6 steps toward resolving the employee-benefits tug of war

Power of Two

Andrew McNeil (andrewm@arrowbenefitsgroup.com, 707-992-3789) and Rosario Avila (rosarioa@arrowbenefitsgroup.com, 707-992-3795) are senior benefits advisers at Arrow Benefits Group in Petaluma.

Read their previous columns.

Executives such as chief executive, financial and operating officers often approach employee benefits differently from human resources departments, based on their roles and perspectives within an organization.

When meeting with HR leaders to discuss employee benefits programs, one of the first questions we ask is, “Aside from you, is there anyone else involved making decisions about your program?”

It’s an important question because there is usually someone else involved — and they frequently have quite a different agenda.

Typically, the C-suite is comprised of top-level executives — including the CEO, CFO and COO — who are responsible for making strategic decisions that affect the overall success of the firm. From their perspective, employee benefits are just one component of the organization’s budget, and they must weigh the costs of the benefits program against the potential returns including employee retention, productivity, and satisfaction.

HR’s vital role in the game

Yet, on the other hand, HR leaders are accountable for managing the day-to-day operations of employee-related activities — including the benefits programs. They’re responsible for due diligence not only in protecting but advising upper management of best practices.

HR leaders balance the creation and implementation of policies designed to attract and retain talented employees, with the need to ensure compliance with legal requirements. From the perspective of an HR professional, employee benefits are a critical tool for building a stellar workforce, and they concentrate on maximizing the value of those benefits for employees.

While there may be some overlap between the perspectives of the C-suite and HR departments — such as the cost of acquiring and retaining employees — their dissimilar roles and responsibilities can result in divergent and often competing priorities and approaches in terms of employee benefits. Ultimately, both groups have a vested interest in ensuring employees are satisfied, engaged, and motivated to perform at their best. So, whose approach is best?

Aligning the contrasting employee benefits viewpoints and objectives between the C-suite and HR team can feel a bit like a battle.

Yet, it does not have to be a zero-sum game. Given the importance of developing cost-effective and valuable programs, it’s important to establish a collaborative and transparent process to ensure both groups are satisfied with the outcome.

Six steps to align perspectives

1. Develop an understanding and appreciation of each other's priorities. The C-suite may focus on cost-cutting and return on investment, while HR may prioritize employee satisfaction and retention.

Since it’s a two-way relationship, both parties need to understand each other's perspectives in order to find a solution that achieves the objectives of all.

2. Conduct a needs analysis. HR should collect data on employee needs and preferences for benefits. An employee survey is a great tool to gain insight into what employees value.

At the same time, the C-suite should provide information on budget constraints and strategic goals. This analysis can inform the selection of benefits that meet both employee and company objectives.

3. Prioritize benefits. After reviewing data, HR, and the C-suite should prioritize which benefits to offer. This process can include comparing information gathered from an employee survey with budgetary guidelines and the advice from a trusted broker. It's important to consider the cost of each benefit, the value it brings to employees, and the impact it has on the company's financials.

4. Communicate clearly. Making decisions in a vacuum, without insight into all sides of the process, is never a great idea.

Thus, it's crucial to maintain clear communication between HR and the C-suite throughout the process. Each party should share their thoughts and concerns and be open to feedback.

5. Find a compromise. If there are conflicting priorities or budget constraints, HR and the C-suite need to find a compromise.

Explore different benefit options and designs, negotiate on cost, or consider phasing in benefits over time. Adding voluntary benefits is great way to enhance a benefits program without affecting the organization’s finances.

6. Monitor and evaluate. Once benefits are implemented, it's important to monitor their impact and evaluate their effectiveness.

An excellent approach involves HR and the C-suite regularly huddling together to review benefit usage, employee feedback, and ROI to ensure they are meeting the needs of employees and the company.

Employee Benefits are a sizable expense for any organization. With a well-designed program, an organization can leverage this investment to lead to lower turnover, higher employee satisfaction, and increased productivity.

Finding common ground between the often-contradictory objectives and perspectives of executives and HR is key. With open communication, an understanding of the budget, and careful review of employee expectations, you can develop a program that meets the needs of the workforce while protecting the bottom line. Instead of a tug-of-war, working together will create balance, mutual understanding, and an overall healthier organization.

Power of Two

Andrew McNeil (andrewm@arrowbenefitsgroup.com, 707-992-3789) and Rosario Avila (rosarioa@arrowbenefitsgroup.com, 707-992-3795) are senior benefits advisers at Arrow Benefits Group in Petaluma.

Read their previous columns.

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