According to Simon Thompson, almost half of employers (48%) who responded to the survey said they didn’t have a benefits strategy or philosophy. In addition, 40% felt they didn’t have enough data to make informed decisions about benefits and 57% said their employees were not fully clear on their benefits offer. Thompson says that having an employee benefits strategy built from a clear underlying philosophy is vital for ensuring your benefits offer is compliant and meets market best practice, and, importantly, that it’s understood and valued by employees.
“By ‘philosophy’, we mean a corporate view on the difference you want to make to the lives of employees and their families and thinking carefully about the role employee benefits can play in supporting your desired market position as an employer.” Thompson told HRD. “Arguably, employee benefits have never been so important to the core business agenda. We work with clients to use employee benefits to support the needs of an increasingly diverse workforce, whether it is benefits or compension that delivers to the need.”
Having a clear benefits philosophy is key. It’s about providing benefits that are competitive, and it’s about promoting your brand in the market as an employer.
“Having a clear benefits philosophy is key. It’s about providing benefits that are competitive, and it’s about promoting your brand in the market as an employer. Employees are increasingly focused on having choices to suit their individual circumstances. Among the employers who participated in the study, 43% said providing choice was a key priority and 33% said they were currently exploring a flexible benefits programme.”
For global organisations, Thompson notes that having a coherent strategy becomes even more important when managing benefits across different countries. “You have to make sure your benefits comply with different jurisdictions, and that you benchmark your offering to industry peers and your own philosophy.”
As we emerge from the pandemic high medical inflation and a recovery in medical utilisation is causing relatively high increases in medical premiums as movement restrictions ease. This is a critical priority for companies that responded to the survey. 55% said increasing benefit plan costs was a key challenge. Thompson notes that “a solid governance framework underpinning the benefits strategy is important to achieve better cost control. At Aon we monitor our clients’ medical claims on a monthly basis and help stakeholders plan for higher claims and premiums. We also compare medical insurance quotes, to an actuarial fair value, and advise clients accordingly.”
The pandemic also highlighted the need to increase business agility. In a benefits context, this means digitalisation to ensure programmes can be tailored to employees’ individual needs and accessed remotely. “You have to think about whether you want to provide choice or access to voluntary benefits (which 22% indicated was a priority), or take a ‘marketplace’ approach where employees have access to a range of options. Once you’ve established that, you need to conduct an audit to understand where you are today, what’s already in place, how much it’s costing, and ask if these benefits are still relevant and how this compares to the benefits philosophy you’ve designed. Technology is becoming increasingly important when it comes to employee expectations and experience, with a ‘digital benefits home hub’ more commonplace - 41% of companies said that they used a digital benefits platform.”
“In most cases, this is a journey,” Thompson adds. “Organisations may not be able to achieve their philosophy straight away and over time that philosophy will change to meet the needs of the external environment, so employers need to start thinking about a timeframe and mapping out a plan with a measurement framework.”
When it comes to designing a strategy and philosophy, Thompson notes that the best results are often achieved by appointing a single regional or global partner. Aon provides advisory services to employers to support them with their benefits plan management, communication, approach and strategy on a local, regional and global basis.
“We use a sector-focused, workshop approach to build strategy,” Thompson says.
“We capture insights into the current position, communications, cost considerations, employee benefits needs and governance, and employer views on direction of travel. This is coupled with sharing Aon’s expert experience and advice on best practices. We then prepare a draft strategy, which provides direction and evolves as we work through the organisation’s benefits journey.”