Benefits blunders: Why learn the hard way?

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To err is human. But in a perfect world, you can learn from the mistakes of others before making too many yourself.

As a benefits professional, you’ve not far to look: the landscape is strewn with blunders and misconceptions. An informal poll of erring, but now wiser, benefits professionals — both practitioners and consultants — yields up a litany of paths not to take, mindsets to avoid and strategies not to adopt, providing fertile ground for those seeking an education on what not to do.

Take Sarah Sardella, senior director of global benefits and HR operations for Akamai, a digital technology services company. When she joined the company more than a decade ago, Sardella assumed the optimum method of communicating with employees in its dozen offices around the globe was electronically. This was, after all, a tech company.

Looking back, Sardella is convinced she missed a significant opportunity by not traveling to those far-flung offices when she was building the foundation for benefits operations. In doing so she could have appreciated cultural nuances and established “IRL” relationships with key players. “The minute you walk in the door [of a satellite office], you become a human being,” she says. “It builds credibility.”

It wasn’t that she didn’t consider visiting some offshore locations, it was just that doing so would have required a bigger push to convince those controlling her travel budget that such trips justified the expense.

Getting employees on board

The same principle applies closer to home, according to J. Brian Coleman, VP of total rewards at Dawn Foods, a baking ingredient company with distribution centers throughout the U.S. and Canada. He says relying on email blasts and other impersonal methods to inform employees about major benefit initiatives doesn’t cut it.

“I’ve learned that you just have got to get out there and get in front of people to drive home essential messages about the potential value of particular benefits,” Coleman says. That makes him a road warrior around open enrollment time, but it’s worth the effort, he has realized.

Another foundational professional lesson Coleman likes to share: “Rome wasn’t built in a day,” which in this context translates to: Expecting quick uptake on new initiatives that you were sure would be an immediate hit can lead to needless discouragement. By way of example, he recalls when Dawn Foods incorporated telemedicine features into its health plan in 2015. The initial response was underwhelming. But with patience and periodic testing of new communications methods with different employee demographic segments, “our team members are now on board.”

And, once in a while, things just don’t work out and you have to make the best of the situation. Years ago, Dawn Foods hoped to plug a leak in its employee retirement savings accounts caused by participants taking out plan loans to finance the purchase of big-ticket consumer products like jumbo-sized flat screen TVs.

The initial solution was a payroll deduction direct merchandise purchasing plan. But the chosen vendor’s parent company shuttered that division, and the program was abruptly suspended. Dawn Foods found a replacement vendor but the program lost momentum in the process.

Intuition failure

A common theme of HR professionals blunder stories involves decisions that, at the time, intuitively just seem right but that turn out to be quite wrong.

In health plan design, for instance, Barry Schilmeister, a senior health consultant for Mercer, warns against overestimating company savings from employees choosing less-expensive health plan options.

“When you steer employees to less-rich plans, you save on claims but lose employee contributions,” he says. Schilmeister recalls one time when his client was heading down the path of raising employee contribution rates for the richer plans — but raising them so high that it would have motivated too many employees to move into the cheaper plan.

Happily, Schilmeister completed his analysis before any real damage was done.

“The more they pushed up the rates for the richest plan, the more they would lose [in net savings] as people moved [to the cheaper plan].” An 11th hour tweak to the contribution levels for the richer plan preempted a benefits blunder.

Schilmeister recounts another story that highlights another HR pro blunder motif: lack of attention to detail. This one involves a common provision in group life plans called a disability premium waiver. It relieves employers from the obligation to continue to pay life insurance premiums for employees who are covered by employer-subsidized, long-term disability insurance, and who become fully disabled.

The potential blunder: “Assuming that your life insurance and disability plans are talking to each other.” Often, they don’t, he warns — even when both contracts are issued by the same carrier. Failing to bridge that communication gap could lead to the loss of the life coverage for the disabled employee.

Sometimes a benefits blunder occurs when important details of plan changes aren’t shared with the higher-ups in the organization. That’s what happened to a former client of Cecile Chang, Willis Towers Watson’s health and benefits market lead for Northern California. Her client neglected to explain a new co-pay formula in her company’s pharmacy benefit plan to the CFO, one that went from a flat co-pay to a percentage of the drug’s cost.

Barry Schilmeister is a senior health consultant for Mercer.

Angry CFO

Shortly after the change took effect, the CFO’s wife faced a higher co-pay when filling a prescription and complained about it to her husband. Feeling blindsided, the CFO marched into the benefits director’s office and demanded that the old co-pay formula be restored. “It was a very disempowering experience” for her client, Chang recalls. That benefits leader has since moved on to another company.

The bigger issue in that scenario, she adds, was the lack of a clear governance structure for benefits decision-making. It hadn’t been clear that the CFO’s involvement was necessary for that category of plan design change.

Explaining benefits changes (as well as those that haven’t changed) isn’t just a minefield as it relates to the C-suite. Just assuming that communications directed to employees are getting through is a blunder in the making, according to Chang. Missed opportunities for employees to take advantage of benefits risk rendering a costly benefits program worthless in the eyes of those employees.

That’s why Chang encourages event-based communication tactics. For example, a message might pose, then comprehensively answer this question from a benefits utilization perspective: “I’m pregnant. Now what?”

Beware shiny objects

Maintaining an employee-focused perspective is critical in avoiding what could be the biggest benefit blunder of all: Offering a robust menu of benefits that do not address employee needs or the human capital goals of the organization.

How to achieve such a disaster? “It’s easy,” notes Julie Wilkes, the Wellbeing and Resilience Lead for Accenture in North America, “to be drawn to the shiniest thing out there.”

That “thing” might be a trendy benefit that’s the buzz at a benefits conference or HR trade show.

“Even an industry best practice might not be right for your people,” Wilkes has recognized. “We want to give our people the best, but you have to go back and ask them what they want.”

In the wellness arena, there are many shiny objects, particularly technology-enabled ones. But “wellness is not a program you just check off a list,” Wilkes cautions. Rather, it’s a component of a broader strategy to “create a culture that sets people up for success.”

A virtual coaching program Wilkes introduced to help implement that strategy turned out to be a false start — a service in which coaches provided what Wilkes considered to be only “scripted answers.” That program was ultimately dropped in favor of a different approach that enabled employees to engage in “authentic conversations” about issues of concern to them, she says.

Adds Chang: “A vendor is not a strategy.” That leads her to what she considers to be the ultimate benefits blunder: “not being strategic” when implementing programs by failing to analyze how they drive the organization’s overarching goals.

Acting with strategic perspective often requires assuming a leadership role. For example, Chang says, if your boss doesn’t have a benefits background, it would be a blunder to assume they can give you useful direction on how to turn your benefits programs into a driver of organizational strategy.

”It is incumbent upon you to provide that leadership,” she says.

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