Balancing the need to keep pay and benefit costs affordable and sustainable in the long run, while still providing a competitive total rewards package for employees, is one of the trickiest tasks for employers — something made even more difficult in a tough economy.
With so much uncertainty in the near term — and with total compensation costs often an organization’s greatest expense — the need for restraint has rarely been greater.
But restraint and inaction are two different things. While the balancing act can be challenging, there may be ways to add or unlock value within the total rewards package at a low cost — or no cost at all — to the organization.
Here are a few key total rewards areas to focus on — with some value enhancement strategies to consider.
Benefits and pensions – focus on engagement
Plan sponsors invest a lot in group retirement and benefits plans. But many plan members continue to leave money on the table and not maximize the benefits available to them.
A pension and benefits provider can help identify areas that may be underutilized. The sponsor can then work with the provider to develop communication campaigns to help capture this value and better engage members.
There’s one essential element — ensure the campaign includes optional plan features or tools that generate employee interest and engagement. For example, the addition of a tax-free savings account (TFSA) is a good option. TFSAs can provide a convenient and easy way for plan members to save at work, at little or no cost to the employer.
For group drug plans, a mobile app or mobile-optimized website allows plan members to check which drugs they are covered for, at what co-insurance levels, right from their doctor’s office. Plan members can discuss drug options with their doctor while having up-to-date coverage information right at hand.
For many plans, digital communications and social media provide excellent opportunities for engagement — especially since the younger generation who grew up with this technology will soon become the dominant group in the workplace. Benefits providers such as Sun Life Financial have launched apps that allow plan members to submit their health claims from their smartphones, check their balances in their retirement plans or access planning tools on the go.
This approach can lead to increased plan member awareness and appreciation of their group plan.
In the end, greater interest and engagement of plan members can help motivate them to take the proper action to maximize their current benefits — and increase the real and perceived value of their participation in the plan.
Drug plans – manage costs while maintaining coverage
Prescription drug plan costs have been a hot button issue for plan sponsors for years, but Sun Life research shows plan members are well-aware of these cost issues for drug plans — and are open to plan changes that can help manage a plan sponsor’s costs while still providing excellent coverage.
Many of the changes plan sponsors are putting in place provide incentives — in the form of higher coverage levels — for plan members to make smart value decisions. While many of these plan design elements, such as mandatory generic substitution and tiered drug plans, have been available for years, recent innovations can make an even more powerful difference in the battle to help control rising drug costs.
One of these is an evidence-based drug plan. It combines a number of cost-control elements, including evaluating drugs for both clinical effectiveness and cost-effectiveness, encouraging employees to choose equally effective but lower-cost alternatives through higher reimbursement rates, and negotiating savings.
While employees value their down time, many employers may not be in a position to increase vacation days or other paid time off. However, flexible work arrangements — such as working from home or a remote location — give employees the time flexibility they may need without this expense.
Programs must be tailored to the needs of each organization. The right arrangement can not only increase the perceived value of a total rewards program but help lower overhead costs. This may offset some startup costs incurred in setting up the program.
Employee assistance programs
Although employee assistance programs (EAPs) aren’t free, such costs can pale in comparison to the real costs of absenteeism many employers face that can be mitigated with early intervention.
EAP programs can help employees deal with work and personal health challenges — including those involving mental health — and help employers manage absenteeism costs.
In 2009-10, 78 per cent of short-term disability and 67 per cent of long-term disability claims in Canada were related to mental health issues, according to the Conference Board of Canada report Building Mentally Healthy Workplaces.
Employee recognition programs can provide important psychological rewards that come from employees knowing their contributions are recognized and valued. They can also provide valuable perks that have a relatively low cost to the employer but be of high value to employees.
For example, Sun Life’s iStar Rewards Program is a formal process that allows employees to recognize the contributions of others through nominations. Once per quarter, a committee reviews these nominations and chooses several outstanding
iStar Reward recipients.
The key to developing an effective recognition program is to reward employees whose behaviours align closely with the company’s core values.
While the tough economy has many employers freezing and cutting programs, this is an excellent opportunity to gain a competitive advantage through a different route — by taking a closer look at your total rewards package and taking the proactive steps to maximize value in a cost-effective way.
Dave Jones is Toronto-based vice-president of market development in group benefits at Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. He can be reached at email@example.com.