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When It's Time to Change Your Benefits Menu

Adding and cutting offerings can keep benefits programs fresh

A woman is talking on the phone while sitting in front of a laptop.

When Thorne Research, a nutritional supplements company, moved its operations from Idaho to Summerville, S.C., it moved only about a third of its workforce of 385 employees and hired the rest in the new location. The company quickly recognized that its new employees in South Carolina valued different types of benefits than its Idaho-based workforce had. If the company was to attract the necessary talent to pursue its ambitious growth plans, it needed to make some changes.

"We had to compete for talent in a new market, so we conducted benchmarking surveys to determine what to offer," said Cynthia Keaton, the company's vice president of human resources. "We recognized that we couldn't just rely on the same benefits."

The analysis showed that the company needed to offer more paid time off in the form of three additional floating holidays. The prospect of free lunches offered through an onsite cafeteria, which was extremely popular at the former Idaho facility, did not excite the new South Carolina employees, but more help with retirement savings did.

"They wanted a stronger 401(k) match, so we applied the money we would have spent on the cafeteria space, preparation facilities and food on providing that match," Keaton said. Although the employees who had made the move from Idaho to the new location missed the free lunches, the company had to use its benefits dollars to compete most effectively for talent at its new location, she said.

Dynamic Benefits

Thorne Research's experience illustrates the importance of regularly evaluating benefit programs to make sure they are still the ones employees want. "Many employers only conduct reviews of their benefit programs in reaction to internal cost pressure or because of annual benefit cost increases," said Christopher Calvert, senior vice president for Sibson Consulting in New York City. "When things are going well, there's less incentive to consider changes that might be a better use of their money and result in programs that are more valued by employees."

As workers age and new employees join the organization, employers now have to offer benefits that appeal across generations. That's why Actualize Consulting, a financial services consulting firm with 85 employees based in Washington, D.C., reviews its benefit programs and commits to adding one new benefit each year.

"Our employees' ages range from their 20s to their 70s," said Kerry Wekelo, the firm's chief operating officer. "We need to accommodate everyone."

Calvert urged employers to analyze employee demographics to learn how many employees are in specific income brackets, geographies and general life stages, such as those new to the workforce, workers who have families and workers approaching retirement. Employers can then evaluate benefits based on facts about the workforce rather than relying on general assumptions or one or two requests.

"Use data, not anecdotes, to drive your review," said Calvert. "There are squeaky wheels in every organization, but benefits professionals should make decisions based on how to impact the most employees" in a positive way.

Just because employees are not actively complaining about their benefits doesn't mean that they are satisfied with them. "They may just be griping about it to colleagues," he said. "Or worse, they may not know a benefit exists or how to use it."

Get Employee Feedback

To understand what types of benefits appeal to its diverse employee population, Actualize Consulting asks its employees what they want. Wekelo conducts periodic employee surveys, and, to encourage employees to provide customized responses, she uses a comment box so employees can suggest new benefit programs. This is how the firm identified employees' desire for additional ways to save money, which led to the creation of a profit sharing plan.

Recently, the firm expanded maternity leave from 60 percent pay for six weeks following a regular delivery and eight weeks after a C-section delivery to 100 percent pay for both. It also added a week of paid child-bonding leave for both mothers and fathers following the birth or adoption of a child. "These new benefits don't always cost of a lot of money, but people appreciate them," said Wekelo.

Vigilance Necessary

Keaton recommends validating any employee feedback on benefits. "At least conduct focus groups," she said. "When we have done this, we sometimes find that new benefit programs are not as valuable to employees as we initially thought." The company plans to use this approach as it considers adding tuition reimbursement to its benefits lineup.

Employers can use the insight gathered through surveys and focus groups to enhance benefit communications. "The lead-off when rolling out new benefits should be, 'The data came from you,'  " Keaton advised.

It is also important to be transparent about what benefits the company can afford to add in a given year. "Explain why we can't add X and Y programs in the same year," she said. "Communicating this makes all the difference in the world and provides a tremendous return on the time spent."

This benefit feedback and review cycle may reveal programs that employees are overlooking. "People sometimes forget what we offer, so we remind them and keep information about those programs available," said Wekelo. "But we also kill programs that prove unpopular." The firm ended a program that provided free mass-transit passes because employees didn't need or use them.

Unused benefits are inevitable as the employee population changes, and employers should be prepared to modify, adjust or end these programs as needed and move on. "Be open to the fact that the workforce is constantly changing, and accept that what was effective in the past may not be effective in the future," said Calvert.

Handling Fallout After a Benefit Is Dropped

HR consultant and blogger Sharlyn Lauby recently interviewed Samuel Hoffman, a partner with law firm Foley & Lardner in San Diego, about how to end a benefit offering. 

"Whenever an employer decides to eliminate a benefit, there is a calculus that the employer will perform in which it weighs the savings from eliminating the benefit against the cost in employee relations and [any] legal risk," Hoffman said. "If, after a decision to eliminate a particular benefit has been announced, the amount of negative feedback the employer receives is greater than it anticipated, there is nothing wrong with reversing the decision and turning that reversal into a virtue by saying, 'We listened to you and heard that this is really an important benefit to you, and therefore decided to retain it after all.' "

However, if there are just a few complaints, "then it is perfectly reasonable to go to those employees and tell them that while you understand that the benefit was important to them, on a broader, employerwide basis, it was not particularly valuable," and it was better for the general workforce to offer a new benefit or enhance an existing one, Hoffman advised. 

"If you can find some way to work with the employee to transition them through whatever hardship is occasioned by eliminating the benefit, that is to be explored," Hofffman said. "Otherwise, you simply express sympathy and continue to move forward with your decision."

Joanne Sammer is a New Jersey-based business and financial writer.

Related SHRM Article:

Employers Boost Benefits to Win and Keep Talent, SHRM Online, June 2019


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