When developing a strategic employee benefits plan, the main objective is addressing the factors – both internal and external – that will impact business growth. When HR professionals create strong long-term benefits strategies, it helps to create unanimity among stakeholders – reinforcing their position as a trusted advisor for decision-makers.
When an HR professional creates a strategic plan, they have the ability to:
- Assess the current needs and resources of their organization
- Define staffing objectives based on business goals
- Plan and design benefits strategies, including needs, assets, and outcomes
- Participate in budget forecasting
- Measure engagement and results
While the benefits to creating this kind of value may be obvious, how to move from a position that is reactive to one that is strategic isn’t always obvious. Employers tend to spend a lot of their attention on preventing turnover, attracting talent, and growing their business with their benefits plans. However, when you look at your employees as a resource, you can develop a benefits strategy that better supports your employees and accelerates their growth.
Here is what you need to consider when creating a long-term benefits strategy:
The Modern Workforce
The modern workforce is rapidly changing. Therefore, adopting a long-term benefits strategy requires employers to be aware of and flexible to these changes.
Employers everywhere now employ workforces that are far more diverse. These multigenerational workforces have varying needs depending on the tendencies and values of their generations. Because of this, employers must broaden their scope beyond core benefits and accommodate the various needs of different employee populations.
In the development of a long-term strategic plan, you will have to continuously revisit and revise areas of your plans as the workforce changes. Economic, personal, and geographical elements will need to be reviewed regularly (annually, if not semi-annually or quarterly). By reviewing these things more regularly, employees will have a much better understanding of the needs, wants, and overall satisfaction of their employees.
What You Can (and Can’t) Control
When creating a long-term benefits strategy, it’s good to start with your financial plan. Consider the parameters of your goals or any merit-based achievements that will establish stability financially.
Long-term strategic benefits plans can be expensive and run the risk of becoming more costly over time if not monitored appropriately. Most commonly, the core benefits will be the most expensive. Alternatively, other additional offerings (i.e. health and wellness, financial protection, retirement) can be less expensive for employers but equally valued by employees.
A careful analysis of cost drivers will help to create a strategy that is geared around cost control. Creating a long-term benefits plan around your financial plan will help you to better address the more expensive parts of the plan. With a well-rounded plan that addresses costs, you will be more agile when faced with the varying needs of a diverse workforce.
Expectation of Options
Offering additional voluntary benefits only does so much for your overall package and if you are not regularly and appropriately reviewing them, it will likely have only a slight impact on the cost control of your your core benefits.
Oftentimes, the consideration of voluntary benefits is influenced by financials and associated risk. While employee satisfaction will always be a major determinant during the evaluation of your benefits plan, it’s important to keep in mind the expectations of both the employee and the employer to assure there is cost alignment.
With a long-term strategy, prioritizing flexibility within your benefits plan is important. Offering a choice of benefits allows employees to allocate employer-provided funds towards voluntary benefits and again addresses the varying needs of your workforce.
Alternative Funding Arrangements
Don’t overlook the possibility of alternatives to funding. These funding arrangements will vary based on revenue and risk tolerance. For example, self-funding is a common alternative to addressing medical coverage risk amidst the continuous rising of medical costs. In fact, in a study conducted by the U.S. Department of Health and Human Services, about 26 percent of employers between 100-499 employees self-insure as compared with more than 82 percent of employers with 500 or more employees.
With strategic advice, employers are positioned to appropriately evaluate risk and identify areas that could be improved. There are several alternative funding arrangements available that help employers successfully self-fund in good claim years. When properly budgeted, you can not only lower your risk, but better manage expense fluctuations and improve budget flexibility – providing an opportunity to develop a better benefits plan for all of your employees.
There are many factors to consider when creating a long-term benefits strategy, but by being strategic, you will create a better benefits plan that will support your employees and accelerate your growth. Connect with Bowermaster today to learn more about crafting the right long-term strategy for your team.