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By: Lori Block & Leah Reynolds

We live in a diverse society — we’re multi-generational, multi-cultural, multi-geographic and have rich family diversity, talents and experiences that create a world of individuals with many beautiful, human things in common. It’s in those human things that most often, the “Golden Rule” applies. For example, it’s a good idea to speak kindly to others or hold the door open for the person behind you, or not cut in line at Disney World.

The Golden Rule is a great concept, but in many other areas of our lives, it’s more important we treat others not in the way that we would like to be treated — but rather in the way they would like to be treated. That means we treat them with respect for their different life situations, experiences, cultures and circumstances. This approach to human interaction is often used in the areas of sales and marketing when a company is trying sell into a particular demographic, age group, or niche population. This is typically referred to as using “buyer personas.”

Personas are also used in product development — providing the lens through which to bring empathy to design, the first step in the “design thinking” or “human-centered design” process. But for example purposes, we’ll focus first on how personas are used in marketing.

Personas work for marketing
Marketers use personas so that a company can gain a better understanding of the various consumers they want to engage, and thusly, communicate with them in ways that are most likely to create a connection. For example, in the consumer world, a retailer like Target may hone in on personas such the stay-at-home mom, the college student, or the retiree on a fixed income.

Each of these personas surely has subsets of people with very different views, life experiences and situations. However, by creating targeted segmentation (no pun intended), Target (the store) can zero in on common characteristics within those personas to create customized experiences. For example, they might text coupons to parents with children the week before a big toy sale—or they might host a special back-to-school night for college students with special sales and incentives.

Personas work for compensation and benefits, too
In the world of compensation and benefits, personas can be used in much the same way. The big difference is, what companies are trying to “sell” to their employees has nothing to do with toys, cosmetics or camping gear. In compensation and benefits, the stakes are much higher because the way we speak to employees and the programs we design around them have a significant impact on wellbeing: their wellbeing, the wellbeing of their families,  and the company’s wellbeing (in the form of better financial results).

Defining the demographics in your workplace, and communication preferences across the generations, is an important step in developing a persona-based communication strategy — but it’s just the first step. Understanding the wants, needs, concerns and learning styles of individuals (and their families) across your organization is the key to any successful change implementation, whether benefits related or otherwise. When you develop “real-life” personas, you’re better prepared to:

  • Assess the impact and likely reactions of employees to your total rewards offering — and any changes you’re considering
  • Identify which programs are likely to be “sticky” with different groups of employees
  • Develop a multi-media approach to communication with the right mix for each target persona
  • Support a culture of inclusion within your organization where employees feel valued and respected

What can you achieve using personas?
By using personas as part of your comp and benefits strategy, you’ll be in the best possible position to make big decisions such as:

  • Whether or not to adopt (and how to adopt) a high-deductible health plan
  • Making changes to your retirement plan
  • Recalibrating your total compensation program toward performance-based rewards
  • Adopting new job classifications and career ladders that tackle future talent needs

We’ll be talking about these topics and more during the upcoming World at Work 2018 Total Rewards Conference & Exhibition. You can catch Lori there on a panel with one of our top clients, where she’ll talk about our experiences working with employee personas — and we’ll show attendees how they can use personas to their advantage. We would love to see you there, so if you’re going, be sure to stop by our booth and say hello! If you can’t make it, feel free to leave your comments and questions below to get the conversation started.

How is your organization using personas to create a better compensation and benefits program?

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By Gary Crockford

The State Pension, payable to those who reached State Pension age (SPA) before 6 April 2016, is divided into two elements.

  • The basic State Pension is a flat rate pension to which individuals accrued entitlement on the basis of their National Insurance (NI) contribution record (i.e. 30 “qualifying years” of NI contributions or credits would provide the full amount).
  • There is also an additional State Pension which was earnings-related and to which individuals qualified on the basis of earnings between prescribed limits during their working life.

Before the Government (in more recent years) began to equalise the entitlement ages for State Pension, males had an SPA of 65 and females of 60. The State Pension system was therefore based on inequality.

The Government’s thought process behind contracting-out is quite simple.  Why don’t we pass the cost of providing the additional State Pension from the taxpayer to pension schemes?  As part of this process defined benefit occupational pension schemes were allowed to contract out of the State Pension: the incentive being employers and members paid lower rates of NI contributions.  In return for this the scheme concerned had from 1978 to promise to pay its members a minimum pension entitlement called a Guaranteed Minimum Pension (GMP) at age 65 for males and 60 for females. The idea at the time was the GMP would, in payment, broadly replace the additional State Pension a member was forgoing. Since April 1997, an alternative mechanism known as the Reference Scheme Test applied and GMPs ceased to accrue.

