Emerging benefits focus on flexibility

Flexible benefits, work arrangements the wave of the future

As the labour shortage worsens, how can an employer woo new employees and convince them to settle in for a long-term relationship? Many employers are turning to a range of new benefits to stand out from the crowd.

But is a larger menu of benefits the solution? Research into employee engagement by Hewitt Associates shows the significance of benefits varies by age, but isn’t likely to be the determining factor when deciding whether to join or stay with an organization. But, if pay is competitive, work is interesting and managers are supportive, benefit programs can be persuasive.

That doesn’t mean an organization should offer what every other company is providing just to “keep up with the Joneses.” It’s important to identify current and future workforce needs and design programs to meet those needs.

If there is one factor all employees are looking for, it’s flexibility. They want to be able to choose benefits — both health-care coverage and broader working arrangements — that accommodate their lifestyle and assist them personally.

Taking flexibility to new levels

Older employees may be looking for ways to gear down before retirement; middle-aged employees may need flexibility to help them care for young children and aging relatives; and younger employees may want time to travel or enhance their education.

Flexible work arrangements can be the answer to all of these needs. According to Attracting and Retaining the New Workforce, a Hewitt survey of 232 Canadian employers conducted in 2006, the vast majority (84 per cent) already offer flexible work hours within each workday to some of the workforce, and that is expected to grow to 90 per cent by 2009.

Other flexible work arrangements, such as formal phased retirement programs, job sharing, compressed work schedules and unpaid or paid time off for sabbaticals, were expected to grow even more by 2009.

Working outside the office, whether at home or on the road, is also a growing trend. Working from home part-time was permitted by 60 per cent of employers in 2006 and that number is expected to grow to 71 per cent by 2009.

To facilitate virtual working arrangements, a growing number of employers are helping employees stay connected by providing cellphones, BlackBerrys, online connections from home to work and assistance with at-home computer purchases.

Flexible benefits expanding in scope

The concept of flexible benefits in Canada has been around for decades, allowing each employee to tailor benefits to his own needs while providing cost-containment measures to the employer. In 2006, 38 per cent of employers offered flex benefits but that proportion is expected to jump to 64 per cent by 2009.

New options being added to flex plans keep them relevant and popular. There will likely be an increase in flexible benefit options that include:

wellness credits;

long-term care;

critical illness insurance;

registered education savings plans (RESPs);

partial redirection of incentive/bonus compensation to a health-care spending account or for additional flex credits/dollars; and

personal accounts, where excess credits are used to reimburse employees for items such as cellphone costs.

Other possible benefits that can be made available to employees outside of the flex plan include:

concierge services;

retirement education and counselling;

elder-care education and counselling;

group legal benefits;

group mortgage benefits; and

group home and auto benefits.

Advances in technology have made administration and communication of flexible benefits easier, so smaller organizations can also offer them. While employers with fewer than 500 employees may not be able to offer all the bells and whistles of larger plans, they can still offer a degree of choice.

Health benefits focus on prevention

Traditional health-related benefits, such as extended health-care and prescription drug coverage, have been mainly reactive, treating problems after they occur. The new crop of health-care benefits aims to keep employees healthy, fit and on-the-job.

Subsidized fitness memberships are becoming mainstream, with up to 63 per cent of employers planning to offer them by 2009. And they’re increasingly joined by on-site facilities such as showers and fitness centres.

Health-risk assessments and flu shots at work are gaining popularity, as is coverage for a number of new vaccines. More than 80 per cent of employers offer some prevention programs and about one-third cover new vaccines against diseases such as meningitis and hepatitis, according to a Hewitt survey conducted in December 2006.

For unforeseen health developments, and to allow greater customization, wellness accounts spent as an employee sees fit are increasingly prevalent. According to the New Workforce survey, these accounts are expected to nearly double in popularity, with 55 per cent of employers planning to offer them by 2009.

Work-life balance benefits soothe stressed employees

Doing a good job at work as well as a good job at home can be tough. So employers are providing benefits that help workers with non-work tasks. Well-established benefits, such as retirement education and financial counselling, are being joined by income tax preparation assistance, a benefit expected from about one-in-five employers by 2009.

Helping parents, and children of elderly parents, is also on the rise. Subsidized or on-site daycare is expected to double by 2009, with about 16 per cent of employers on board. Elder care is even more popular, with 44 per cent expecting to provide support in this area by 2009.

Maternity, parental and adoption assistance is also on the rise. An August 2007 Hewitt survey found more than 60 per cent of employers were offering some level of top-up for maternity leave or parental benefits. About 14 per cent of employers expect to offer adoption assistance or reimbursement of adoption expenses by 2009.

While 44 per cent of organizations responding to the New Workforce survey currently provide unpaid time off for community and charitable activities, that number is expected to grow to 69 per cent by 2009. However, paid time off for the same activities is not expected to change very much over the next two years.

Benefits of the future

If flexibility is the current trend in employee benefit programs, some employers could push this concept even further in the near future. The next level is “flexible rewards,” where employees have even more options for how they receive their total compensation. Salary-related benefits may become part of the flex fund, enabling employees to choose cash or the equivalent in some other form of compensation.

As the workforce becomes smaller and more diverse, flexibility and customization in employee benefits and overall work arrangements become increasingly important. While some employers are looking to be “cutting edge” when it comes to benefits, it is more important to provide benefits that meet the needs of employees an organization is trying to attract and retain.

Jason Kolysher and Christopher Westcott are senior consultants in Hewitt Associates’ benefits practice in Calgary and Toronto, respectively. Jason can be reached at [email protected]. Chris can be reached at [email protected].

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