Building a benefits package

In so many job postings for HR-related positions, I see something along the lines of “review and administer benefits plans”. Certainly, administering plans is way down on the list of exciting things to do in the profession, but putting one together is pretty friggin’ important and exciting! Strategic HR folks see it as a great opportunity. Indulge me for a minute.

You exist in a competitive market – there are other companies out there fighting for the same customers. There are companies trying to steal your customers. So you look at product market fit. You do focus groups to see where you are falling short, and what influenced your customers’ decision to select you over the competition. Maybe it’s price. Or features. Or service. You look to establish what the minimum viable product is to even be in the conversation with prospects.

Then, you do some self reflection. What are you capable of building? Is it better to go all in on one big change, or do a bunch of smaller ones? You look at your current market and how you are messaging to them in what channels. You try to understand what the most effective messages are to convert sales. Ultimately, you make some strategic decision that will impact your success in hitting your goals going forward.

Viewing HR through this business lens makes sense to me because your goals and levers are very similar. Your customers are the talent you want to attract and retain. Your culture,  business problem, compensation and benefits all factor into the “product” you are offering. Let’s flush that out with benefits.

Minimum Viable Product

You want great talent, so you need to understand what it takes in the market. Take a look at companies you’ve lost employees or candidates to and understand their benefits packages. What insurances do they offer and what are they contributing to each? What is their PTO like? Do they match 401(k)? What perks do they offer? Your insurance broker or an HR consultant can give you a pretty good lay of the land, but so can your employees and candidates. Lastly, don’t forget to take a look at the law and what you legally must do for all employees.

Putting together the right package is a puzzle. Understand the whole picture of what’s out there to give you an idea of all the pieces you can work with and to frame what the bare minimum “product” is in your market. Then you can start the process of prioritizing and eliminating options.

Understand Your Demographics and Culture

Look at your existing demographics and intimately understand the usage of your current benefits. Are there demographic differences in usage (i.e. development budget is most utilized by mid managers; entry-level folks aren’t really utilizing anything)? You may flush out some inefficiencies or a better way to allocate efforts and budget.

Next, ask what is most important to who you are as a company? Factor in your corporate culture and core values when constructing a package. If you say you are about work/life balance, your benefit package should support that. Similarly, if you talk about wanting people to grow, make sure there is a tangible perk or benefit to reenforce its importance.

Lastly, think about your growth goals and the demographics of those you are looking to hire. What benefits appeal will make you uniquely competitive in attracting the best of the best in that group? For example, if you are building a call center and want to attract and retain entry-level folks for 2+ years, a loan reimbursement program, events and in-office snacks may be more strategic to add. If, however, it’s time to build out a senior management team, you may be looking at things like flexible hours, 401(k) and a very comprehensive health plan.

Leverage Your Budget

Your goal is to deploy dollars in the best way to support your business’ growth, throughout the organization. This includes benefits on a micro and macro level. I’ll explain both.

Now you have an idea of what you need to attract talent, what benefits matter to which demographics, and what your objectives are in terms of attracting and retaining talent. Take your benefits budget and spend accordingly. This may mean cutting certain benefits that appeal to a small subgroup of employees in favor of ones with more widespread use. Don’t forget to factor in administrative overhead associated with running certain benefits when going through your evaluation.

If you make changes, communicate the why’s behind it to everyone so it doesn’t seem arbitrary. Be prepared for changes to materially affect certain employees. If these are people you want to retain, consider adjusting their compensation accordingly.

On a macro level, look at how your business is performing from a people perspective. Are you attracting and retaining the talent you need to drive your business? Are your employees engaged and satisfied with their benefits and compensation? You want positions filled quickly, limited turnover, and performers capable of doing the job. If you are seeing deficiencies in any of these areas, it may be time to look at your budget as a whole and decide if you’ve allocated enough to HR to most effectively meet the needs of your organization.

Don’t Forget Compensation

Compensation and benefits work hand in hand with one another and should be part of the same strategy. For example, if you want to pay top of market, you may be able to skimp in benefits. On the flip side, many nonprofits are able to retain great people because their benefits are outstanding. If you are a company the grants equity, you need to factor that into the equation as well.

There are a million ways to build an effective benefits program. Be strategic. Be true to who you are as a company. Understand your objectives. Use benefits (and compensation) as a lever towards hitting business objectives. Companies (and HR teams) that see the value of the right package can exploit a market inefficiency to their advantage and get a leg up on the best talent. Make how you leverage your HR levers a competitive advantage for your business.

 

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