For most HR leaders, the formula for making changes to your benefits plan is pretty simple: change = big headache. And it’s not just because of the extra paperwork.
Tinkering with benefits can take a toll on employee relations. The most minor change can be regarded with suspicion or become a sore point—even when it’s part of larger adjustments that result in a net improvement for plan members. But it doesn’t have to be that way.
Whether you’re going through a major pension conversion or simply tweaking your flexible benefits plan, life will be much easier if you embrace a different kind of formula—one based on the “economics of trust.” The notion that trust is the cornerstone of a positive and productive organizational culture is not new. But the connection between trust and a successful benefits change isn’t always recognized.
Author Stephen Covey (The Speed of Trust) has a simple “speed of trust” formula that sums it up nicely. The formula establishes the relationship between trust and the speed with which a change can be made, as well as the cost of implementing that change:
↓Trust = ↓Speed ↑Cost
↑Trust = ↑Speed ↓Cost
Covey argues that low trust acts like a hidden tax on every activity within an organization, including every communication and every interaction.
Of course, not all organizations have trust issues. But if mistrust isn’t a problem for your organization, you’re likely in the minority. The results of a recent poll conducted by Maritz Research paint a dire picture of employee trust levels. The poll found that approximately 25% of U.S. employees had less trust in management in 2011 than they did in 2010. Only 10% of employees trusted management to make the right decision in times of uncertainty, and just 14% believed their company’s leaders were ethical and honest. Another U.S. poll by Deloitte LLP found that lack of trust and lack of transparency were factors in the decision of roughly half of all respondents planning to hunt for a job in the coming months.
In Canada, trust levels have remained relatively stable compared with other developed economies, many of which saw a double-digit drop in business trust last year. That said, according to global PR firm Edelman’s 2012 Trust Barometer, only 32% of Canadians feel they can trust CEOs, putting them at the bottom of the trust scale (just below government officials).
What this means for successful benefits change
When it comes to managing benefits change, it’s not enough to send out a newsletter, conduct employee meetings, schedule webcasts, set up a blog, bombard members with tweets or launch an app. No matter how well designed or beautifully written your materials, without substance, they’re just propaganda. Any attempt to “sell” something to your employees will only provoke any underlying mistrust.
Moving beyond propaganda starts with an understanding of the interplay between three key variables. These are—in order of importance—leadership, plan design and media.
Leadership
Employees will take their cues, first and foremost, from their leaders. This includes official leaders (such as managers), as well unofficial leaders (you know who they are). You need to ensure that your leadership is onside. Unless your leaders visibly support the change and are willing to walk the talk, it will be tough—if not impossible—to sell your message to the broader employee population.
Plan design
Employees will judge your plan more by personal experience than by what they read or hear. For example, you can’t go around saying that your plan offers “peace of mind” if it doesn’t provide adequate disability benefits. On the other hand, even bad news will be accepted if employees understand why it’s necessary and believe it’s appropriate and fair. The best way to ensure that this happens is to involve your employees (or a representative group of them) in the decision-making process. Active employee involvement creates buy-in and acceptance.
Media
Finally, the medium adopted to communicate the message—whether it’s paper-based, electronic, face-to-face or some combination thereof—must be well crafted, honest and accurate. The goal is to provide a window on what’s going on and to make the change process as transparent as possible. This requires choosing the right channels at the right time. If the message isn’t accessed or understood, it can’t do its job.
In short, the key to successful change is trust, and the key to trust is aligning leadership, plan design and media. Get it right and the speed of change goes up and the cost of change goes down. Get it wrong and you’ve got one big headache.