial sense for themselves and the business, leverage health and wellness benefits that keep them and their families healthy and productive, and take advantage of the offerings you bring in that pack the most value.
Education has the power to significantly reduce inefficiencies in employee benefit usage and build a better experience for everyone. Advocate with leadership to get professional development time with each department or team in the lead-up to enrollment time, and plan a learning experience that helps everybody understand their options, the value of the benefits you offer, and the importance for themselves (and the business) of getting the best bang for their buck. Your employee benefits broker can help you develop and execute on a highly-effective employee education strategy.
Maintaining a Strong Broker Relationship
One key stakeholder we haven’t delved into yet in this post is your employee benefits broker. The right broker is another experienced planner and a valuable ally for you and your finance colleagues when it comes to understanding which benefit options are best scaled to your business and goals.
What a Good Broker Looks Like
Great brokers are dedicated to getting your people the coverage they need while also lowering your healthcare costs. They’re strategic, innovative, and understand how emerging technologies are changing the world of medical coverage and healthcare benefits.
A great broker is a true partner who wants to build a well-scaled benefits program that improves employee experience and maximizes business potential. They’re not trying to sell you on what works for them or what will jump off the page the most; they’re working to understand your goals, needs, and challenges, as well as those of your employees.
Why You Should Always Be Shopping
Even if you have an established relationship with a broker who has provided value for your organization in the past, it’s always good to maintain your own understanding of how the marketplace is evolving and continually work toward upgrading both your own experience and the employee experience. That means not being afraid to shake things up and bring in a new perspective, especially if you are in the process of re-planning your entire approach to employee benefits.
More than half of businesses shop their health insurance every year because the market is constantly evolving, both from a healthcare capability standpoint and a business perspective. A business leader looking to maintain a valuable program always has their ears open for the latest innovations and can’t allow their vision to be limited by what one broker offers or says.
Key Takeaways
Scaling your employee benefits program in a way that’s well-aligned with business goals and maximizes the bang for your buck is one of the greatest challenges modern business leaders are faced with. However, success is absolutely possible, as long as you keep in mind:
• More isn’t always better when it comes to employee benefits
• At the end of the day, a benefits program needs to be mutually beneficial
• Maximizing value requires dedication to plan design and finance-minded thinking
• Building value for employees requires a deep understanding of wants, needs, and actual behavior
• Getting the most out of a program requires strong employee education to ensure team members know what’s possible and how to access valuable programs
• Your broker should be a valuable strategic ally in your quest to maximize your bang for your every benefits dollar spent.