It’s time to get strategic about employee benefits
Get your employee benefits package working for you; not the other way ‘round
By Earl Shindruk
It is 2019, and there is no shortage of economic and political factors, both provincially and nationally, that an owner must be responsive to. An expenditure that is perhaps the easiest to control, yet the most demoralizing to reduce, is the workforce. When less production is needed to meet decreasing consumer spending, I’ve seen companies in the last few years reduce as much as 70% of their workforce.
As a benefits broker, I’ve worked with companies to develop creative compensation strategies that help to manage labour expenditures, reduce the peak and valley syndrome of a workforce, and strengthen a team by focusing on retaining skilled workers.
With so many benefit providers in the market, and so many options for plans, how does a company choose the benefit plan that will provide them the maximum value? You start with your business objectives and audience – and use these to shape your strategy.
At the most basic level, the Objectives of every benefits
plan include recruitment, retention, productivity, and peace of mind
for employees; the extra step is
aligning these with your employee management goals.
For instance, is your goal to reward and retain senior executives, the individuals at the core of your business? Or ensure the team members that have invaluable knowledge and expertise remain with the organization?
Is your goal to attract the top performers of the millennial generation – those with high ambitions but a unique sense of entitlement?
Do you want to ensure that every employee has their basic health needs covered and that they are using their benefits plan as needed to improve attendance, efficiencies, and productivities?
With economic shifts, your goals likely change. While cutting out plan features to save costs may be inevitable, restructuring your plan to ensure that you’re rewarding skilled employees for their commitment allows you to strengthen your relationships and overall retention strategy.
For many companies, the goal in the last few years has shifted to keeping skilled employees. This means rewarding them with better benefits and sometimes adding additional plan features such as health spending accounts, group retirement programs, and even wellness accounts, which are designed to keep workers productive and healthy. With that said, the value of additional plan features is subjective, and your employee needs must be considered as well.
This brings us to Audience, in other words, a Needs Assessment. Analyze the existing workforce demographics to determine the needs of different categories of employees. In our experience, employees in the manufacturing industry:
l have a lot of muscle and soft tissue problems particularly in their back and shoulders, so practitioner coverage is a must
l are on their feet a lot, so footwear plans need to cover orthotics and orthopedic shoes
l are on projects requiring close attention to detail, so eye care and vision care are necessities
l are experiencing stress and anxiety around layoffs and job loss, so many are on anxiety and antidepressant medication
l use short term disability insurance frequently, not only for stress and mental health concerns but also for injuries to hands, arms, and backs.
To retain employees, your plan should cover these needs. When looking to attract new talent, anticipating the needs of the ideal employee will help to attract just that type. For instance, younger employees usually value paid time off, whereas older employees may place a higher value on retirement income plans.
Employee needs go beyond the fundamental deliverables of a plan and extend to communication and administration as well. Specifically, reimbursement percentages paid within the plans (such as 80% vs. 100% for medications), and the percentage of premiums covered by their employers, is information often misunderstood. A benefits plan is a retention tool only if your employees are aware of the value of the benefits package.
Your Strategy builds off these assessed needs and organizational objectives to determine employee eligibility, coverage levels, plan features, and exclusions.
l Eligibility refers to whether you will provide the same benefits to all employees, or provide different benefit levels based on employee classifications. Common classifications affecting this would include job status or full time vs. part-time.
l Coverage Levels are typically communicated as a percentage of cost coverage for specific health expenses. However, for Life Insurance, Short Term Disability, and Long-Term Disability, it is determined by the overall maximum, which is the maximum amount of insurance a carrier will provide under the terms of the contract.
l Plan Features include Life Insurance, Accidental Death and Dismemberment, Dependent Life Insurance, Short Term Disability, Extended Health Care, Dental Care and Critical Illness. Each of these plan options may be included or excluded and can have varying levels of coverage. It is worth noting that to remain fully non-taxable for the employee; the employee must pay 100% of the life insurance, accidental death, and dismemberment, dependent life, critical illness, and disability (both short and long term) premiums.
Strategically designed benefits plans shortlist the potential combinations of these factors based on organizational and employee needs. An example of this is one of our CNC Machine Shop clients, previously a 32-person team that has reduced to eight people in the past year. They implemented a reward program for employees who have stayed with the company for five years. Once they reach the five-year mark, the employer pays 100% of the Extended Health Care and Dental Care premiums.
With a similar approach, a number of our clients contribute a higher percentage of the premiums as employees remain with the company for one, two, or three years. In this case, their goal is to grow a new workforce and target more immediate retention.
Another common tactic is to provide a health spending account, which allows employees to determine what areas they need to allocate funds to cover health costs that would otherwise not be provided through regular plan features. This enables employers to ensure they are covering the needs of a diverse workforce and that all of their employees feel valued.
Developing creative compensation packages that look at more than just the hourly wage is critical in defining your company’s edge in an increasingly competitive labour market. Looking at the total package from the perspective of current and prospective employees, aligning it with your company’s management plan, and employing specific benefit strategies will help you maintain your core people and ensure you have skilled workers at every stage of the economic cycle.
Earl Shindruk is President and founder of Optimax Benefits, an Edmonton-based benefits broker, and has worked in the benefits industry for 24 years.