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Silverberg Group - Bringing Your Employee Benefits into Focus

Better benefits plans in 5 steps

Much has been written about elite organizations and great leaders, and what makes them stand out from the rest. Common to both is a thirst for innovation and a desire to challenge the status quo. Great organizations and great leaders live by the credo “there is always a better way.”

So how does this translate into benefits programs?

The world around benefits plans continues to change: employee demographics, rising costs, legal and legislative changes. Elite organizations not only adapt, but embrace innovation and strive for continuous improvement and benefits plan design should do the same. Benefits managers must always ask themselves, “is there a better way?”

Unfortunately, this does not seem to be the case and there continues to be very little innovation from plan sponsors.

This is not to suggest that the industry is stagnant. There have been some innovations recently in the areas of prescription drug plan management and some impressive advancement in insurer technology. We see incremental year-over-year increases in plan flexibility, primarily through the use of spending accounts.

However, if you look at the majority of benefit programs in this country today and compare them to plans of 10 or 20 years ago, not much has changed.

There are some valid reasons for this inertia: conflicting priorities, limited resources to manage change and and a desire to not upset the apple cart. Insurers (and even advisors) are reluctant to advocate for innovation with this muted plan sponsor interest. And yet, market forces in favour of innovation and change seem compelling—benefits plan costs are escalating and the workforce of today (and tomorrow) looks nothing like the workforce of 20 years ago.

Innovation does not need to be revolutionary—it can be evolutionary. However, it needs to starts with the following important steps:

  1. Review your benefits philosophy – Make sure your benefits philosophy is aligned with the organization’s mission and vision. If as an organization you embrace innovation and continuous improvement it only makes sense that these values are reflected in your benefits philosophy. If you do not have a benefits philosophy, develop one. You need a road map to guide you.
  2. Understand your organization – Understand your organization’s key workforce metrics such as age, sex, diversity, etc. Perhaps as important, understand how these are likely to change in the next ten years. From a benefits plan perspective, how are these metrics shaping your decision making on plan design and how are these metrics driving plan costs?
  3. Benchmark – It is dangerous to benchmark yourself against an industry that might be similarly lacking in innovative thought. So think about different benchmarks: organizations and/or industries that you view as being progressive and innovative. And think more globally, too. There is lots to learn from different markets, markets that have perhaps already dealt with some of the issues impacting Canada.
  4. Challenge the status quo – Start with the premise that there is always a better way and ask yourself how you might do things differently in order to better support the organization while delivering on your benefit promise to employees and their dependents. Healthcare reform south of the border is causing employers in the U.S. to challenge the status quo and we are starting to see some really interesting innovation in the business-to-business-to-consumer market. Why not in Canada?
  5. Alignment – For the most part, plan sponsors in Canada need to rely on insurers and other vendors in the market to deliver on their benefit promises. There are some fairly significant differences in the market’s ability to accommodate flexibility and embrace innovation. There are also some non-traditional vendors that warrant consideration. Price and flexibility should be considered when selecting a vendor.

At the end of the day, a benefits program is a risk management tool. It helps the organization manage (and fund) a wide assortment of risks related to employment.

Likewise, for the employee and their dependents, it helps manage risks related to their life and health. Make sure the risks and returns of the organization are matched to the risks and returns for the employee.

Whether your organization is driven to achieve, or maintain, elite status or simply driven to maximize shareholder return or serve your customers well, a benefits program is an important component of your people strategy. And, as your people strategy evolves to reflect the organization of tomorrow, do not forget about the benefits program.

As an industry, we have not asked ourselves the question “is there a better way?” often enough.


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