Disruptors Series Part V: The Issue of Communication

This is the fifth installment of our Disruptors Series where we provide additional information on each of the issues that we believe so-called Disruptors are missing for employee benefits in the long term. We offer the following information for your consideration around the key Issue of Communication. To follow this series and more, you can read the original article here, as well as the other articles where we covered the issues of Cost, Invincibility and Risk Management.

More and more we hear references to the word Disruptors in various industries, including employee benefits. Some new players are entering the market with promises to revolutionize benefits programs and thus make them more appealing to employees. Other new players are promising to provide other human resource services for “free” if you purchase your employee benefits through them. However, is what they offer really all that new and can you really get “something for nothing” in the long run?

One of the key issues is effectively communicating with employees and convincing them that there is value in benefits that we hope they will never use. None of us plan to die or become permanently disabled or suffer from a major costly illness, so it is not surprising that life and disability insurance and drug benefits are not necessarily valued as much as we would like. So why wouldn’t a Disruptor simply help employees better understand real risks in their lives and better appreciate the role current employee benefits play?

The Issue of Communication

• Employee benefits support the more comprehensive people strategies for businesses which in turn support the broader business strategies. As such, these plans need to be designed specifically for the business’ needs. Businesses should understand the needs of their current and future employees but employees also need to understand why the employer has structured the benefits plan the way it is and how this strategy fits into the broader business strategy of the company.
• Based on our experience when conducting employee focus groups, generally 20% of employees really like the plan, 60% are generally satisfied with it and usually only 20% of employees would prefer something different. The irony is that these findings typically hold true no matter what the plan design currently is or what potential plan design changes are being considered. As we often hear, you can’t please all the people all of the time and the same seems to hold true for employee benefits.
• While technology can help facilitate delivering employee communications, it is not the actual communication itself. Time must be taken to not only craft the communication but to determine the best way to get this information to employees. And companies need to remember that different demographic groups like to receive messages in different ways but the underlying messages should still be the same. Utilizing available technology tools without focusing on the core message is a short-sighted strategy
• Regardless of the selected communication strategy, employee benefits need to be communicated more frequently – not just at the time of hire, or by relying on the booklet given to employees, or at the time a change is being made. By developing an ongoing communication strategy customized to the company and its employees, plan sponsors can more effectively educate employees for the long term
• More effective employee communication can not only increase the perception of the value proposition for the employee benefits plan but can also lead to enhanced employee consumerism. At the end of the day, employees need to play an effective role in helping ensure the sustainability of those plans. Plan sponsors need to educate employees on how they can reduce their share of costs or maximize the value of their plans by engaging in buying decisions with providers like pharmacists, massage therapists, chiropractors, optometrists, etc. Employees also need to understand the broader market pressures on benefits plans and appreciate the pressure that significant plan inflation has on the business
• Given that employee benefits are most often designed to help attract and retain employees to support the business, perhaps the best time to solicit feedback on the benefits plan is when employees join or leave the company. When employees decide to join the company, perhaps take some time to ask them what elements of the company’s total rewards package most influenced their decision to join and whether there were any initial concerns. Likewise, when employees leave the company, ensure that you ask them in exit interviews whether the benefits program played any role in their decision to leave. Also, when a key target hire does not accept a job offer with your company, ask whether the company’s benefits plan played any part in their decision. These avenues of feedback will usually provide superior tangible feedback on the value of the employee benefits plan and its role in supporting the company’s business strategy

Perhaps there is an underlying reason why many parts of the employee benefits offering have remained intact and connected to a broader HR strategy over the last 30 years. Employers continue to provide benefits that include life and disability insurance along with extended health and dental benefits, and employees continue to value them for the most part. Risks around income protection in the event of disability and cash payouts for beneficiaries in the event of death continue to be needed as the underlying risks are still unchanged. Extended health and dental benefits are arguably even more important now as governments continue to download (or delay taking on) new drugs and services.

Note that at ZLC Financial we believe there is a better way for employee benefits, but we also believe the solution is not in “throwing the baby out with the bath water”. We are concerned that these new Disruptors are attracting attention with flashy ideas in the short term but are missing the key issues for employee benefits in the long term. Instead we recommend reviewing your current and future employee needs, understanding the financial reality for your company around projected inflation trends, and developing a benefits program that works for you in the long term and truly supports your broader HR strategy and business plan.

Each organization’s needs are unique and warrant a customized solution. We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits program. Should you have any questions on the above, please don’t hesitate to contact me or a member of our team.

ZLC Financial is one of the fastest growing employee benefits advisors in Western Canada and we are fortunate to have the best people, resources and clients. Our goal is to work with you to find a better way for your employee benefits plan. We provide this value to you by leveraging one of the most skilled benefits teams in the city – almost 300 years of experience within our team of 14 employee benefits specialists. We have been working with businesses ranging from 4 to over 10,000 employees for over 30 years.

By Dan Eisner

Update: to follow this series and more, you can read subsequent articles where we dive into each of these issues further, such as the issue of Experience.