Employers may also want to add in some extras. In the oil patch, most companies offer a broad-based annual bonus program that extends beyond executives and management to other employees across the organization. Long-term incentives, such as phantom shares, performance share units and stock options, are also broad-based and serve as important retention tools. Acting pay is offered when an employee is asked to take on additional or more senior responsibilities for periods up to a year. Energy companies frequently rely on this tactic to fill talent shortages for superintendent, field or plant supervisor roles.
Oil and gas companies commonly offer generous policies relating to time off. This “paid time not worked” can be days when the office is closed or paid floater days. In Calgary, it’s not uncommon for corporate offices to close during the Calgary Stampede and around Christmas. Floater days can be taken whenever the employee chooses. All forms of paid time off can add up to as many as 25 paid days off (including statutory holidays) beyond the employee’s regular vacation entitlement.
Oil patch workers also enjoy earned days off, usually every other Friday. This is a good example of how employer flexibility can increase employee satisfaction. Called “nine-eighties”, employees work a total of 80 hours over nine days and get the 10th day off. Although the employee has earned the day off by working longer hours, there is a perceived value attributed to having a long weekend every other week, which may increase employee engagement.
There are many factors that create employment value for current and prospective employees. Western employers are responding with compensation and benefits strategies that are outside of the norm compared to other regions in Canada. In the West, cost management has taken a back seat to the need to attract and retain talent.
Benefits Plus
Benefits have long been defined within a relatively narrow context: life insurance, accidental death and dismemberment, disability, health and dental and, more recently, EAPs and critical illness. Today—particularly in Alberta—plan sponsors are responding to requests for concierge services, long-term care, eldercare and pet care. Traditional boundaries are being stretched as plan sponsors look to leverage the benefits plans to better attract and retain talent.
What do employees want most? They want flexibility. Flexible benefits plans are increasingly popular, but the days of cafeteria-style plans are waning. Full-blown flex plans are being streamlined as plan sponsors realize that the relatively small incremental value that employees attribute to the additional options does not justify the increased costs of plan administration. Simplification also reduces the cost of communication required to support elaborate flex plans.
Flex is now simple—add a spending account. Or, for a more inventive approach, give employees a non-taxable healthcare spending account and a taxable wellness account to fund a fitness membership, sports team registration or nutritional counselling, or to pursue hobbies such as gardening and cooking to de-stress. Employees appreciate the freedom to make choices, and wellness accounts are a popular vehicle to put them in charge of their own spending. And wellness is not restricted to the energy sector. In the public sector—particularly in Alberta and B.C.—staff retention is critical, and often, fewer dollars are available for cash compensation. Wellness initiatives are gaining ground as a relatively inexpensive way to create a difference in the employment brand.
Promising Technology
Plan sponsors are often reluctant to add a new benefit—particularly if it increases the funding and administration of the plan. Post-retirement and out-of-country health insurance benefits are good examples. However, employers may choose to offer a suite of sponsored products for employees to purchase online from insurers. The insurance marketplace is responding by making more individual benefits products available. Looking ahead, insurers may offer the means to help plan sponsors satisfy employee demand for certain benefits.
Technology also enables customized communication. With immigrants expected to make up an increasingly large percentage of the workforce in the future, plan sponsors view this as an important differentiator. The ability to communicate benefits plan information in an individual’s native language can be a powerful motivator for employee satisfaction and engagement.
Outside the Oil Patch The need to control and reduce costs remains critical to long-term survival in some non-energy sectors, such as forestry. Due to the heavily unionized nature of this industry, plan design change is generally not an option. Disability costs are an issue because of the physical demands of the job, combined with the aging employee demographic. A focus on more effective management of disability claims may facilitate an earlier return to work. Keeping healthy workers on the job is key to controlling benefit costs and sustaining the labour pool. |
Employee self-service is also on the rise, and employers in Western Canada are early adopters. Online access enables employees to do more of their own benefits plan administration, such as annual enrollment, updates and claims checking. To be successful, plan sponsors must communicate and train their employees well on how to use the system. If not, the opportunity to streamline administration and improve employee satisfaction could be missed.
As the pool of potential full-time employees shrinks, employers are challenged to think differently when staffing their organizations. Recruiting part-time employees and contract employees, and even rehiring retired employees, is often necessary. Plan sponsors need to respond by adding coverage or reducing the eligibility period to qualify for benefits. Benefits for part-time workers are increasingly commonplace in many service industries.
New Frontiers
Looking forward, pet insurance may become a popular benefit. The new generation entering the workplace is more likely to have a cat or a dog than a child. Pets are their dependents, and vet bills are not getting any cheaper. The same principle of group insurance could be applied to the purchase of pet insurance—leverage the collective to secure a better deal for the individual—to meet this growing demand.
In addition, gas prices are driving up the cost of commuting, and more employers are thinking about how they can alleviate the pain for employees. Company-paid parking is a big-ticket cost, but company subsidies toward public transportation are more affordable. Flexible work schedules, increased teleconferencing and telecommuting from home are other ways to soften the impact of higher gas prices.
Western Canada will continue to be a hotbed for innovation in compensation and benefits practices. Economic growth and employer ingenuity are driving new and creative enhancements to the employment proposition—meaning that workers can look forward to opportunities, enticements, incentives and innovations that will be the envy of the rest of Canada.
Brian Lindenberg is worldwide partner; Iain Morris is national partner; Rose Kwan is principal; and Matthew Lerner is an associate with Mercer. brian.lindenberg@mercer.com; iain.morris@mercer. com; rose.kwan@mercer.com; matthew.lerner@mercer.com
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© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the October 2008 edition of BENEFITS CANADA magazine.