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Benefits Reimagined: A Fresh Strategy

As HR professionals strive to create competitive benefits packages that attract and retain top talent, it’s essential to think beyond traditional offerings. AIM HR’s Mary McNally and Stacey Wenczel join Pete Wright on this episode of Human Solutions as we discover how to design a benefits program that aligns with your company’s culture, values, and the needs of your employees. Just as a chef creates a menu that reflects their restaurant’s identity while catering to their customers’ tastes, you need to align your benefits program with your company’s values and culture while providing benefits that resonate with your people!

From generational differences to financial, cultural, and family needs, Mary and Stacey explore how to personalize benefits for your company. This episode also covers communication strategies, compliance issues, and low-cost team-building activities to ensure your benefits program stays fresh and engaging. Tune in to discover how to take an ongoing approach to your benefits program and evaluate what your employees want while aligning your benefits program with your company’s culture and mission.

Links & Notes

Episode Transcript

Pete Wright:
Welcome to Human Solutions: Simplifying HR for People who Love HR, from AIM HR Solutions on TruStory FM. I’m Pete Wright, and this week we’re talking all about benefits. Figuring out how to best design a benefits program that aligns with your company’s culture, values and the needs of your employees isn’t easy. And just as tastes shift over time, so must the offerings in your company benefits plan. This week, Mary McNally and Stacey Wenzcel join me to share their insights into building a benefits plan that satisfies your team’s needs while thinking out of the box too. Mary McNally, Stacey Wenzcel, welcome to and welcome back to the show. It’s good to have you both here. Hello.

Mary McNally:
Hi, Pete. Thank you.

Stacey Wenzcel:
Hello, nice to see you.

Pete Wright:
We’re talking about out of the box benefits, and I wonder if we need to talk about benefits in 2023, maybe writ large before we start zeroing in on how to build a benefits plan that addresses real lives of real people in our organizations, especially because so much has happened over the last three years that I imagine have greatly impacted benefits offerings for companies. Can one of you get us started by setting the table a little bit on what the landscape for benefits looks like right now?

Mary McNally:
Sure. I’m happy to do that. A big trend, and it’s always been kind of like behind the scenes but maybe just hasn’t been vocalized as much, is really this whole idea of personalization of benefits, really making that the forefront when trying to decide what benefits that you want to offer as an employer. So I think that is one of the key pieces of benefits for now and for the future. It really is but analyzing your population, your employee population because everybody has different needs. There are different financial needs, there are different cultural needs, there are different family needs. So there’s just a wide range of personalities and needs that each employee has. So it’s really trying to grasp that and seeing what you can offer as a company that can hopefully satisfy all of those needs of the employees. Of course, you can’t satisfy every single one, but the hope is that you can offer a wide range of benefits that can at least help all the employees in your company.

Pete Wright:
When I first started working for a big company, the benefits was, “Here’s your benefits. You just need to sign here to say you acknowledge that you have healthcare. And if you have someone else in your family on your healthcare, acknowledge that, we’ll send you some cards.” I think there were other “benefits” in my benefits package. I know I had two weeks of vacation, but there was never any conversation with me about how my identity, my age, my culture, my ethnic racial background, my sexual orientation, none of that was ever a conversation in my early sort of benefits experience. And I know so many of these cultural drivers that we see sort of out in the world at large are pushing against some of those conversations. And I wonder how those kinds of things, talking about generational needs and different financial, racial ethnic needs are pushing on how you think about building a benefits plan. Stacey?

Stacey Wenzcel:
Yeah, Peter, I do think that that’s become much more of a focal point for employers in recent years and definitely more so in the last two to three years due to the change in the labor market for across all industries. So employers really need to take it to that next level as opposed to medical insurance and 401(k) and vacation time and really communicate not only with their employees but with prospective job candidates, what they have on the benefits front that speaks to a different generations, different family makeups, different social categories, different types of benefits may or may not appeal to them. And then the employer has the opportunity to really differentiate themselves from the other job down the street or the other remote opportunity that an employee might have.

Pete Wright:
What makes for a strong benefits package in a recruiting context? What are people looking for right now?

