Flex benefits are about the journey, not the destination

IN Partnership with

When looking at your total rewards program, a full-flex model can be quite the leap – but the introduction of even a small amount of flexibility can make all the difference when it comes to employee retention

FLEXIBILITY AND CHOICE infuse many front-and-centre themes for employers right now, including multi-generational workforces, ESG, and diversity and inclusion considerations, and it all ties into the total rewards package that organizations offer. “Flexibility is more relevant than ever. It’s about creating an environment in which employees have the ability to make choices,” says Shelly Russell, VP, client relationship health solutions at Aon. “It becomes a way employers can truly differentiate themselves, attract the best talent – and keep it.”

Aon exists to shape decisions for the better – to protect and enrich the lives of people around the world. We provide our clients with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their businesses. Aon is in the business of better decisions.

Find out more

Plan Design Continuum

Strategic and financial objectives

“[Flexibility] comes back to the employee value proposition: What do they value and how can you use that to differentiate yourself as a best-in-class employer?”

Shelly Russell, Aon

Benefit plans have come a long way from suites of generic coverage defined solely by the employer. Though one-size-fits-all plans aligned with the philosophy at the time – that providing the same level of benefit to everybody was the benevolent approach – over time the workforce, and people’s mindsets, changed, and “the school of thought became that they aren’t just part of your compensation package, but are really about keeping employees healthy” – and the health experience is unique to each person. “Those themes started creeping into how to structure the plans. The key question is, how do you create a world in which people can access benefits that support not just

their health and well-being, but also other needs, to support employees to be their best and drive their excellence for their employer?”

Employees spanning five generations is a common story in many workforces and employers must find ways to offer better benefit plans to employees in order to attract and retain their most valuable assets: people. Traditionalists and baby boomers are focused on the core benefits of medical, dental, vision, and retiree benefits, though the former are likely managing chronic health conditions and the latter are typically still trying to maintain better health. The boomers also tend to be caring for aging parents, which can create work-life issues, so they’re looking for support there. While basic health and drug coverage is important to Gen X, this group likely has kids and older parents, and therefore financial stability is a big deal in this season of financial stress. Caregiver support and flexible working arrangements help with work-life balance, and financial well-being tools such as savings plans are key to this cohort. Millennials are very focused on flexibility, but also face financial stress in the form of student loans and their attempt to establish security as they move through the workforce. This generation is very open about the need for mental health support, “so that’s a key opportunity for employers,” Russell notes, adding that “structuring the flex plan to manage that mental health piece and make sure you’re providing that proactive support is paramount.” Finally, Gen Z are building on what the Millennials have sought out: mental health and well-being, but with a sharp focus on work-life balance.

“Technology is key for this group, so how employers provide flexibility and support is an opportunity,” Russell says. “They’re the most acutely aware of the importance of choice and what it can do for them. They’re in tune with what they need and don’t hesitate to bring it forward, which is helpful in defining your plan.” This generation is also very much about the diversity, equity, inclusion, and belonging structure of a benefit program, which is another mindset shift in the benefits sphere. Similar to how everyone has different health needs, “we all have different perceptions of what makes something diverse, makes us feel included, and creates a sense of belonging,” Russell says. Flexibility creates choice and provides more opportunity for a member of your workforce to select programs that best support them not just from a health perspective but also a D&I perspective. “Employers should strive to ensure employees feel their benefits are well-understood and they have access to a lot of options, and that they can focus on their priorities.”

Choice and flex do not mean all or nothing, Russell says, noting she emphasizes “flexibility more than flex” because there are many ways to introduce flexibility into your total rewards without rolling out “what I call ‘full cafeteria’ where you’re buying and selling options and you’ve got 18 levels of choice — those are complex to manage and can be a big leap.” “I talk about introducing flexibility where optional coverages are the first step – a defined plan with optional life, for example,” she says. The next step can be introducing health spending accounts, which are used to cover medical expenses as defined by the CRA. Employers can build further flexibility through well-

being or personal spending accounts with which, although the benefits claimed are taxable, employees have more freedom to choose how they’d like to promote their well-being – through a gym membership, perhaps, or as extra funds to manage elder or daycare expenses to support work-life balance. “Another important one in the current economy is a financial well-being,” Russell says. “I’ve seen some employers evolve the personal spending account to include options to support financial well-being – for example, through RRSPs or TFSAs or promoting ways to save. They’re covering different spheres: health, well-being, financial.” The next step is a flex design. Many employers start with a modular design in which the “middle of the road” is closest to the employer’s traditional plan, but an employee can purchase higher levels of coverage – higher levels of drug or dental coverage or additional paramedical coverage, for example – while another employee who perhaps has coordination of benefits coverage through a spouse/partner can opt for a reduced level of benefit. They would have lesser defined coverage and can allocate available flex credits to health spending or well-being accounts, “allowing them to purchase things that might not be covered in any of the flex benefit options but that they feel will best support their needs.”

Woman remote working and online meeting. Full-flex program.

Not your grandfather’s workforce

Think flexibility, not flex

Published 27 November 2023

“[Employers] understand it’s actually a vehicle with which they can invest in the health and well-being of their employees and their total rewards model while also helping to manage their costs”

Shelly Russell, Aon

Current benefit plan features; claims experience; pricing and funding

Feedbback, including employee feedback

Competitive Issues

Employee needs, tolerances and demographics

Legilative changes and issues

hOW fLEXIBLE DO YOU WANT TO BE?

Assigned plans

Employee contribution

Optional benefits

Coree and options

Optional benefits

Modular flex

Modernized modular flex

Cafeteria style

CAP

Lifestyle

Individual

...and beyond

Degree of Employment Involvement

How far can you go? How far should you go?

Cost Management

Defined Benefit

Defined Contribution

Financial and Health Services

Type of Plan

One-size-fits-all fits none

One of the key challenges when moving from traditional to flex is change management. A primary concern is cost, but when companies talk about sustaining a budget, “flex can provide you with a lot of tools to do that,” Russell says. “As employers work through the learning process, they understand it’s actually a vehicle with which they can invest in the health and well-being of their employees and their total rewards model while also helping to manage their costs,” she notes. The first step? Communication. Whether you send out surveys or create innovation hubs, get clear on what’s important to your employees and what they think makes you a good employer. And critically, continue to ask over time; it’s not “one and done,” but an ongoing gathering of feedback. “Use the information to infuse knowledge and truly understand how to define your total awards approach,” Russell says. “However you create flexibility, it has to really resonate with your employees to get the full value of the opportunity. It comes back to the employee value proposition: What do they value and how can you use that to differentiate yourself as a best-in-class employer?”

Don’t be afraid to flex

Newsletter

Advertise

About us

Enquiry

Privacy

Authors

External contributors

Advisory board

RSS

News

Focus Areas

Resources

Best in HR

RSS

Advisory board

Authors

Enquiry

About us

External contributors

Privacy

Advertise

Newsletter

News

Focus Areas

Resources

Best in HR

RSS

Advisory board

Authors

Enquiry

About us

External contributors

Privacy

Advertise

Newsletter

News

Focus Areas

Resources

Best in HR