Increase Employee Engagement by Offering Flexible Benefits Packages

May 18, 2013 - 7 minute read - Posted by

In an era of sky rocking benefit costs, employers are facing the dilemma of cutting down their costs associated with their employees’ benefits while still providing an attractive health plan to attract prospective employees. According to a survey conducted by LIMRA, 63% of employees rated benefits as an important factor when comparing job offers from two separate companies. Many employers have realized that the traditional one-size fits all benefits plans have lost its appeal with the increased diversity among employees ranging from age to cultural differences. It is becoming more common to have one workplace where you have Joe who is married with two dependents and want a benefits plan that will cover both him and his family in the long term while Mike is single and an avid sports fan who just wants to have the basic coverage for health and dental care. As a result, more than half of employers are willing to adopt voluntary benefits in order to keep their competitive advantage against other competitors. Voluntary benefits packages allow employees to pick and choose coverage accordingly to their personal situation so they have more custom fit for their needs while still ensuring that they are properly insured. In this blog, I want to discuss the advantages of offering flexible benefits to your employees, the risks involved, and how to manage your benefits plan effectively while still offering an attractive package.


The main benefit of offering flexible benefit programs is that you are able to meet the changing needs of the workforce. As more Generation Y is entering the market and Baby boomers extending their retirement age, it is becoming more common to have workplaces where you have both generations working together. By offering flexible benefits, you are giving your employees the opportunity to choose packages that best satisfy their unique needs. The best news is that flexible benefits plan is not necessarily more expensive than the traditional one-size-fits-all benefits plan. The best practice is to set a dollar maximum. For example, each employee has $2500 annually to spend on the benefits deemed to be more suitable for their lifestyle. If employees want to opt in for more options, they can do so at their own expense. By setting a fixed amount, you can contain the cost of the benefits and budget better for the years to come. Another great benefit is that flexible options increase the involvement of employees and families which in turn, improves the understanding of the benefits. When you offer a one-size-fits-all, employees know that they can’t change the policies, therefore, they show little interest in what is being offered to them. But when they have the option to choose, employees want to make sure that they are getting the best for the fixed amount provided to them. So they will go the extra mile to understand each of the option to then make an informed decision on what to choose.

Now why should you care what your employees choose as part of their benefits packages? Making the wrong decisions on an individual level can affect your organization in two ways: firstly, if you allow your employees to pick their own benefits, you will see your insurance premium going up. The reason is related to the adverse selection i.e. only people who have less than average eyesight will select the vision care. The high level of claims will increase the premium for that specific benefit which unless you share the costs with the employees, you will end up paying for the increased rate. Secondly, employees picking the wrong benefits may lead to high absenteeism and low productivity. For example, if one of your employees suddenly has some cavity issues and is not covered by the dental plan, that employee may skip work to tend to the pain or come to work but not be fully efficient due to the pain. These examples are simple, but you can easily see how the wrong benefits can affect your organization as a whole.

How to guide your employees to select the right benefits plan? The language used in the insurance words are often an obstruction to employee involvement. Employees do not understand or show interest because it is explained to them in a language they cannot understand. The wording of a plan could mean difference between being covered and not being covered for an illness. I would suggests to make benefits plan education more interactive rather than the traditional hour-long PowerPoint presentation. You want to be able to engage your employees in asking the right question and leaving the workshop with the right knowledge to select their benefits. The most useful recommendation is to have one-on-one guidance whether you have an HR manager or Benefits coordinator in your organization who can answer all the inquiries or teaming up with your insurance company to provide a hotline/client manager to support the employees if they need more clarifications. By having this type of support during the enrolment process, you are providing your employees with experts who will guide your workforce into making the right decisions.

Voluntary benefits allow employers to be competitive in hiring and retaining employees. With today’s workforce being less loyal, having satisfaction with benefits directly impact overall job satisfaction for your employees. A conscious effort made by you and your employees to ensure both parties are able to determine a benefits package that is mutually beneficial will provide you with a healthier and happier workforce while you can lower your costs on benefits but still making sure that everyone is being covered properly.

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