Stacey Wenzcel:
Well, speaking to that personalization, what is any individual looking for I think is what really comes down to, because Jane might be looking for a robust medical insurance plan and Bobby is looking for lots of vacation time. Someone else is looking for a hybrid environment where they’re able to have flexibility to either come into the workplace just periodically or not at all. So it really depends on, well, number one, what an employer is able to afford to offer from logistics as well as financial. And then it comes down to what is somebody seeking. It’s just different for so many people.

Pete Wright:
You broke the seal on hybrid work environment. I’m curious how you consider building a benefits package that works for people who don’t come to the office. How do you personalize when this is somebody that you don’t see as often as other people? What does that look like? Mary, you want to take that one?

Mary McNally:
Sure. So I think a big piece of that now is that people are accustomed to being on video. So I think it’s still okay to include benefits that maybe someone can only access through video but as long as there’s that inclusivity aspect to it. So you don’t want to just be building a benefits program that is saying a lot of onsite benefits that somebody that’s working from home most of the time isn’t going to be able to access. But if you are going to be, say, doing some type of wellness seminar or some type of benefit seminar, you want to make sure that yes you can do it in person, but that you also are including all of the remote employees as well.

Pete Wright:
Let’s walk through some of the main categories of benefits. We have healthcare, and that includes physical health and mental health now, well, although again historically mental health seems pretty new as something we’re considering. So there’s health and healthcare and time, how you handle things like schedules, flexible schedules, sabbaticals, those sorts of things, right? What else am I missing? Tell me how else would you categorize the big buckets of benefits we need to think about?

Stacey Wenzcel:
I mean, yeah, I think that sabbaticals and pay time off kind of fall into their own separate category from flexible time and schedules. I think that those almost are two separate buckets. And then in addition to that, we can add things like the financial sort of wellness of the benefits which speaks to retirement benefits or loan assistance, educational reimbursements, those types of things. And then the list of fringe benefits is probably endless and to try to categorize them into one specific bucket might be a little bit challenging, but I don’t want to forget to include what Mary and I think we agreed upon calling them like incidental benefits where there are these things that an employer might not even think of communicating to employees or perspective candidates as benefits, but the truth of the matter is that is in fact what they are. Like we have donuts on or healthy free food on every day of the week for that matter, or there’s free coffee in the cafeteria. We host brown bag luncheons, which are generally types of educational meetings, but a speaker might come and an expert.
So there are these things that people might not necessarily think of as benefits, but they really are. And there’s something that should distinguish one employer from the next.

Pete Wright:
Well, I think you bring up learning and development is also a benefit, right?

Stacey Wenzcel:
Totally.

Pete Wright:
So far as we’re developing our own workforce, it’s also a benefit to you that you can’t take that away. Once you’ve learned something, you can’t take it away.

Mary McNally:
Yeah, absolutely. I think another area would also be, on the sidelines a little bit but it’s becoming more popular is voluntary benefits. So I kind of call these low hanging fruits in a way because it’s a nice way to personalize some benefits. So you can offer different types of benefits that different types of folks can take advantage of, but there really isn’t a lot of heavy lifting on the employer side. There’s usually not a lot of administration that goes around it. There’s not a lot of benefits compliance that surrounds them because they typically are not pre-tax benefits. So they don’t have to abide by certain benefit compliance and tax compliance rules because they are usually paid for with after tax dollars.
And usually, an employer is just the passthrough for the payments of such benefits. So for instance, a popular one now is pet insurance. That’s a big one. Another one, especially since the pandemic, a lot of people are interested in purchasing more disability coverage than what they may have with their employer or more critical illness coverage. So benefits like that, called voluntary benefits, are something that I think employers can start to think about.

Pete Wright:
Those kinds of benefits where the employer is just a passthrough, what’s your sense of how employees look at those benefits, do they still look at them as benefits or do they look at them as they really… Like it serves a sort of internal branding purpose?

Mary McNally:
Yeah, that’s a great question. So I think it does. And like I said, again, when I think of personalization of benefits, I think of, “Okay, what benefits are you going to work for me and do I have a list of benefits that I can just pick from?” And adding voluntary benefits creates more of those options. So it’s not like you have to have so many people to enroll in a pet plan in order to offer that pet plan for instance.

