Who Benefits From Your Benefits

Monday June 27, 2016 comments

Who Benefits From Your Benefits?

Back before World War II, few Americans had health insurance. Fewer still received it as an employee benefit. Of course, life was simpler then. Healthcare was relatively medieval, and most people just suffered through all but the most debilitating pain or disease.

Back before World War II, few Americans had any kind of employer-provided retirement plan. Of course, life was simpler then. People didn’t live that long because healthcare wasn’t that good. And most died shortly after “retirement,” living at home until they kicked the bucket.

But then labor shortages during WWII led some creative employers to start offering “Fringe Benefits” such as health insurance and retirement plans. It didn’t take too many years before those became the norm, and in order to be competitive in the labor market, employers had to provide benefits.

It wasn’t all that long before employee benefits became an entitlement, where it was expected that employers would provide these things. A plethora of laws followed – often in reaction to less than scrupulous employers who promised things they never delivered.

What started as a competitive move on the part of some employers, created an entitlement mentality, resulted in a lot of regulation, red tape, and government oversight, and skyrocketing expenses. For instance, healthcare costs now represent 18% of our GDP, much of which is born on the backs of employers. Yikes! With the Obamacare employer mandate, health insurance is pretty much mandated for many employers.

Regardless of anyone’s politics, it’s easy to see that this isn’t sustainable. And I wasn’t talking about the costs, the politics, or the structure of healthcare! I’m talking about the entitlement mentality we’ve created among the employed.

Anytime people work for what they can get, rather than what they can be part of creating, it’s not a winning business proposition. Without a compelling business case that can be easily understand, all the benefits in the world will become an entitlement – with or without governmental influence.

So what’s can savvy business leaders to do to keep their benefits package from becoming an entitlement?

1. Focus on What Matters. Motivational Theorist Frederick Herzberg believed that the motivators were the intrinsic conditions of the job, such as challenging work, recognition, responsibility, opportunity to do something meaningful, involvement in decision making, sense of importance. Employers who spend effort in this realm will get a motivated workforce. None of those things costs much, while benefits do.
2. Change Your Expectations. Herzberg classified demotivators as the extrinsic conditions of the job, which he called “Hygiene Factors.” Salary, fringe benefits, job security and other hygiene factors don’t motivate; they only demotivate if missing, done wrong, or focused on too much. When we try to use benefits as a motivator or even a reason to keep employees from moving on, we are wanting benefits to do what they cannot do. There are better reasons for benefits, and there are better ways to motivate employees.
3. Make the Business Case. Don’t provide benefits or perks because you want to be competitive, to be an “employer of choice,” or to be benevolent. Believe in and if possible, quantify, anything you provide as a benefit. That could mean offering Child Care Assistance because you believe employees will be more productive if they don’t have to worry as much about their kids, or offering wellness programs because you believe you will reduce sick time and cut costs in your health plan. And if you don’t get the results you expected, revisit.
4. Include Employees. Involve employees in decisions about employee benefits. Show them everything – costs, options, tradeoffs. It’s tough to do these days, as groups of employees - even in non-union environments - cannot be involved in negotiations with employers about terms and conditions of employment without risking an Unfair Labor Practice from the Department of Labor. But there are ways.
5. Consider Performance-Based Rewards. Where possible, tie everything to significant accomplishment of strategic goals, and meaningful demonstrations of organizational values. Get the point across that perks are earned. This will appeal to your best performers, and not appeal to those who think you owe them something and want to coast. You can’t legally do that with some benefits like some kinds of retirement plans, but you can with some others.
6. Question Seniority-Based Benefits. Don’t assume that time off benefits, for instance, should increase with length of employment just because other companies do that. Time in the job should only be rewarded where there is a corresponding increase in productivity; a business case. Where you don’t have that, don’t do it. Prevailing practice is not best practice; it’s just common.
7. Set Nothing in Stone. Make it clear that policies, benefits, incentive pay, and even base salary, are all offered based on current business conditions and preferences, and are subject to change. If benefits were merely a motivator you couldn’t change or remove them without demotivating employees… which is pretty much where we are.

A benefits package can be something that actually fits with the culture, reinforces business knowledge, and focuses your whole team on the vision and strategic goals of the organization. That’s so much better than entitlement.