Many of today’s employees work in an environment where companies fight to hire the best. In its February 2010 review of hiring trends, HRinfodesk.com (a site dedicated to Canadian payroll and employment law) reported that one significant trend is a move to recruit top talent to replace low performers. Companies, it said, “will need to rethink their methods for attracting talent if they want to gain the confidence of an insightful workforce in recovering economic conditions.”
When these desirable potential hires attend interviews, they are as much inclined to ask the interviewer why they should want to work for the company as the interviewer is inclined to determine if they would be a good fit for the organization. These are workers who expect more from their workplace, over and above just salary. And these conditions—along with a benefits budget that seems to “buy” a little less every year—are forcing employers to become more nimble in juggling benefits costs while offering a package that appeals to top talent.
The traditional benefits of life, health, dental and disability will likely always be the pillars of a well-rounded plan. But companies are now starting to seriously consider tweaking this traditional plan with some modifications that appeal to specific employee groups—and may make fiscal sense.
The executive
Let’s start with the company’s leadership. Executives must be more than just good workers. After all, these are the people who will lead an organization to its five-year business goals and beyond. The same executive who has to grasp how to maximize opportunities when times are good must also be able to steer a company through an economic crisis.
“Executives are sometimes handled separately from the rest of the employee group benefits program,” says Judy Buckley, vice-president of consulting with Pal Benefits. “An organization with a strategic leadership plan that relies on healthy, whole and satisfied executives should consider how effective enhanced non-traditional benefits could be in the effort to attract and retain key leaders.”
Consider the following non-traditional benefits for executives.
Out-of-country coverage – Out-of-country travel insurance is a common group benefit intended to cover employees for medical emergencies outside of Canada. An enhanced out-of-country benefit means that if an executive requires a certain medical procedure and there is an extended wait time for it here, he or she can undertake the procedure outside of Canada with many of the expenses covered. Although it’s expensive, out-of-country coverage is appealing to top leadership, which will appreciate access to swifter medical attention—wherever in the world it may be available.
Executive health assessments – Losing an executive to disability can be an organizational catastrophe, so keeping this group healthy should be a top priority. An executive health assessment is a complete medical workup and physical exam, including blood work and other medical tests. A third-party private clinic of doctors and nurses oversees the assessment, which includes follow-ups on progress and treatments. An organization may provide this special handling of its executives’ health by fully or partially subsidizing the cost of a private clinic medical workup.
The general employee population
For non-executive employees, there are ways to provide additional funds that are not salary-related yet also offer the means to improve employees’ health and well-being. Here are some options.
HCSAs – Many people are already familiar with healthcare spending accounts (HCSAs), also called health savings accounts. This system of employer-supplied credits or funds allows an employee to be reimbursed for medical or dental expenses that are not covered by a company plan.
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Wellness spending accounts – These accounts, like HCSAs, provide employees with additional funds for wellness-related expenses. But while HCSA funds can be used only for medical or dental expenses approved by the Canada Revenue Agency, a wellness spending account may pay for sports equipment, for example.
This is a great addition for a company that wants to encourage healthy living and work/life balance. Providing such a feature demonstrates an organization’s commitment to employee well-being.
PSAs – Organizations may also adopt a form of flex account to provide employees with a set amount of funds that can be used for non-traditional expenses in addition to allowances for more traditional healthcare expenses. For example, a travel company that has such an account allows employees to tap into the personal savings account (PSA) for coverage of private travel expenses, which also encourages employees to participate in the company culture.
Employers can be creative in providing coverage for expenses that are not limited to health benefits, would be appreciated by employees and reinforce a company core value or service, thereby further strengthening the employee/employer relationship.
Rewards for healthy practices
The idea of allowing employees who exercise healthier life choices to pay a smaller portion of their premium costs might challenge our Canadian perceptions of privacy and fairness. But this practice exists and has been successful in the United States. And Canadian plan sponsors that are tired of annually increasing costs may eventually decide to wholeheartedly embrace this concept, too.