Pete Wright:
I can’t believe I didn’t make this connection but you just brought it up. We have a company near where I am, it’s a small production company. One of their benefits is HelloFresh. And it’s not something that the company pays for, but as a result of the cooperative, they’re able to get a little bit of a discount and they just pass through to HelloFresh. And employees, the work at home employees especially, get boxes of food delivered to their house. It’s not a burden necessarily that the company takes on, but to your point, employees have greater affinity for the company for just taking the time to organize that relationship.

Mary McNally:
Exactly. And again, I should have mentioned actually one of the big advantages is not only is it easily available for employees, but you’re right, there typically is some type of discount for a group plan and then the convenience of payroll deduction.

Pete Wright:
Yeah, right. You’re right.

Mary McNally:
So if you want HelloFresh, if you’re going to order that and pay, whatever, $25 a week, you could possibly have that taken out of your paycheck and not have to write a separate check or submit a payment online.

Pete Wright:
That’s somebody-

Mary McNally:
I guess nobody writes checks anymore.

Pete Wright:
Yeah, who writes checks? I think I’ve had one check left on my book for 10 years.

Mary McNally:
Exactly.

Pete Wright:
Okay. Before we transition, if we’re here ostensibly to talk about out of the box benefits, speaking of personalization and things like HelloFresh, what are the benefits that are in vogue right now? What are you seeing in terms of benefits packages that are surprising you?

Stacey Wenzcel:
I can’t speak to the tax implications of this, but I am seeing a lot of creative solutions for tuition reimbursement and ways to help employees finance all kinds of things that are not necessarily even work related where there’s reimbursements or partial coverage of even health insurance deductibles. Just ways to, I mean, I hate to say it, but to throw money at employees but for a particular purpose as opposed to having it be in their actual salary. So it’s more of a, I guess, more bang… Not really bang for buck, but it’s more focus on, “This is what we think is important as an employer and this is what we think.” And you’ve already indicated to us that you find value in this, and so we’re finding creative ways to use the fiscal resources towards various different types of financial needs that employees might have.

Mary McNally:
I mean I think one thing that has come up in the past, but now I feel like it’s getting a little bit more in the forefront is this idea of offering unlimited vacation time. And I think, again, this goes around the flexibility. So I think employees have maybe more flexibility nowadays because of COVID. So more companies are offering hybrid arrangements or fully remote arrangements, but this piece of, “Okay, well, we’re also going to offer you this unlimited vacation time, so we’re going to put that trust in you that you’re going to use your vacation how you see fit as long as you make sure that your responsibilities at work are kept up and we have the appropriate coverage.” So I definitely am seeing that talked about much more.

Pete Wright:
Well, that’s actually an interesting sort of pivot a little bit on this idea of trust in a benefits package. We’re not only trusting you to use the time that you put into work effectively. We’re trusting you and your manager, both, to have a sound relationship around the work that you’re doing. Does this personalization of benefits and the idea of the company having to invest more trust in the employees to use these benefits responsibly, is that a conversation that needs to be had when you broach the communications front of talking about the package that you offer?

Mary McNally:
Absolutely. In stepping back even from when we first just started chatting, I mean the main idea that someone should, or the main factor that someone should consider when… I say should, like an employer should consider, is this whole idea of, “What’s your benefit strategy?” And part of that is what is the trust factor of your employee population? What is your employee demographics, things like that. What is our budget? All of those things fall under that big piece of strategy, right? So I would say that trust would be a piece of that as well.

Pete Wright:
Okay. Have we reached the end of the era of the extravagant benefits era, right? The sort of highlighted by the Silicon Valley, heavy recruiting against extravagant benefits packages. Is that over?

Stacey Wenzcel:
That’s funny. I don’t know. I did a little research before we did this podcast to see where the days of the company car is and paid for vacations and sabbaticals-

Pete Wright:
We talked on this show about the investment of, “Don’t worry. It’s Friday. It’s Salsa Day. We make salsa for you,” you know?