In May 1990, more than 12 years after the introduction of GMPs, a Mr Barber took his equalisation case to the European Court of Justice (ECJ).  His pension scheme was a contracted-out occupational pension scheme with a five year gap between the normal pension ages of men and women.  The ECJ ruled that from the date of the judgment, pensions constituted deferred pay and unequal retirement ages for men and women was discriminatory.

Traditionally, many pension schemes had not provided equal pension benefits for men and women, and in particular often had a lower pension age for women.  What was known as the Barber judgment heralded a period of change in relation to pension equalisation.

One area which the pensions industry has grappled with, but has continued to fail to properly address, is how do you equalise GMPs?  GMPs were meant to replace the additional State Pension which itself was discriminatory in having unequal retirement ages.  Although there are schemes which have already had to deal with this issue, for example, where they have been wound up, they are largely the exception.  Nearly 28 years after the Barber judgment, no generally recognised “safe” method of equalising GMPs exists. Any move to equalise will have cost implications for trustees and sponsors of affected schemes. It has been estimated that this could be as much as £20m.

The Department for Work & Pensions (DWP) has attempted to provide clarity on more than one occasion. Its latest consultation, in 2016, sought to achieve equal GMP benefits by comparing the benefits a male and female member would receive in relation to the period between 17 May 1990 and 5 April 1997, and using a one-off calculation, converting the higher amount in ordinary scheme benefits by way of GMP conversion. This latest consultation ran until early 2017, but as yet, the government has yet to confirm how this will be taken forward. The option of GMP conversion has been around for some time, but in lieu of any recognised method for GMP equalisation, has not been used too regularly before now.

Any legislative changes to introduce the DWP’s method of GMP equalisation are likely to requirement a new Pensions Act to be passed. No such legislation was announced in last year’s Queen’s Speech, and with Brexit taking up much of the government’s attention, it is looking increasingly unlikely that a solution will be found this side of the UK leaving the EU.

Separately, it is hoped that case law may provide some guidance for trustees and sponsors.  A legal case is being brought by the Lloyds Trade Union, Lloyds Banking Group, and trustees of the Lloyds pension schemes, at the High Court. This case, which is due to be heard this summer, is expected to consider some fundamental questions on the issue of GMP equalisation.

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Employers have a vested interest in ensuring their employees are fit, healthy and not overstressed.  Private medical insurance, to deal with the physical health of employees and their dependents, is pretty standard.  Much has been done in recent years in terms of mental health.  Now more employers are looking to see what can be done for employees around financial wellbeing.

Last year’s survey by Neyber, the workplace loan provider suggested a third of employees cite financial worries as their biggest concern.  Financial worries say the report are the biggest issue for workers under age 55, after age 55 health becomes the biggest concern.

In a speech last year the FCA’s Jonathan Davidson said “16m people in the UK have savings of less than £100”.  The FCA’s 16/17 annual report and accounts says “61% of people in the UK have at least one consumer credit product, with 26% of them having an outstanding debt on that product. We estimate that two million credit cardholders have persistent levels of debt and a further two million cardholders were in arrears or defaulted on payments”

With large numbers of people failing to put aside rainy day money, and over reliant on credit, it is no surprise that some people are on the edge of their finances unable to do more than pay the minimum payments whilst other are drifting into debt through slow repayment.

With uncertainty over how Brexit will affect the UK, and in an environment where wages have been slow to rise, yet the cost of living keeps going up and interest rate increases are on the horizon, these issues may become even more widespread. So this is a good time for employers to seize the opportunity to put employee wellbeing at the top of their agenda.

What can employers do to help their employees caught up in a spiral of debt and stressed as a result without actually paying them more? One option is to provide access to financial education, savings solutions and affordable loans.

Neyber’s survey says 48% of employees regularly borrow money to meet basic financial needs.  Where their credit rating is not good, or their income fluctuates and lacks consistency, they may turn to loan sharks or payday lenders who will charge very high rates of interest (rates of over 1,000% per annum are not unusual).  Accordingly, even if the money loan is paid back are likely to only make the employees position worse in the long term.

