Employee Benefits Strategies

What is Employee Benefits Planning?

In its most general sense, employee benefits planning is a process by which an employer designs a package of benefits that is offered to supplement a prospective or existing employee’s base compensation. And in spite of the tumult that the global pandemic has wrought, the fundamental construct of employee benefit planning — design, pricing, compliance, communication, implementation, and administration — remains largely unaffected. But the challenges of navigating that construct in the real world have become more complex as employers try to recruit the best and the brightest, managing changing social and legal workforce needs, and accommodate the various expectations of existing employees, all while delivering sustainable business results.

To align itself with the unique aspects of employee benefit strategies that emerging throughout the U.S. workforce, a company must adjust its focus and processes in both significant and subtle ways. To begin, company decisionmakers need to clarify an organization’s mission, and align it with the company’s overall purpose and goals with respect to benefits. Shining the benefits spotlight on wellbeing (instead of wellness) is another simple yet profound aspect of an enlightened employee benefit strategy. Employers will also want to optimize the benefit experience and continue to find robust connections between healthcare costs and leveraging benefit options for their greatest value. In today’s world, employee benefit planning is becoming (has become) an essential component of a company’s overall success.

Why is benefits planning important?

The extent of a company’s success with its customers, targets, and competitors, as well as its prominence in the opinion of future and existing employees, is strongly correlated with that company’s employee benefits strategy. If designed haphazardly, the program will not serve its intended purposes of attracting and retaining employees or fostering their financial security. From an employer’s standpoint a poorly designed benefits plan may either hamper recruitment or retention or be overly costly to fund and complex to manage.

What Are Employee Benefits Strategies?

There are several types of benefit strategies for an employer to consider:

• Mandatory vs. Discretionary benefits — employers need to make strategic decisions about how or even whether to supplement mandatory benefits with discretionary options
• Non-traditional benefit options — employers must also strategize about providing benefits that improve the workplace or impact employees outside the office
• Post-employment options — employees may also wish to consider providing benefits that are triggered with the employment relationship is interruption or after it ends

These and other strategic concerns must be addressed in connection with a company’s employee benefit strategy.

Why is strategy important in employee benefits planning?

Indeed, it’s an axiom that bears repeating time and again: many aspects of a company’s success in its industry and internally with its own workforce hinge upon the strategy a company adopts in connection with the development and delivery of employee benefits. Strategic employee benefit planning increases the likelihood of success with:

• Recruiting
• Retention of existing employees
• Employee job satisfaction
• Employee engagement
• Reputational concerns
• Managing costs

How To Strategically Plan Your Employee Benefits Program

Given the vital role that employee benefits occupy in an organization’s overall success with its business endeavors and with its new and long-term employment relationships, employers that treat their benefits strategy as an afterthought do so at their own peril. To avoid the consequences of a casual approach to the complexities of putting together and operating an employee benefit program, there are various actions employers can take that are likely to produce optimal results. These steps guide employers who must for the first time create an entire benefit strategy process, from conception to implementation and reassessment and include:

1. Identification of Objectives — this step involves an overall assessment of an organization’s overall mission in general and its policy and specific goals with respect to employee benefits and encompasses:
2. Determining the benefit preferences of the market’s top candidates
3. Pinpointing the reasons and purposes that support the company’s benefit package
4. The scope of benefits that the company’s program will include
5. Whether the company’s benefits should provide multiple, robust options or instead offer less complex package that is easier to administer and understand
6. An assessment of whether to develop benefits gradually in the event the company is without any benefits program
7. Workforce Evaluation — this step involves a close look at a company’s target and existing employees to understand what those individuals need, what they want, and most important, what they value and could include various mechanisms such as:
8. Polling
9. Interviews
10. Focus groups or
11. Anonymous surveys

Utilization review of existing benefits is also a valuable tool to gauge usage and preferences

1. Financial Forecasting — this is a reality check step is best characterized a company’s reality check of priorities, scale, and cost and should include:
2. A comparison of a company’s benefit costs to its budget
3. An honest assessment of what the benefits percentage the company can afford to subsidize
4. An examination of the amounts employees should contribute, including possible variations based upon different employee categories or pay levels
5. Eliminating benefits popular with niche groups that are underused by the majority of employees
6. The financial burden that administrative costs impose
7. The manner of administration, whether in-house, via TPA, or through a broker
8. Program Design — Once objectives are solidified, employers must take the next step of mapping out the features of an optimal benefits program. There are various options that can be considered at this juncture, including:
9. Deciding whether your program will take a menu-driven approach on costs and choices
10. Reviewing the pros and cons of various vendor options and obtaining multiple quotes
11. Researching the availability of association or group plans
12. Clearly delineating between mandatory and discretionary benefit options
13. Determining eligibility differences between various employee classes
14. Reducing and refining the plan’s contours based upon discussions about trade-offs and financial priorities
15. Consideration of alternative self-funding arrangements that can help stabilize risk

It is advisable for companies to seek the guidance of financial and legal professionals as well as insurance intermediaries for additional input and expertise.

1. Employee Communication — this critical step, which is necessary for employee awareness and appreciation of offered benefits, (and to answer employee questions) is underscored by legal disclosure and other rules, and should incorporate multiple outreach channels such as:
2. Call centers
3. Health fairs -and-
4. Dedicated websites with cost calculators and comparison tools
5. Metrics Analysis — this strategic step follows actual implementation and administration of an employee benefits plan with a thorough data analytics that track employee engagement, shifting priorities, and unstable cost drivers.
6. Periodic Review — this final step in an employee benefit strategy ensures that a regularly company scrutinizes the outside forces and business developments that drive change generally in its industry and internally within its own operations and must incorporate an audit process that:
7. Keeps decisionmakers on point with competitors
8. Continues engagement between decisionmakers and employees
9. Fosters the recognition and development of new or different benefit goals and priorities
10. Takes a hard look at implicit costs, shifting priorities, and emerging value propositions

Strategic Employee Benefits Planning Tips

There are some tips and best practices that employers can consider that may help to foster the design of a strategic employee benefit plan with unique differentiators. These include:

• Pet insurance, a high demand benefit for employees who adopted animals during the pandemic
• An array of worksite amenities from onsite gyms and gourmet food courts to dry-cleaning and child daycare
• Time subsidies such as additional PTO, allotted time for charitable work, and support for diversity and inclusion initiatives
• Company subsidies that support employee interests such as charitable donation matching and payment of health club dues or the costs of a nutritionist or wellness coach
• Programs that provide pay in various kinds of situations wo employees who are not working, such as severance pay and placement services

Why Choose HUB For Your Employee Benefits Planning Needs?

It’s tempting to seek guidance from pro forma plans that other businesses have used. But your business is different, your finances are different, and the employees you hire will be different. Your existing workforce will have differing priorities, different wants, and unique needs that you will wish to accommodate to the extent possible. You now have newfound knowledge about exploring employee benefits in the harsh light of reality to determine what you can provide, and you’re aware that a competitive benefits package can sometimes lure a desirable employee to you even when you cannot offer as high a salary as a competitor. Proceed with a clear understanding that benefits can be costly, but also be aware that there are ways to alleviate some of the cost burden of a comprehensive benefits package, such as by using HDHPs and self-insurance arrangements for health care. In the long run, furnishing a comprehensive benefits plan to your employees, although costly, brings its own benefits to your business in quality employees, morale, and productivity.