Stacey Wenzcel:
I mean, I don’t know for sure because most of the companies that I work with are smaller and don’t generally fall into the category of having the fiscal resources to do those types of benefits. But from what I’ve been reading and hearing about, I don’t think they’re gone. I just think that smaller companies, mid-size organizations are just getting into the benefits game and so they’re looking for creative ways and low cost big bang benefit offering. So we don’t hear as much about the cell phone plans being provided and the company cars, like I said, and the all expense paid vacation kind of a thing. But I think they’re still out there.

Pete Wright:
They’re still out there. Maybe they’ve just been normalized, right? Those are the things that we have come to expect. And so now what’s the next brave frontier? To your point, personalization.

Stacey Wenzcel:
Yeah, exactly.

Pete Wright:
Do we need to talk about compliance and tax and the financial burden of these benefits? Is that a conversation that HR teams are having enough?

Mary McNally:
1000%.

Pete Wright:
Okay.

Mary McNally:
I was going to mention that too. As much as a company would say, “Oh, we want to offer the best benefits that we can that are personalized, that are cost effective,” you always have to be thinking about do they need particular benefit and tax compliance laws, and also too making sure that they’re in how they’re being offered as well so that here’s this whole balance.

Pete Wright:
Okay, I’m going to need some examples.

Mary McNally:
Sure.

Pete Wright:
What do we look at in terms of red flag benefits and policies that might potentially hurt us or not be addressing the broader nature of our community?

Mary McNally:
Sure. So I’ll take it an easy compliance one. And I mentioned earlier about the voluntary benefits being pre-tax versus coming out of your paycheck after tax. There’s, there is a list of benefits basically, and the IRS publishes a Publication 15-B, which is an employer tax guide to fringe benefits that goes over each benefit, what is considered exempt from taxes and what benefits are not. That’s kind of like an easy example to be like, “Okay, if I’m offering this benefit, does the IRS say that we can take this out of employees paychecks pre-tax?” That’d be one example of pre-tax.

Pete Wright:
Okay. So HelloFresh is not going to be a pre-tax?

Mary McNally:
Exactly.

Pete Wright:
Right. Okay.

Mary McNally:
But my medical dental, those core benefits that you think about are going to be, and that’s compliance with the IRS. Then there’s also compliance, so, “Am I communicating this benefit appropriately? So am I giving employees the right documentation that’s telling them about the benefit?” And there are a lot of these core benefits such as your health plan, your dental plan, your vision plans. There needs to be specific documents that employees have access to that goes over all of the benefits and what the benefits offer and so forth.

Pete Wright:
Okay. So does that include if you’re going to offer a benefit… This is how my brain is working out what you’re talking about. If you’re going to offer a benefit, you have to clearly communicate that benefit exists and you have to, I imagine, do so in a timely manner, right?

Mary McNally:
Exactly.

Pete Wright:
You can’t just say, “Oh, benefits, the open enrollments closed. Sorry,” right?

Mary McNally:
Exactly.

Pete Wright:
Even though you never told them that it was… Okay, so those kinds of considerations, what am I missing in that mental model?

Mary McNally:
So other considerations would be, again, well you asked for an example of the compliance, but also something that maybe is non-discriminatory. So that can even come down to as much as how people are paid, right? So if you have employees that are considered highly paid employees and you’re giving them a benefit that they are getting more of the benefit than employees that are considered non-highly compensated, that’s discriminatory. An employer cannot do that. There are penalties for particular benefits that can’t be favor highly comped employees. So that would be one example.
Oh no, another example would be sometimes people think, “Oh, if I can offer more of an employer contribution for a medical plan to folks that are older because they need that benefit more than say somebody that’s younger,” that’s extremely discriminatory, right? So you always have to be thinking about, “Is this fair across all of my employees?” Does that answer your question, the examples?

Pete Wright:
It does. That’s very helpful. My follow on question is, is this sort of jurisdictional? Are we talking about federal compliance issues here or are there any Massachusetts specific issues we need to consider?