As employers are increasingly looking to improve their employee benefits package and wanting to include something for everyone, the more rounded the benefits package the better. Financial support as part of the benefits package looks like a win-win for an employer.  Financially stressed employees may have a bad attendance record, but even if they turn up for work then with their mind on financial worries they are likely to be less productive.

Workplace loan providers will not be looking at the credit rating of individual members of staff as the repayments will come from salary deductions by the employer. Much like a season ticket loan that many employers already operate.  Interest rates are typically in single figures, so while employees with strong credit ratings may be able to access cheaper forms of credit, the rates are manageable and considerably lower than those offered by less scrupulous lenders.

For those already in debt, the ability to consolidate their loans at an acceptable rate of interest could transform their day to day financial position and as a result be far less financially stressed.

It’s true however, that those in debt are unlikely to be paying meaningful amounts of money into workplace pensions and other savings.  So even securing a loan via flex may not be enough to make them a habitual saver.  Employers usually find pension benefits form the largest part of their benefits package.  With auto enrolment there are minimum levels of contribution that an employer must make into a workplace pension.  Those employers paying more than the statutory minimum could consider enabling employees to choose to divert part of what would otherwise have gone into their pension into a shorter term saving vehicle such as a workplace ISA or Lifetime ISA.  This would enable the pension budget to support wider financial goals than purely long term saving for retirement.  True that would have an effect on the employees long term saving but breaking out of financial debt and building a saving habit now is much more likely in the long run to see employees end up saving more for their retirement.

Employers are in a good position to help financially stressed employees take back control over their finances.  That would be good for the employees and good for productivity and the employer.  Of course payday lenders may not like it!

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During a very intense professional sports playoff game, a commentator glanced at his smart watch and noticed his heart rate was highly elevated. In that teachable moment, he committed to get his health under better control because he wasn’t going to stop attending stress-inducing sporting events.

In “Can My Smartphone Make Me Healthier?” (Benefits Quarterly, Fourth Quarter 2017), we argue that smartphones and other mobile devices can – if the user selects, appropriately uses and sustains use of the tool and application, to achieve lasting results. Therein lies the rub – using the solution for lasting behavior change.

There’s no shortage of mobile devices – IHS Technology predicts growth from 23 million in 2011 to 75.5 million by the end of 2018.1 Increasingly, wearable sensors are being built directly into smartphones and smart watches, and the numbers of health-related apps continue to multiply. Consumer demand is strong but significant room remains to connect individuals to device-based solutions that make it much easier to stay healthy or better manage health conditions.

Health Applications

Top players such as Apple and Microsoft, Fitbit and Garmin, plus various medical manufacturers as well as many technology start-ups are developing related devices and apps.

For example, portable EKG readers that work with smartphones have been available for some time, allowing users to check their heart’s electrical activity by using a separate device. Newer technology such as the KardiaBand for Apple watches, from AliveCor, continuously measures heart rate every five seconds right on one’s wrist – based not on generic standards, but personalized to the user. Data can be forwarded to the doctor, reducing unnecessary doctor visits. And the immediate notification lets the user know whether it’s just a minor surge in heart rate or a “life or death” situation. 2

Many app-based solutions help users manage key health metrics and related conditions such as diabetes, high blood pressure, chronic obstructive pulmonary disease, coronary artery disease, and more. Some monitor fertility while others help monitor pregnancy. Even basic solutions such as medication and dosage reminders can make a dramatic difference in health, given that half of U.S. patients stop taking their medications within one year of being prescribed. 3 Or carriers’ provider-finder apps can better promote decision-support research based on cost and quality metrics, or reduce unnecessary use of the ER. In one study, HIV patients using a mobile app were 2.9 times more likely to be adherent to treatment. 4

Many have found apps helpful in promoting greater physical activity and healthier eating, as well as weight loss. And while it’s early in their use, apps to support mindfulness and resilience have been reported as helping some users better manage stress and the related comorbidities such as depression. Some apps also help with financial health, from tracking spending to better budgeting – important to stress reduction and mental/emotional health.

