If the pitch is total rewards, flex benefits are the home run

HR needs to ensure benefits are practical, relative and meaningful to employees
By Jacqueline Taggart and Joy Sloane
|Canadian HR Reporter|Last Updated: 05/20/2004


ike the mythical phoenix rising from the ashes, every few years corporate HR departments (and their advisors and consultants) are destined to unveil the latest and greatest innovation guaranteed to reinvent the work environment.

In many cases these innovations are well-intended and do improve working conditions, but is it too cynical to question the predictability of the cyclical nature of these inventions? Maybe this cycle of innovation is related more to product lifecycles than to any real underlying strategic change. Whatever the real drivers may be, it is true that some of these ideas offer real benefits to organizations and employees and one of these is total rewards.

Total rewards is the latest packaging innovation suggested for employers and employees alike. It encourages employees to take a holistic view of the total value proposition offered to them by their work engagement. Philosophically, it’s a valid concept. Employers spend millions of dollars on direct variable and non-variable compensation programs, on indirect pension and benefit programs and on a range of non-quantifiable benefits that often don’t win the attention or appreciation they deserve.

But HR professionals shouldn’t just hang the latest marketing slogan of total rewards on their programs. If they want to gain the credibility and appreciation of employees for the dollars invested in them, they need to make sure these benefits are practical, relative and meaningful to employees.

Benefits are a funny thing. Few people care about them until they don’t have them when they need them — that’s human nature. On the other side, many employers still sponsor programs that are one-size-fits-all (usually referred to as traditional plans) and that cost a lot of money without much return in terms of employee appreciation.

Employers need to take a step back from the philosophies and plan designs of the 1960s and assess whether benefits programs really reflect the organization and what it stands for. Diverse employee groups now include young singles, older singles, singles with dependent children, couples (mixed or same sex), families with dependent children, families with dependent seniors, and families with dependent children and seniors. They are members who only have access to the company’s plan and members with access to two plans. How can the traditional plans that grew out of the post-war era be made relevant to this changing dynamic?

The best strategy a plan sponsor can employ is two-fold. First, offer a program with enough flexibility to recognize diverse needs and individual situations. Second, invest in plan member education so employees can make informed decisions and choose the benefits that fit their needs.

A well thought out and carefully designed flexible benefits plan can be a real reward to employees. The typical traditional benefits plan covers employees for extended health care, dental care, life insurance and disability with varying levels of cost sharing. The early flexible benefits plan expanded the coverage options slightly by usually allowing some level of opt-out and including some type of health-care spending account where employees could use pre-tax dollars to pay for health care costs not covered by the plan. Today’s flexible benefits plans have the opportunity to go even further if companies can get beyond the gut-level instinct that encourages them to think they know what’s best for employees.

If employers really want to win recognition for forward-thinking, rewards-based programs they need to step out from the pack and offer programs that really touch the lives of the people they’re intended for. In theory, flexible benefits are a way to do just that, but in practice they have generally proven to be fairly conservative in their approach. Repackaging them as part of a total rewards package is the perfect opportunity to re-evaluate an organization’s flexible benefits strategy and ensure the program really is flexible enough to provide meaningful options to employees. Employers that do won’t have to worry about building appreciation for the program — it will earn it on its own.

Jacqueline Taggart is a principal in the communications practice of the Toronto office of Morneau Sobeco. She can be contacted at (416) 385-2119 or jtaggart@morneausobeco.com. Joy Sloane is the partner in the corporate accounts practice of the Toronto office of Morneau Sobeco. She can be contacted at (416) 383-6443 or jsloane@morneausobeco.com.

Think about it…

•Maybe your 20-something IT worker still lives at home, sees the doctor or the dentist rarely, if ever, and would really rather use the money you invest in his benefits towards saving for a down-payment on a house.

•Maybe the stressed out director of accounting could really use a yoga class membership funded by a reimbursement account more than duplicating benefits already available through his spouse’s plan.

•Maybe your sales manager is balancing more than just her monthly and annual sales targets and could use a flexible spending account to pay for elder- and child-care expenses.

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