When Coca-Cola unveiled an expanded parental leave policy in April, the beverage giant was making a statement beyond the realm of employee welfare. The decision was in part aimed at luring and retaining talent.
"It's the smart thing to do for our business," Katherine Cherry, a member of a group of young Coke employees that proposed the policy change, said in an article on the company's website (see coca-colacompany.com. "To remain competitive, Coca-Cola must preserve and enhance its talent pipeline. We know paid parental leave will go a long way in supporting our current associates, and it will be a great selling point for recruitment."
Beyond traditional health care plans and pensions, employees now expect a broader choice of benefits that reflect their changing needs and lifestyles. Meeting these expectations gives employers an opportunity to differentiate themselves in a competitive market for talent.
Well-structured benefits plans enable employers to reward and incentivize staff, promote loyalty, and boost engagement and productivity. They also alleviate some of the most common causes of stress among employees, such as health care and financial security.
Coke's extended leave policy, for example, will give six weeks of paid leave to biological and adoptive parents, regardless of gender, starting next year, according to the article on Coke's website. The new policy supplements up to eight weeks of paid leave the company provides birth mothers through short-term disability.
Coke is not alone. EY also said it would expand its parental leave policy in part for the same reasons as Coke: talent recruitment and retention.
Starting July 1, EY mothers- and fathers-to-be—be it through birth, adoption, surrogacy, foster care, or legal guardianship—would be eligible for up to 16 weeks of fully paid parental leave. The outgoing policy offered 12 weeks for eligible birth mothers and six weeks for eligible fathers and adoptive parents.
EY will also offer employees financial assistance of up to $25,000 per family for adoption, advanced reproductive technology procedures including for surrogacy, and medically necessary egg and sperm freezing. These benefits, which go into effect on Jan. 1, would apply to same-sex and opposite-sex couples, the firm said.
Last year, EY research found that 38% of U.S. Millennials would move to another country with better paid parental leave benefits and men were more willing to change jobs or give up a promotion to better manage work and family than women were.
"These new benefits will not only continue to attract and retain the best talent, but help us to deliver exceptional client service, while also encouraging our people to live fulfilling lives," Carolyn Slaski, EY Americas vice chair of talent, said in a news release.
WHAT EMPLOYEES WANT
Research by Willis Towers Watson suggests that employers are increasingly aware of the need to tailor the range of benefits they offer to their employees' needs.
In the United States, 92% of employers believe that voluntary benefits and services will be important to their employee value proposition over the next three to five years. This awareness is up from 73% in 2015 and 59% in 2013.
Willis Towers Watson researchers asked employees around the world to rank their top three reward preferences from a range of well-established options. Larger pay increases came out tops among respondents in all 12 countries and both age brackets (20—39 and 40+). More generous retirement benefits were in second place for respondents over the age of 40 across most of the world, as well as for 20—39-year-olds in Australia, Germany, the United Kingdom, and the United States. In Brazil, Canada, China, India, and Japan, the opportunity to earn a bigger bonus came second among the younger group.
More generous retirement benefits were also a priority for those in their 20s and 30s, while more generous health benefits were valued by the 40+ group.
INCREASINGLY POPULAR NONCORE PERKS
As employers begin to offer greater customization, they are able to respond to employee demand for additional options that support their financial well-being. Such security is a priority shared by employees of all ages around the world.
The 2016 Willis Towers Watson Voluntary Benefits and Services survey, which focused on U.S. employers, suggests that the most common of such perks are set to grow significantly in popularity in the coming years:
- Identity theft protection was offered by 35% of the organizations represented in the survey in 2015, projected to rise to nearly 70% by 2018.
- Critical illness insurance was available to employees of 44% of the organizations polled in 2015. That figure is estimated to reach 73% by 2018.
- Student loan repayment programs were provided by 4% of employers last year. This could expand to 26% by 2018.
- Pet insurance was offered by 36% in 2015. It could rise to 60% by 2018.
5 steps to update your company benefits plan
The authors of Willis Towers Watson's The Future of Benefits report recommend employers take the following steps when considering how to develop their benefits plans:
- Align the benefits strategy with business objectives. Revisit the strategy regularly to ensure it evolves as regulations and employee requirements change, while still supporting business priorities.
- Aim for global consistency with local relevance. Cultural differences among locations can be accommodated as long as they are in keeping with the strategic commonalities that support the company's underlying principles.
- Provide core security and increase employee choice. Health coverage, life insurance, and a pension are among the core benefits that provide employees with financial security and should be available to all. Once these essentials are taken care of, employers can offer a selection of add-ons for individuals to choose from. The options could be tailored to the individual's career stage, caring responsibilities, or personal aspirations.
- Educate employees about the benefits program. Explain how it fits in with the company's goals and rewards policy to boost employee appreciation and understanding and, ultimately, the value of the program to the company.
- Deliver a high-performing program. Design best practices based on research into employee behavior. Improve administrative efficiency. Use technology to enhance cost-effective delivery of the program. Use data and claim analytics to support decision-making. Establish quality standards for insurance products.
The original version of this article, "5 Factors to Consider When Designing Benefits Plans," by Samantha White and Jack Hagel, is available at cgma.org.