The Future of ‘Benefits’ in the Workplace

We’ve been talking a lot about the future of the workplace and the trends we will likely see in the coming years, but what does all this mean for the world of employee benefits?

With a diversity of demographics – older workers, Millennials, and the sandwich generations – and the rise of mobilization, digitalization, globalization, and dynamism in general, businesses need to rethink their position in regards to employee benefits.

There has been a fair amount of talk about companies’ need to add more tailored and inclusive solutions to their offerings, but why not challenge ourselves? Let’s ask whether we need to break down and rethink the concept of ‘benefits’ altogether.

Looking at any dictionary or traditional business management books, we find ‘employee benefits’ (also called fringe benefits, perquisites, or perks) are defined as in-kind compensation, provided to employees in addition to their given salaries. The variety may include offerings such as housing, insurance, retirement benefits, reimbursements, and things like sick leave, vacation, social security, profit sharing, etc.

The purpose of employee benefits is described as “to increase the economic security of staff members and, in doing so, improve worker retention across the organization.”

Now read that definition again and ask yourself: “Is this really the purpose of benefits?” If so, this time try asking, “Should it really be the definition going forward?” From another angle, are we really offering employees benefits with the intention of hiring the best talent and/or retain them in the workplace? Do those ‘perks’ really impact an employee’s engagement and sustained satisfaction?

We believe not…

We think the future responsibility of an organization may require embracing the variety and needs in their employees’ lives. After all, we are all human. We have unique needs just as we have unique strengths and motivations, and those needs may evolve depending on the different phases and circumstances of life.

Let’s look at an example: Say we hire an employee who’s about to finish her MBA. Should it really be a ‘perk’ to give this employee time to attend classes and/or reimburse a part of her tuition costs? Stop and think about it… What are the consequences of not recognizing the employee’s current reality? Whether we acknowledge her condition or not, she will have to go through the experience. In the absence of the right sort of support, though, would she not be splitting her attention and focus between school and work? Would she not be stressed? Would her stressed mind, body, and soul not interfere with her creativity, productivity, and level of collaboration? Of course it will!

One of the ‘best’ companies I worked for offered me a five-digit bonus in shares, vesting over a 4 year period when, coincidentally, I was getting married. As grateful as I was for the award, I couldn’t be thankful. Why? Because I felt like their ‘love’ (meaning the show of recognition) was conditional. The recognition was only there if I was willing to stay with the company another four years to collect the shares.

Seriously though, as any of us who got married relatively young knows, one needs cash most during that time because bills seem to come in pairs… ☺ I wanted to shake our executives to say, “No really, I only need 5K in cash vs. 30-40-50K vesting over 4 years right now,” but couldn’t.

The truth is: Benefits should be less about hiring or retention and more about understanding, recognition, and support. ‘Humanizing the workplace,’ we call it; putting ourselves in others’ shoes to recognize their current need and supporting them in the best way possible.

So, then, when it comes to the future of benefits, here are a few of our recommendations in terms of how to reposition yourself:

1. Recognize changing workplace dynamics: A convergence of forces from globalized markets, changing demographics tonew customer needs, and evolving competition is transforming the workforce. It is imperative for organizations to simply take the time to visualize their future workforce.

2. Get to know your employees: All individuals are unique, and employees have a vast array of needs and values. Therefore, it is critical that organizations take time to understand employees’ individual attitudes, motivations, etc. Note that there is no way one standard employee benefits package, intended to meet the needs of your entire workforce, can ultimately meet them all.

3. Design your solutions for integrated lifestyles: Acknowledge and accept that, as an employer, it is the organization’s responsibility to design, fund, and implement benefit and reward strategies best suited to their workforce. Some strategies may continue to involve traditional approaches, in which employers closely manage plan funding and administration; with others, you may need to serve as a “facilitator” by empowering individuals to take more direct ownership of their benefits.

4. Take a consultative approach and create a dialogue: Whether you take a traditional or a new-age approach to designing your company’s benefits, it will require an increased emphasis on education, communication, and behavioural psychology. Motivation involves three psychological processes: arousal(which initiates action), direction (the path taken to accomplish goals), and intensity (the vigour and amount of energy employees put into reaching the goal). It will be critical for front line managers and service partners to be well trained to drive such conversations.
5. Embrace innovation and leverage technology: Foster innovation in the plan design, funding, and administration of a variety of choices to effectively support workforces that are global, mobile, independent, and unique. What’s more, invest in technology to make the use of selection, implementation, and change easier on people.

Remember: The right focus on recognition and appreciation can help you create a stronger culture and strengthen relationships. Promote sustainability through humanizing your workplace and practices – one person at a time.

¹Source: Boundless. “The Psychology of Employee Satisfaction.” Boundless Psychology Boundless, 26 May 2016. Retrieved 16 Jan. 2017 from https://www.boundless.com/psychology/textbooks/boundless-psychology-textbook/workplace-psychology-21/workplace-psychology-106/the-psychology-of-employee-satisfaction-402-12937/