In many instances, benefits plans can serve as effective motivational tools for employees. Of course, improved engagement and satisfaction depends on workers being able to understand their options and determine which benefits will likely provide them with the compensation and lifestyles they seek.
Different employees capitalize on different benefits. A parent might be keen to use company childcare benefits, while an active younger employee might be more intrigued by discounted healthcare. With thoughtful plan design and delivery, both scenarios can resonate with workers.
Employee segmentation can help plan sponsors identify the needs of specific workforce groups with the goal of targeting relevant benefits and services to them. Here are three steps to consider when establishing an effective benefits program.
Understand what motivates workers. The first step in establishing an effective benefits program is to understand what motivates workers — employee segmentation can help accomplish this. According to Willis Towers Watson’s 2016 Global Talent Management and Rewards survey, employers that offer customized benefit programs are three times more likely to have highly-engaged staff. They are also more likely to deliver better financial results than competitors that don’t offer more personalized programs and benefits.
Workforce population segmentation coupled with an understanding of group preferences can help employers add programs that workers will more likely use. For example, millennial workers increasingly want to see student loan repayment benefits. Adding such a benefit can help attract and retain younger talent.
As long as the same benefits are universally available across the company, plan sponsors can target different programs to different workforce segments. This can demonstrate to employees that they’re valued and the company is seeking to help meet their needs.
Communicate available benefits differently to employee populations. Marketing professionals know it’s vital to tailor messages to different segments of their audience. The same is true when plan sponsors use segmentation to guide their employee benefit communications.
Announcements of benefit program changes, for example, should include targeted messages regarding the plan options that employees currently use. With health benefits, this could mean segmenting workers that use a PPO plan from those with an HMO plan, and then communicating distinctly to each group. This enables employers to direct relevant information to different segments of their workforce without forcing employees to dig through information that doesn’t apply to them.
Workforce segmentation can also be effective when conducted according to life stages. Retirement benefits, in particular, can be organized by age ranges and progress toward estimated income needs. This will help guide employees in making better long-term decisions.
Companies with financial wellness programs should consider communicating program advantages to different workforce segments in different ways. Younger employees might want to know the wellness program can help them make a plan to start investing while still repaying student loans; more experienced employees might need help determining when to start taking Social Security benefits in retirement.
Avoid the pitfalls of employee segmentation. Employee segmentation can improve benefit program development and communication as long as plan sponsors avoid common pitfalls.
Employers must understand they cannot exclude employees from benefits programs. In other words, when creating a program with the goal of reaching a target segment, a company can’t exclude those outside the target segment from participating.
Thoughtful communication can help plan sponsors reach segments that will most likely benefit from a given program. Also, segmentation can help companies understand different populations within their workforce, but it isn’t foolproof. Not everyone in the same demographic segment necessarily wants the same benefits.
Some employers get creative with segmentation, using surveys to identify different types of workers that might be spread across demographic classifications.
The Society for Human Resource Management shared a case study in which segmentation was conducted by technical, functional and professional roles. Career development, benefits and other programs could be targeted by role to help employees accomplish their goals.
By understanding what employees need — then designing benefits to meet those needs and targeting communications by workforce segment — employers can reduce turnover, improve productivity and increase employee satisfaction.
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