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Health and Welfare: A Critical Component to Your Total Rewards Strategy

By Clint Tripodi


Health and Welfare: A Critical Component to Your Total Rewards Strategy

 When considering total rewards, base and incentive compensation usually ranks first on the list, well ahead of the benefits component. However, more and more progressive companies are seeing the benefits component as a better differentiator in defining their employment value proposition; allowing for many more design options than just compensation.

We tend to design benefit plans top down, mostly from the employer’s point of view. But take a look at it from the view of the employee’s family. Whereas an employee’s compensation package is usually accepted as is and perhaps not even discussed until the annual merit cycle, benefits touch all family members throughout the fiscal year. This may be as ordinary as getting a prescription filled or as dramatic as a catastrophic medical event. Either way, the family’s benefit plan is typically more ‘visible’ on a day to day basis than the employee’s compensation.

Despite this, most companies leaned on traditional approaches which have worked well in the past: Smart HR professionals working with smart benefit consultants to design programs that meet certain cost requirements and balance the best interest of the employees and the company.

However, the aforementioned forward-thinking organizations are re-orienting the process and designing from the bottom-up.

An underlying theme in this approach is giving control back to employees. As the saying goes, “employees do not resist change as much as they resist being controlled”. We’ve all heard employees complain about the increase in premiums, deductibles, co-pays, introductions of HSAs, etc. A change to a fundamental reward, made outside of their input, affecting them and their family is cause for employees to become very vocal, and fast.

Do you want to undermine the culture you have been working hard to maintain? Make a serious mistake in your total rewards strategy and you will get there in a hurry.

How do you make employees part of the benefits solution and gain buy-in with the total rewards strategy? Consider the following suggestions:

  • Form employee benefit committees with the sole objective of gathering input on the design of benefits;
  • Develop surveys to obtain both employee and family input;
  • Educate your employees on the economic realities of a benefits plan from the employer’s perspective; they will appreciate the candor and transparency;
  • Articulate how the benefit plan is a major component of their total rewards package and put a real number behind this.
  • Provide personalized yearly compensation statements. Most employees (and their spouses) would be surprised at the actual costs;
  • Reinforce your total rewards with annual benefit statements, mailers, company newsletters, website, etc. If possible, include data showing that your offerings are competitive—your benefits consultant should be able to provide this for you;
  • Strongly reinforce your company’s total rewards strategy during the recruitment process and throughout the year during appropriate large group gatherings such as management meetings, town halls, etc.

Getting your employees engaged in a bottom-up approach to benefits and total rewards requires looking at this critical component through a new lens, but the work is worth the effort because the overall business impact is measureable.

You’ll strengthen your work culture, compete better for talent, improve employee retention and cost management, and perhaps gain a creative perspective from your employees that your HR staff and benefits consultant may not have discovered on their own.

Want to talk about a better total rewards strategy?

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Connect with the Risk Strategies Employee Benefits team at benefits@risk-strategies.com

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