Employers’ Role

Employers can play a role in promoting smart use of smart devices to help enhance their employees’ health:

  • Analyze data to identify the top health challenges in the workforce, so as to prioritize and target top needs and opportunities
  • Conduct an inventory of existing partners’ available applications and available alternatives, with a “mobile first” priority
  • Validate effectiveness and identify mobile solutions that will overcome classic barriers to healthy behaviors change – convenience and access, ease of use (intuitive), motivational, and sustainability
  • Provide periodic communication to promote opportunities, including targeted communication for messaging on tools relevant to given individuals – using technology and partner/provider support for confidentiality

Smart Users

So the question remains, are you smarter than your smartphone? It likely comes down to how you use your smartphone – or how your smartphone uses you. Those who can identify the right apps/features for their health needs, sustain ongoing use, and in turn score health improvements are the smart ones. That’s true for both individuals who use the devices and for the employers who can achieve organizational health behavioral change from these ever-increasing mobile solutions.

Endnotes

  1. See https://harbinger-systems.com/digital-health-the-new-rx-for-usa-healthcare-ecosystem-2/.
  2. See https://www.bloomberg.com/news/articles/2017-11-30/how-your-apple-watch-may-save-your-life .
  3. See cdc.gov/cdcgrandrounds/archives/2017/february2017.htm.
  4. See drugstorenews.com/article/mobile-app-improves-hiv-adherence-49.
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The pan-Canadian Pharmaceutical Alliance and the Canadian Generic Pharmaceutical Association have just announced an agreement to reduce the cost of generic drugs in Canada effective April 1, 2018. Under the new agreement, the price of some of the drugs will fall to 10% of the brand-name price.

According to the press release “the prices of nearly 70 of the most commonly prescribed drugs in Canada will be reduced by 25% – 40%, resulting in overall discounts of up to 90% off the price of their brand-name equivalents. These drugs include those used to treat high blood pressure, high cholesterol, and depression, and are collectively used by millions of Canadians.” This is a five-year initiative and will benefit both public drug plans and employer sponsored drug plans.

While high cost drugs are getting all the attention currently, the majority of claims under drug plans is for lower cost drugs to treat chronic conditions, such as high blood pressure, high cholesterol and depression as mentioned previously. Cost reductions on these drugs help by leaving a little more in the budget for less frequent but higher cost drugs for the treatment of catastrophic illnesses.

Is your benefit plan designed to maximize the savings opportunity this presents? Employees may be a bit resistant to change. It is important that they understand that generic drugs must contain the same medicinal ingredient as the name brand. Incentives built into the plan, such as reimbursing only up to the cost of the generic drug, encourage employees to change behaviour.

Let me know if you want to talk about the challenges of changing your plan. I’ll buy the coffee, so it is another win for your budget!

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As HR professionals, it’s our duty to help our employees not just be physically well but be well emotionally, financially and socially. Total wellbeing programs work, helping to keep employees engaged and productive. But what happens when an employee is forced to give up one aspect of total wellbeing to support another?

Learning Experience

I was at an Open Enrollment planning meeting with a client – this was many years ago. We’d gone over the healthcare renewal (costs were flat) and other H&W plan design changes. The client then advised me that “based on the results” of the employee survey they did, they were going to increase the 401(k) match.

“”However you look at it, having employees forego one pillar of wellbeing to support another can have devastating effects in the long run.” Lori Block, Principal—Total Wellbeing Strategist, Engagement Practice.” Lori Block

The company did not plan on increasing its total benefit spend, so to pay for the match they were planning on increasing employees’ health care premium contributions.

When I asked whether that was what they wanted to tell employees, the client said “of course not.” So when I asked the obvious follow-up question — how then did they want to position it — they said that employees were used to being informed that healthcare costs were rising, so we should just tell them that. (What a learning experience that was for me! When I got to the office I asked to be removed from the account.)

What was particularly annoying was the client only had about 65% of its employees participating in the 401(k). Somehow, I doubted that increasing the match was going to improve that — faced with higher healthcare costs, employees were even less likely to be able to participate in the 401(k).

Faustian Bargain

Skyrocketing healthcare costs, pharmacy drug costs, premiums and deductibles are putting so much financial strain on employees that they are reducing—sometimes even foregoing altogether—saving for retirement to pay for increases in premium contributions and out-of-pocket health care expenses. At the same time employers too have reduced their contributions to employees’ retirement needs as health care costs consume an ever-larger slice of the total rewards pie. Call it a Faustian bargain (a deal in which one focuses on present gain without considering the long-term consequences), or robbing Peter to pay Paul. However you look at it, having employees forego one pillar of wellbeing to support another can have devastating effects for both the individual and the organization.

