Benefits philosophy 101

Many organizations, however, do not have a vision or philosophy that speaks specifically to the management and direction of their benefits plan. They have not quite decided what the guiding principles for their benefits plan should be, or what they want their plan to support or achieve. They may not have considered how their benefits plan relates to their compensation or recruitment objectives, or how they will use their plan to facilitate wellness initiatives or incent or reward specific behaviours. Additionally, many organizations that do have a benefits philosophy do not review it periodically for its continued relevance as the organization evolves.

When developing or reviewing a benefits philosophy, there are a few fundamental questions the leadership of an organization should consider to get started.

Why do we have a benefits program?
This question might sound glib, however, the answer provides important context. Are there market pressures that make having a comprehensive plan a necessity? Does your organization have a more patriarchal culture where you want to look after your employees? Is the benefits program treated as a component of compensation, or does your organization treat it as a separate entity?

What do we want our plan to provide coverage for?
Are you looking to provide coverage for employees in case something catastrophic happens, or do you wish to provide coverage for everyday supplies and services that keep them well? Do you wish to provide coverage for employees should they hurt themselves pursuing a leisure activity outside of work hours, or do you want them to have coverage at work only? Does your organization want to cover both your employees and their dependents, or have coverage for dependents the responsibility of the employees who have them? Do you want to provide short-term disability, or would you prefer employees access EI benefits for short-term disability? Though the responses to these questions may seem harsh, there are no wrong answers here, simply the interpretation of your company culture on your benefits program.

Do we wish to have equity between the benefits and company contribution that are offered to all employees, regardless of their compensation, years of service or role?
Some organizations choose to have enhanced or different benefits for their leadership group, for reasons that can include competition for talent, development strategy, retention concerns or culture. Other organizations choose to have the same benefits offering and company contribution for all employees, regardless of their role in the organization. Some organizations choose to provide different benefits for part-time or seasonal employees, while others put parameters around eligibility for the participation of these non-regular employees in the benefits plan. Still other organizations with retention challenges in a highly competitive labour market choose to offer benefit enhancements when an employee has been with them for a predetermined number of years.

Are there specific behaviours we want to encourage or reward?
Do you wish to encourage smart consumerism in our employees? Do you wish to incent employees with chronic health concerns to be compliant to their treatment paths regardless of the cost to the company? Do you want to reward employees who embrace healthy behaviours, or is equity for all more important?

How do we wish to address cost sharing?
Does your organization want employees who have high or frequent claims to have the same out-of-pocket expenses as employees with low claims? How will our organization deal with premium increases or decreases in the future—will they be shared equally between the company and your employees, or will your current company contribution remain static?

While these questions are a beginning, there are, of course, other considerations, such as the presence of competitive, political, cultural, economic or regional issues that the plan needs to address, the degree of risk the organization is willing to assume and the degree of choice the organization wishes to give its plan participants, among others.

Next steps and examples
Once an organization has answered these questions, the leadership group can use the responses to guide decision-making as they go forward, and ensure that the decisions they make about cost containment, plan design changes or changes in cost sharing align with the principles developed here.
One company’s philosophy focused on providing coverage to employees but also support to their families. The employees of this organization often work long hours or travel for business, so it was important to this organization that it provide benefits allowing employees to fulfill the expectations of their jobs while helping their spouses or partners at home. Consequently, its benefits includes a flexible spending account, which provides benefits for work/life balance services such as home cleaning, snow clearing and yard maintenance, as well as providing access to emergency childcare and prepared meals to take home to their families. The organization also put in place a comprehensive employee and family assistance program with a variety of means for accessing counselling services and support.

Another company developed its philosophy around providing coverage to its employees to keep them well and productive at work. It also wanted to focus its benefits coverage on employees rather than their dependents. Work at this organization was physical, and many employees were smokers. The wellness committee of this organization targeted the reduction of cardiac risk factors as its main objective. The benefits plan was enhanced to provide broader coverage for smoking cessation, home blood pressure monitors and nutritional counseling for employees. The company leveraged its employee assistance program provider for healthy eating and stress management lunch-and-learn sessions at work, and kept a supply of smoking cessation support materials in the HR department. The company also worked with its vending machine company to provide a significant employer subsidy toward the cost of bottled water and reduced the number of soft drink vending machines at its worksites.

Over time, as the plan renews, or as an organization needs to make decisions regarding plan design or cost, referring back to the benefits philosophy will provide the organization with the principles by which it can make the changes that address its issues while remaining true to the foundation of its design and direction. This also helps the organization avoid making reactive decisions that run contrary to the guideposts of its philosophy and prevent leadership from asking, Why are we here?