Six strategies to maximize the impact of your benefits budget | Part 1: Introduction
Benefits can be one of the most cost-effective drivers of a company’s bottom line by improving employee wellbeing, engagement, productivity and retention. But as companies face strong economic cross-currents caused by inflation, a tight labor market, and the threat of a recession, HR leaders are being asked to do more with less in their mission to attract and retain the best talent.
We’re partnering with employers and brokers each day to optimize their benefits programs, and we’re excited to launch a four-part series to share six strategies companies can employ today to maximize the impact of their benefits budget.
Here in Part 1 we introduce the six strategies at a high level. Then throughout the series we’ll dive deeper into key considerations and actionable tips for each strategy, grouped into three types of impact:
- Simplicity (Part 2)
- Equity & inclusivity (Part 3)
- Agility (Part 4)
Where to start
Figuring out how to do more with less starts with assessing current programs to identify what’s working and what’s not:
- What are the utilization and engagement rates for each benefit?
- Do employees feel like these benefits are meeting their needs?
- What are the total costs – including vendor fees and internal admin operations – of each benefit?
- How connected or siloed are each of your benefits?
- Will these benefits work for future needs?
Ready with a clear assessment of existing benefits and hungry to figure out a better path forward, employers and brokers should consider six key strategies as they look to maximize the impact of their benefits budget.
1) Approach this as an investment exercise
Companies added many new benefits in response to the pandemic, mostly through point solutions. But a large set of disconnected benefits won’t scale, for admins or employees. Instead of looking for benefits to cut, focus on finding more streamlined solutions that still deliver the meaningful care and support employees need.
2) Repurpose budget into more cost-effective benefits
Low utilization of benefits typically results from barriers to access or confusing user experiences, and some benefits are only likely to be used by a portion of employees. Rather than paying per-employee fees separately for each benefit, look for flexible solutions where employees can use benefits on what’s most meaningful to them and employers retain any unused dollars.
Maximizing equity & inclusivity
3) Deliver more equitable benefits
More than half of Americans live paycheck to paycheck, and therefore can’t afford to pay out of pocket to use their benefits and wait to be reimbursed. Alternatively, when benefit dollars are available on a card for employees to spend without using their own money, a major barrier to access is removed, leveling the playing field for all employees.
4) Optimize for employee choice
Benefits based on a marketplace model create limitations for employees. The discounts are a value-add, yes. But the fixed list of merchants will never completely and equally solve the needs of all employees. Whether people want to use their benefits at a local business rather than a chain, or if they live in a rural area far from the vendors in the marketplace, benefits are most inclusive when employees get to decide where to use them.
5) Collapse benefits into one account
Many employers are now approaching benefits design using the “defined contribution” principle over “defined benefit.” As employee needs continue to evolve, a less prescriptive benefit provides flexibility for both employees and employers. Rather than creating separate spending accounts, just provide one account that covers a broad range of categories.
6) Set yourself up for the future
From the need for a Medical Travel benefit in response to new restrictions on healthcare access, to the need to evolve all benefits to serve remote and hybrid teams after the onset of the pandemic, employers have had to scramble to find new solutions. Future change is inevitable, so decisions about solving today’s challenges should be made in service of readiness to respond to future needs too.
Coming up next in Part 2 of our series, we’ll detail how to maximize the simplicity of your benefits portfolio by applying an investment mentality, and repurposing budget into more flexible, cost-effective benefits.
We’re here to help
Level’s benefits are built to help employers and employees get more value out of every dollar. From lifestyle spending accounts like Wellness, Food, and Family Forming to ERISA-compliant dental and vision benefits, Level can help you design and deliver delightful benefits that maximize the impact of your benefits budget. Reach out here to set up a conversation with our expert consultants.