The pandemic has shaken up the workforce, and employees today expect more flexibility and choice from their jobs than ever before. The idea of the traditional workforce is nearly obsolete, and I would say the same is true of traditional work benefits. As standard workplace practices have shifted, companies have likewise re-evaluated their benefits packages to better match the evolving needs of employees. According to a MetLife employee benefits trend study, 69 percent of workers indicate that having a wider array of benefits would increase their loyalty to their employers.
Companies can fulfill this need by offering flexible benefits plans that allow employees to pick and choose benefits that suit their needs and life stages and to reselect options annually according to their evolving lifestyles. Flexible benefits differ from their traditional counterparts because they offer highly customizable subsidies with defined contribution and spending guidelines.
Employees still get core benefits, but they also receive earmarked funds in an employee spending account that can be used towards a wide array of health or lifestyle benefits, including health and wellness programs, childcare, transportation or even home office equipment. With flexible benefits, both the company and employees reap the rewards.
So, with this in mind, allow me to share more on what flexible benefits are and three ways companies can use them to meet the evolving needs of today’s workforce.
What Is a Flexible Benefits Plan?
What Are Flexible Benefits Plans?
Every organization is made up of a diverse set of individuals in varying stages of their lives, which means they all have evolving needs. A 25-year-old and a 55-year-old are going to have different priorities in terms of benefits. For example, the 25-year-old may be focused on welcoming a new baby into the household, while the 55-year-old is concerned with wellness for healthy aging. Companies need to understand these varied needs and tailor benefits offerings accordingly.
Flexible benefits plans are critical for meeting such a range of needs. With these plans, companies can set up a variety of programs, including health, flexible and lifestyle spending accounts. Health and flexible spending accounts only cover medical expenses. They are not subject to income tax, however, which is a perk for employees. Moreover, traditional insurance may not cover certain expenses, like chiropractors or hearing aids, so these types of accounts can pay for such out-of-pocket costs. Additionally, flexible spending accounts can offer benefits like child care to employees tax-free, helping them save money.
Lifestyle spending accounts, which are more versatile in nature, can be used to cover commuter costs, training seminars, daycare and vacation spending. For example, instead of companies offering a set benefit like yearly gym memberships at a specific fitness company, lifestyle spending accounts give employees the opportunity to choose which gym they’d like to go to. Flexible benefits plans that include lifestyle spending accounts can provide an enticing way for employees to spend funds provided by their employer.
Now that you understand more about flexible benefits plans, here are a few ways that companies can use them to better support their employees.
1. Offer Flexibility
According to a survey by the American Institute of CPAs (AICPA), employees are typically more motivated by non-cash incentives than the cash equivalent. This data signals that employee spending accounts can be advantageous to both employers and employees.
With flexible benefits plans, employees can gain control of their benefits spending. For instance, an employee may not need a family health plan provided by their employer. Rather, they may prefer a sized-down benefits plan that only covers health services that they need most, which could help save them money. Traditional benefits programs don’t offer the kind of choice and flexibility that allows individual employees to customize their plans accordingly.
Further, flexible plans can offer benefits employees may not otherwise have access to at a discounted rate. Companies can partner with retailers, for instance, and provide products at a discount to their employees.
Employees want flexibility and the freedom to choose benefits from their employers today. In turn, companies have a better understanding of their employees’ preferences, which can have a positive impact across all aspects of the business. If a company knows exactly what employees care about when it comes to benefits, they can adjust their approach to increase employee engagement and drive retention, all of which impact the bottom line.
2. Make Informed Decisions About Your Team
Companies of every size are working to formalize their long-term, distributed work plans. With team members dispersed around the country or across the world, businesses must establish which employees are responsible for which business processes, what resources and tools they have to work with, and where they’re working from. As employees move to new locations and embrace remote work, they may develop new preferences for benefits that best serve them.
To support the post-pandemic workforce, companies should survey employees to solicit feedback about benefits. Collecting this data will give you a better sense of what motivates employees, which means you can make more informed decisions about what kind of flexible benefits programs you want to provide to employees, whether it be a health savings fund or lifestyle spending account. Surveying employees also increases engagement because it provides employees an active voice in the decision-making process.
For instance, if a company conducts a survey and discovers that most employees value rewards and recognition, they can set up specific programs like funds for work anniversaries, annual wellness or spot bonuses to cater to those desires. Companies can mix and match different programs based on what employees share they value most.
Companies should conduct a benefits survey once a year to yield insights that will guide renewals. They can distribute a conjoint analysis, which is a survey-based statistical method that can help explain employee’s preferences around employer-provided benefits. This study can ask participants to share preferences around their current benefits, benefits not currently available and benefits more generally.
Companies should leave the survey open around two weeks to gather results. From there, they can analyze the results and make changes to their flexible benefits program accordingly. If the data is unclear, companies can ask additional questions in a follow-up survey as needed. Having a better understanding of employee preferences will help companies create programs that match what employees want.
Using strategic employee surveys, company leaders can continually assess, monitor and make well-informed choices for their flexible benefits programs.
3. Attract and Keep Top Talent With Flexibility and Choice
A robust and dynamic benefits program is a key way to retain employees for the long haul while also attracting new talent. According to a Glassdoor employment confidence survey, nearly 60 percent of people reported that they strongly consider perks and benefits offered before accepting a job offer. In addition, 80 percent of employees prefer additional benefits over a pay increase. In other words, companies must update their benefits programs to remain competitive and appeal to potential candidates.
To improve retention and maintain a recruiting edge, companies can plan to roll out new benefits offerings and educational programs as the workforce evolves. With flexible spending accounts, companies can move beyond the traditional benefits programs we see today and adjust any of their programs to suit employees’ needs at each life stage.
Offering ongoing learning and development programs to keep staff apprised of how benefits choices can improve the quality of their lives is key to retention and engagement. To do so, companies can build an omnichannel communication plan that includes sharing benefits information via quarterly email blasts and newsletters to keep employees informed. Communication can also take place in intranet channels like Slack and Microsoft Teams. Companies can set up a channel or group specifically dedicated to benefits information. This helps spur questions employees have about their benefits year-round and help remind them of pertinent deadlines. Additionally, companies can host on-site events and consultations with benefits providers to talk to employees about what benefits are available to them.
Learning and development are important because they emphasize the value of flexible benefits to employees at every stage of their life. For example, if an employee has recently gone through a life change, she may need guidance on updating her benefits to make the right choice. With flexible benefits, employees have more choice over how they spend benefits funds, and so, having added support through continuous education can be helpful.
Prepare for the Future of Workplace Benefits
The bottom line is that benefits programs are not one-size-fits-all. Today’s modern workforce is ever-evolving and what interests one employee may not work for another. Whether employees are welcoming a new baby or tracking health and fitness goals, flexible benefits can provide them with harmony and balance in both work and personal life.
Flexibility and choice are essential to winning the war for talent. As you build your long-term work plans, consider making flexible benefits a top priority.