Thursday, April 18, 2019

Strategic Benefits?

What is your planning horizon? One year? Three? Five? Ten?? Chances are we’re clear about the effects of our decisions in the near-term: mostly one year, sometimes three if it’s a general policy issue. We might even appreciate that benefit choices are enduring. I wonder if that was the case for employers during WWII and after. When wages were frozen, one of the ways to attract employees was to provide health insurance benefits—which previously had been purchased by individuals. Over the last 6 decades, those benefits are assumed by current and potential employees.

Once a benefit is given, a benefit is hard to take away. I once removed a Perfect Attendance benefit, which added a half-day of vacation for each quarter of perfect attendance, and replaced it with two extra holiday days—floating holidays freely chosen by each employee. It saved a lot of supervisory effort spent to track—and negotiate as in whether there was adequate notice for an excused absence rather than an unexcused absence—those who wanted to have perfect attendance...and instead focus on performance improvements. I received some push-back because I had eliminated a benefit. It seems benefits only have additive policy directions, not subtractive policy directions. I didn’t reverse the decision because it was strategic that we needed to redirect the supervisors’ time towards process improvements, education, problem resolution, etc.

With regard to health insurance, even before the ACA (“Obamacare”) provisions, we were re-thinking the provision of health insurance benefits. In 2008-2010, we weren’t extravagant in the portion we paid but it was a big cost. It was running close to 25% of payroll. What other strategic things could the money be used for that would better insure organizational success? I’m not talking about stock prices. I’m talking about long-term growth through investments in product development, acquisitions, expansions, capital equipment, and so on. Then and today, it was assumed that health insurance premiums were just another cost of doing business, like leases and utilities. Medical costs are out of our company’s control. There aren’t price lists to choose medical procedure, device or prescription options. Many places don’t have provider choices—either you only have one option in your area or you’re locked into one choice by the insurance plan. It’s one area that we don’t control and we have limited solution options—increasing deductibles is one of the most utilized. I’ve even seen arguments that smarter health insurance choices improve employee engagement, which in turn improves productivity. Not so sure about that. For one thing, employee engagement does not improve if organizational trust is not high; health insurance benefits can’t fix low trust levels.

Attracting employees is important. It’s why employer-sponsored health insurance was originally promulgated. What else could we do with 10-25% of payroll to attract candidates and not tie us into a system we don’t control? How much has the cost of health insurance influenced our move towards more part-time employees and how much has that move hindered our employees’ productivity, effectiveness, customer service levels, growth, etc.?

Having healthy employees is important, not just physiologically but also mentally. Peace of mind that there’s a safety net through health insurance can be important for individual productivity as well. But is health insurance the only way to do this? If the benefit/cost ratio is greater than 1, shouldn’t we offer it to the part-timers as well.

What strategies need to be executed for your company to survive, thrive and grow exponentially? How much does providing health insurance help or hinder your ability to succeed?

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