Leading U.S. example — Safeway’s grocery chain is famous for its Healthy Measures program, which was designed to help its corporate non-union employees identify and understand their major health risks and to encourage them to engage in healthy behaviours. This, in turn, lowers employees’ chances of suffering from heart disease, diabetes, some forms of cancer (e.g., colon cancer may be linked to a poor diet) or other health concerns, particularly those relating to manageable behaviours. Employees who participate can qualify to receive substantial discounts on their healthcare premiums if improved test results indicate healthy practices.
According to a June 2009 article in the Wall Street Journal by Steven Burd, CEO of Safeway Inc. and founder of the Coalition to Advance Healthcare Reform, the results have been remarkable. “During this four-year period, we have kept our per capita healthcare costs flat…while most American companies’ costs have increased 38% over the same four years.”
Employee participants experienced their own health and financial improvements as a result of Safeway’s program. The 2010 follow-up tests showed significant improvements in blood pressure (43%) and body mass index (17%), resulting in rebates for some employees. If an employee “passed” all four tests (tobacco use, weight, blood pressure and cholesterol), annual premiums were reduced by $780 (single) and $1,560 (family).
While there have been subsequent challenges to Burd’s statements—many of them political lashings at President Barack Obama, who has praised Safeway’s approach—Safeway regularly gets inquiries from other companies seeking to mimic its model.
Safeway’s program is currently offered only in the U.S. But Betty Kellsey, public affairs manager with Canada Safeway, says, “We’re very proud of the success of our Healthy Measures program in the U.S. and are currently looking at opportunities to bring to Canada this concept of rewarding and recognizing employees’ healthy choices.”
Canadian uptake — Canada Safeway is not the only Canadian organization considering rewarding employees for healthy practices—or at least for healthy intentions. The Economical Insurance Group (TEIG), a property and casualty insurance company, launched a health and wellness program with the assistance of its benefits provider in 2008. More than 70% of the company’s 2,500 employees across Canada participated in screening clinics, wellness assessments and competitive team initiatives to improve healthy practices.
As a reward for participating in the program, TEIG employees accrued up to $300 a year, which they could then use for health- or fitness-related purchases. Employees were rewarded simply for signing up to participate, regardless of whether or not they succeeded in improving any behaviours. Although employers may see this as a potential loss (funding initiatives based on intentions rather than results), enough employees from the 70% who participated moved into what was established as “the healthy zone” to result in a healthier group of TEIG employees and improved financials.
According to Sun Life Financial’s manager of health and wellness solutions, Erin Dick, who helped TEIG establish and implement this program, “Over a two-year period (2008–2010), TEIG avoided $343,198 in costs associated with unhealthy markers such as smoking, high blood pressure, unhealthy cholesterol and high body mass index.”
Clearly, the concept of rewarding employees for healthy behaviours benefits employers, too, which may realize financial improvements through better group insurance rates, fewer disability claims and better presenteeism. Employers will also likely look forward to reduced drug expenses due to fewer manifestations of the diseases associated with an unhealthy lifestyle or poor management over those diseases.
It’s not just about money
The sky’s the limit when it comes to creative ideas that may be effective in your workplace, but plan sponsors should consider and choose wisely before including a new benefit or modifying a current one. And it’s not just the budget that is of concern—plan sponsors also need to look at employee demographics, competitor offerings, company culture and, in some cases, the public perception of the company.
Plan sponsors may think they have to invest even more into their benefits program when modifying or improving, but that’s not necessarily true. Employers should take the time to evaluate their employee demographics and culture, as well as how their competitors compensate employees. This will help them to more wisely allocate their benefits investments to achieve HR goals, because decisions will be based on a unique employee demographic and objectives.
While benefit enhancements and creative non-traditional features often have an associated cost, they may be more important to a particular employee group than other underappreciated benefit features. It might just be a matter of shifting the distribution of funds or offering employees a degree of choice to reduce or eliminate less-valued features and enable more-valued benefits. In addition, Steven Osiel, vice-president, total rewards, with Pal Benefits Inc., says, “An employer faced with multiple benefit options might want to choose only a few—but make them spectacular—as opposed to trying to offer a little bit of everything.”
In today’s competitive work environment, to impress prospective quality employees and keep the current ones proud of the company they work for, employers will need to go beyond the traditional benefits paradigm to meet employee needs.
Esther Huberman is a communications consultant with Pal Benefits Inc.