Mary McNally:
That’s a great question. Go ahead-

Stacey Wenzcel:
Yeah. I don’t know off the top of my head if there’s any state specific compliance elements. But to just piggyback on what Mary said and she spoke great about the real legal compliance tax implications, from a discriminatory standpoint and more of a best practice kind of a thing, an employer wants to make sure that they are offering benefits sort of equitably across different groups of employees.
So probably, I want to say in the old days we would see the managers or the salaried employees as opposed to maybe if you’re working in service industry, the customer facing or the production employees might have a whole different slew of benefits than somebody who works in the office. And generally, they were a little bit more generous on the salary side versus the hourly side. That’s something that a lot of employers are getting away from because it just doesn’t align with the culture and really the general environment that a business is trying to create for their employees and also the public relations that they’re trying to communicate to their customers. To have an us and them kind of a layout of benefit plans is just really doesn’t cut the mustard anymore.

Mary McNally:
And also too, just to jump in on that, is that, so yes, definitely there is a federal law that governs benefits. You’ve probably heard it’s called ERISA, but then yes, certain states do have their own laws as well. And that comes into also offering remote benefits in different states too. That’s a whole nother compliance piece. But anyways, I just wanted say [inaudible 00:23:16].

Pete Wright:
Is that something we should address briefly?

Mary McNally:
Yeah, I think a lot of people think, “Oh, we’ll just hire people in any state.” And you just always have to be aware that some states do have specific tax laws that apply to payroll and/or benefits. So it’s just being aware of that before just hiring somebody in a specific state. You may have to register as an entity in that state and abide. You have to abide by their employment laws. So definitely another piece of the pie to be looking at.

Pete Wright:
For sure. All right, we have this brand new manufacturing organization that we have been building in our minds for the last three seasons. And I would love to have you both come into my brand new organization, manufacturing organization that is, as you can imagine, a complex hybrid organization with people who are working everywhere. But also we’re trying to build a bespoke culture in our manufacturing organization. And so I would love, as we wrap up today, for you both to paint a picture of how you would go about looking for clever benefits to bring my culture together and build a benefits package that works. Morale boosting, team building. What are the things that allow us to really thrive and also offer a comprehensive benefits package for a not so huge company quite yet?

Stacey Wenzcel:
Well, I mean simply put, I would start with the standards that you spoke of earlier, the kind of the must have that employers need to offer, or at least if nothing else, provide access to through those passthrough kind of payroll deductions. But then I would get with the management team and the founders of the organization and find out from them what’s important to them. What do they envision as the culture of their organization? We want flexibility for our employees. We want to retain them for the long term. We want to respect diversity. So if those are the things that are important to them, then let’s use that as our checklist, as our laundry list of, “Okay, well what benefits feed into that? Or what aspects of our paid time off policy speaks to those unique characteristics that we say is important to us?”

Pete Wright:
That’s actually fantastic, this idea, and Mary I’ll turn to you, the idea of saying, “What do you stand for company leadership? And now how do those benefits represent that?”

Mary McNally:
Exactly. And that’s the benefit strategy piece. So that’s really the first thing that needs to happen is having those conversations, like Stacey said, with the owners of the company and management, but also employees as well. I mean, I’m a big proponent of employee surveys or employee focus groups because you can be in a conference room or be on a Zoom call and talk about what you think your employees want till the cows come home. But until you really know what employees wants, I think including employees as well in that decision.
But I agree too, what Stacey was saying, I think the core benefits are always going to be a need and a want from employees, like the health insurance and dental and vision, we call those the health and welfare. And then these out of the box benefits that can meet… Hopefully like we talked about, these generational and cultural and fiscal needs will be things like the voluntary benefits, maybe additional mental health benefits. I know we could have a whole podcast on that as well. Certain types of financial wellness benefits. So these out of the box benefits can just be wraparound those core benefits.

Pete Wright:
I think it’s fascinating to talk about it in that way. I went to a presentation at the local SHRM and the presenter I think was a fan of Steve Jobs who said something akin to, “We don’t need to ask our people what they want. They won’t know what they want until we give it to them.” And that was the idea. I think that that presents a really interesting tension in crafting a benefits program, which is the whole idea that, “We’re giving you the benefits that represent us as a company. It’s not like we don’t care what you are asking for, but you’re our audience and we’re presenting you this package and you’re going to enjoy it. You’re going to enjoy it because it’s what’s on offer.”

