As we’ve been discussing throughout this series, several external drivers – from the changing nature of work and the workforce to digital disruption to employee expectations for transparency – necessitate a renewed focus on Total Rewards. In Part 3 of this series, we looked at these and other factors driving the need to modernize and invest strategically in the right Total Rewards programs to optimize performance. Benefits are no exception to the need to modernize: Employees are seeking customization and personalization of their benefits portfolio, especially as the workforce becomes more diverse. Global benefit cost and risk continue to put pressure on company budgets, and benefits technology has created opportunities to improve the employee experience and the administration of benefit plans.
Given this context, “modernizing” benefits is not purely about revisiting the portfolio of offerings; it’s also about finding more efficient ways to deliver, finance and manage benefits programs.
Here are five important keys to consider when modernizing benefits delivery to meet today’s standards:
1. Offer a purpose-driven portfolio of benefits.
A healthy company culture embraces wellbeing, inclusion and diversity as part of its organizational purpose. Benefits that align with organizational purpose and culture, as well as mission and values, better reflect the company image and reputation. Modernizing the benefits portfolio means thoughtfully aligning with business strategy, desired culture, the Talent Value Proposition, market norms and employee preferences to achieve a purpose-driven program.
Consider: Voluntary options offer greater choice and flexibility in addition to core protection to help meet the preferences of an increasingly diverse workforce. Initiatives that go beyond traditional offerings to address employees’ physical, emotional, financial and social wellbeing should be considered as part of any modern benefits program.
2. Optimize the financing of benefits programs.
Low interest rates, rising health care costs and increased longevity contribute to the relentless pressure on companies to manage benefit costs, which are crowding total compensation budgets. Optimal financing is key to ensuring companies maximize the capital spent on these programs. This means allocating money effectively to programs employees most value and leveraging global scale to get the best deal on the benefits offered.
Consider: A systematic approach to measuring and evaluating risk enables companies to be more agile in their ability to capture legislative and pricing opportunities to reduce costs and transfer risks to third parties.
3. Use technology to engage employees and help them make informed choices.
Using technology to educate employees and provide more engaging tools to help them make informed decisions makes it easier for them to achieve their wellbeing objectives — while increasing their engagement and productivity. A user-friendly interface that provides employees with choice and flexibility to personalize their own experience is also key to modernizing benefits strategy and delivery.
Consider: Companies that effectively leverage communications and benefits technology to treat employees like customers tend to have employees who are more engaged with their benefits, make better choices, and value their benefits commensurate with what companies are spending.
4. Gain efficiencies through operating model and administration technologies.
Complying with legislative and regulatory changes can be costly and time-consuming. Inconsistent global governance, manual administrative processes and legacy systems can further constrain resources and increase the costs and risks of sponsoring benefit programs. Companies that leverage benefits technology to improve data interface and security and streamline administrative processes are more agile and better able to keep pace with modernization trends.
Consider: A global technology platform, digitized and automated administration solutions, and a consistent global operating model with clearly defined roles and responsibilities can help optimize internal and external resources and reduce administrative and compliance cost and risk.
5. Use data-driven insights for informed decision making.
Companies that use data-driven analytics and insights to inform their benefits strategy can make better decisions, control costs and risk and help foster employee wellbeing. While the specifics of the benefit programs offered may vary for different segments of the workforce or around the globe, the governance protocols for decision making and measurement against objectives should be consistent throughout the organization.
Consider: Analytics related to competitive market positioning combined with actionable insights into employees’ benefit preferences help ensure the programs are competitive and valued by employees.
To begin modernizing your benefits strategy, we recommend the following three-step approach:
- Define specific and measurable goals for modernization that are anchored in business, talent and reward strategy. For example, are you meeting the needs of a diverse workforce? Is there a commitment to diversity and inclusion that is part of your organizational fabric? How can this be reflected in your benefits offerings?
- Understand the current gaps in your modernizing agenda, and market best practices. Are there legacy approaches in place that are difficult to unwind? Is there a lack of understanding regarding what employees really want?
- Develop a plan by prioritizing actions to systematically migrate to a modern benefits program. What actions can provide the biggest bang for the benefits buck? What actions might require resources and further analysis to consider implementing later on?
Most importantly, don’t ever expect to tick “modernization” off your to-do list. Modernizing benefits is an ongoing concept that needs to change as your company and workforce evolves, and as the market innovates. For some companies, supplying basic core benefits might suffice. For others, changing the way benefits are delivered or offering more choice could be a significant step forward. The key is not to innovate for the sake of innovation but to set goals for your benefit programs and figure out how best to achieve them. And then take a fresh look at how these goals align with your organizational purpose each year.
The complexities of meeting the benefit needs of a changing and disparate workforce is a challenging and often elusive target. The needs of talent will change, and how organizations react will change as a result. But the systematic structure in which these actions are assessed and managed will serve companies well in achieving the modernization agenda. Whatever your plan for modernization, it needs to be agile enough to adapt as circumstances change in order to be truly effective.
Previously in this series: 4 Ways the HR role is pivotal to M&A success
Bill Gulliver, Global Co-head of Retirement, Human Capital and Benefits
Cecil Hemingway, Global Co-head of Health and Benefits, Human Capital and Benefits
Amol Mhatre, Integrated Solutions Leader, non-North America, Human Capital and Benefits