Everybody loves flex

Survey suggests most firms that don’t have them are planning on providing flexible benefits
By David Brown
|Canadian HR Reporter|Last Updated: 11/21/2002

Statistics Canada recently confirmed a growing number of families are no longer one man and one woman living together with 2.5 children — benefit plans continue to change to reflect that reality, suggests a new study.

Families are changing and employees want their benefits to meet those changing needs. Most organizations feel flexible benefit plans are the inevitable solution, said Cathy O’Bright, a benefits consultant with the Calgary office of Hewitt Associates.

A survey by Hewitt suggests a large majority of organizations are at least thinking about going flex — giving employees some choice on how a portion of company benefit expenditures are spent. Hewitt conducted an online survey of 136 organizations from across the country earlier this year; 93 per cent of respondents said they have or will be introducing flexible benefit plans in the future (43 per cent already have them in place).

In a similar survey conducted four years ago, just 72 per cent of respondents said they had or were going to introduce flexible benefits. (Before 1993 the rate was closer to four per cent.)

Flexible benefit plans have long been considered a useful way to meet diverse employee needs while at the same time providing the employer with a way to control costs.

But many organizations resisted introducing flex plans, often over concerns about communication or administration. Either that or they looked for other methods of delivering employee benefits.

But things have changed. Communication methods have improved and benefit providers are increasingly willing to take over administration. On top of that, those that have gone flex appear to be, for the most part, happy with the results.

Benefit providers are convinced the demand for flexible benefits will only increase.

“We see that as a real area of growth potential and it is one of our key strategies,” said Nancy Burda, assistant vice-president of group marketing and a former director of flexible benefit strategies for Sunlife Financial.

The main motivation is to meet changing employee needs, said Burda. Cost control is also important but plan sponsors must recognize costs won’t level off right away. It takes a while, but by going with a flex plan, the organization puts itself into a position to control costs in the future, she said.

The Hewitt study also found 94 per cent of respondents said the flexible plan met or exceeded expectations around meeting diverse employee needs, and 71 per cent were satisfied about containing costs.

Some respondents with a flexible plan in place are thinking about adding new options to meet the need the evolving demands of employees, said O’Bright.

Fitness memberships, auto insurance, financial and tax counselling and child-care services are all showing up in flexible plans according to the Hewitt study. Just three per cent offer registered education savings plans, but another 20 per cent intend to add the option in the next three years. Similarly, while 12 per cent have provisions for sabbaticals, another 15 per cent expect to offer it in three years.

“These are stemming from the fact that families are changing, and employees want to create a benefits package that meets their needs,” said O’Bright.

As for resistance, the Hewitt study found the main obstacles to introducing a flex plan remain fears about administration (33 per cent) and communication (21 per cent).

Some plan sponsors fear that the complexity of flexible benefit plans make them more difficult to administer, said Burda of Sunlife.

But administration processes are being streamlined and online accessibility means more employee self service is being offered.

Steve Moffatt, Maritime Life’s Ontario vice-president of group insurance, said that while flex has been around for sometime, some organizations resisted and looked for other options. They may have tried other co-insurance or co-payment options but now they’re coming back to flex plans, he said.

If employees are being asked to pay for some portion of their benefits they want to have more choice about where they are spending that money. That only becomes possible with a flexible benefit plan.

He said the biggest challenge to successful flex plans remains communication. Plan members need to be given the right information to make good decisions. “Organizations have to spend a lot of time making sure the communication is good, crisp and easy to understand.”

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