Mary McNally:
Exactly. And that’s why it’s nice to be able to offer a whole wide range, because people, you can hopefully satisfy the majority if not all.

Pete Wright:
Okay. The last thing that I have been told that we need to talk about is gamification in benefits. Somebody has a story about turning Benny’s into games.

Stacey Wenzcel:
Well, I mean whenever you can find an opportunity to do some team building work or some employee morale lifting and make anything sort of boring fun, HR is ready and waiting to make it happen. One of the clients that I recently worked with just saw this as an opportunity. It’s St. Patrick’s Day, I think it was along the lines of finding the pot of gold at the end of the rainbow. They built up a scavenger hunt. This worked for onsite employees and remote employees. It was basically done via email and Teams and with people’s communication in Slack and taking pictures with their cell phones. Just a list of things to find, build your own teams, let HR know who your teams are, and snap a picture when you find the rainbow Post-it note pile or the… I can’t remember what some of the other things were. Oh, like a half-eaten donut in wherever.
And so they were just fun things. Every team submitted whatever they found. And then it was a lottery as to who won the pot of gold at the end of the rainbow. So it forced employees to work together. There was awards but it was a low cost team building event.d 10 employees got to walk away with gift cards to local restaurants. So that’s a benefit even though it doesn’t fall into the core benefits and general things that most people think of.

Pete Wright:
Well, I think that is exactly the point of thinking outside the box, that we’re not just talking about health, vision, dental retirement. Bringing the team together and doing something that increases our affinity with one another is as much a benefit and certainly as much a utility to operation of the organization. That can be very powerful.
What do you think about the idea of maintaining a benefits process? Like we opened this conversation with tastes shift, needs shift over time. If anything we’ve learned over the last three years, that needs have really, really shifted over the last… Thanks to the pandemic. How do you continually optimize your benefits program to make sure that you are addressing these shifts over time? Mary, you want to take this one?

Mary McNally:
You use the word continual. Reviewing your benefits is ongoing. I think a lot of times people will think, “Oh, benefits renewal is coming up, so we’re going to look at our benefits sometime in September and make decisions in October with a January 1 effective date.” But it’s not. An HR department really needs to be reviewing their benefit options and analyzing claims data and reports and so forth to make sure that the company is within its budget, but also that employees are utilizing the benefits that you’re offering them. So it’s all year long really.

Stacey Wenzcel:
It’s a great opportunity to utilize those employee surveys that Mary mentioned earlier about asking employees, “Which benefit plans are most important to you? What do you even know about this offering that we have? Why aren’t you using?” And then maybe having adhoc committees that really just come up with new ideas or suggestions for modification. Even employee exit interviews are a great way to determine what benefits you may be offering that are important to employees and things that you don’t offer that would be of value.

Pete Wright:
You never would’ve known without asking.

Stacey Wenzcel:
Right.

Pete Wright:
That’s great. Hey, both of you, thank you so much for your insights and for participating. And Stacey, I hope this is the first of many podcasts we can record together. Appreciate you being [inaudible 00:32:10].

Stacey Wenzcel:
It was very enjoyable.

Pete Wright:
Thank you. And thank you as always, Mary. It’s great to see you again and thanks for your insights today.

Mary McNally:
Great. Thanks, Pete. Thanks, Stacey.

Stacey Wenzcel:
Thank you.

Pete Wright:
And thank you everybody for downloading and listening to this show. We appreciate your time and your attention. As always, you can find links and notes about the show at aimhrsolutions.com., Or just swipe up in your show notes. We’ve got some links in the actual show notes on your podcast app. You can tap there to learn. In fact, how about learn about this Form 15-B, Guide to Fringe benefits. You want to see some hot form action? That’s in the show notes.

Mary McNally:
Very exciting.

Pete Wright:
Yes, very exciting. On behalf of Mary McNally and Stacey Wenzcel, I’m Pete Wright. We’ll catch you next week right here on Human Solutions: Simplifying HR for People who Love HR

Each week we will showcase a bite-size conversation dedicated to helping you get your arms around another HR challenge. The people on this show have decades of experience, and this is our chance to share that knowledge with you.