6 Solutions

Thankfully, not all hope is lost. With advances in technology and data analytics, employees have access to tools that can analyze their individual needs and optimize their plans both for health and retirement. Here are six ways you can help employees keep total wellbeing whole, and not something they have to sacrifice.

  1. Before making changes to plan design, consider how they will impact your employees in the long term. Create “use cases” to identify any extreme impacts of plan design changes before those changes go into effect—and adjust the design, or your communications, if needed. And if you make changes, how are you telling employees how those changes affect both retirement savings and health coverage?
  2. Help employees understand how your online health and retirement tools work. Many employees are overwhelmed by the choices and decisions that they’re faced with and required to make.
  3. Create personas that employees can use to model their decisions. Often employees make plan selections that are ineffective for their needs. Having the ability to make decisions based on personas that match their circumstances could lead to lower costs, and more effective coverage.
  4. Conduct periodic audits of your plans to identify ways to improve efficiencies, making plans more affordable.
  5. Encourage positive lifestyle changes. Employees and their families, when engaged in healthy lifestyle practices, will see a lower overall cost for their health insurance. In the long term the money that’s saved on healthcare can lower premiums and keep their retirement fund growing.
  6. Don’t be afraid to talk to your employees about how to make good choices. It’s understandable that, for most employees, costs become their main worry, but being open with them leads to a more engaged workforce, which is a great resource for any organization.

While Faust may not have been seeking a lower deductible plan, and Paul may have simply been trying to rebalance his 401(k) plan, the fact still remains that employees frequently need assistance when making short- and long-term life decisions. What my client wanted to do – putting employees in an untenable position – was a stark reminder of why considering all of the implications of plan design changes (not to mention carefully crafting surveys) is so important.

And the benefits to the company go beyond a workforce that’s engaged and productive. Research shows that workers who are unable to retire are costing companies thousands of dollars a year. So helping employees stay balanced by being healthy today, and saving for tomorrow, can have short- and long-term benefits for everyone.

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Suicide is the leading cause of injury-related death in Canada and the 10th leading cause of all deaths in the United States, while in the United Kingdom, one in 15 people have attempted to take their lives. Working-aged men and women represent one of the highest risk groups for suicide.

This week (September 10-16) is National Suicide Prevention Week in the U.S., so we wanted to help raise awareness of the issue from a workplace perspective, to guide employers through the steps they can take to understand, and try to prevent, suicide. Three of our health consulting experts from the U.S., Canada and the U.K. have written on the topic of mental health in this blog in the recent past – we hope the information they convey will be helpful to you.

Wellbeing: Walking the Walk – Employees with mental illness need programs and work arrangements that support their good health. In her June 2016 post, our Canadian Health Practice Leader Lizann Reitmeier laid out some ideas to help.

Managing Adversity and Everyday Life – Key to the ongoing success of an employee mental health wellbeing strategy is helping to build emotional resilience in the workforce. Simon Crew, one of our former health consultants in the U.K., wrote candidly about the topic in his May 2016 post.

Beyond Disease: Innovation in “Behavioral Health” – What’s innovative in the new behavioral health model of wellness programs? Lori Block, our Total Wellbeing Strategist, looked at these innovations in her November 2016 post.

If you would like assistance and advice in designing programs or plans to address mental health, and specifically the issue of suicide, in your workplace, please get in touch with us:

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[Editor’s note: In this post, Shane Morgenstern gives us a quick gaze into the near future of corporate portal design. Conduent’s own technology “skunk works” team in Toronto is always thinking and developing new ideas, constantly looking for ways to improve the user experience in – and engagement with – HR technology.]

We just found out one of our boys needs braces. Fortunately, thanks to a little forward thinking, we have a health care spending account (HCSA) to help soften the blow.

Not being one to procrastinate, I went to our HR portal to check on our HCSA. Let’s see, where would I find it? Braces are dental, so it must be under ‘Dental’. But wait, the HCSA isn’t just for dental, it can be used for other things too, right? Then it must be under ‘Health’, or is it under ‘Wealth’ because it’s part of a savings program? Who knows? I’m already 10 minutes in and I’m still clicking around hoping for the best.

“As technology evolves, user behaviour and expectations evolve as well.” Shane Morgenstern, National Practice Leader and Creative Director
Health, Wealth, Career Communications

Fast forward to Friday night, the kids were finally asleep and my wife and I were ready to snuggle up with Netflix.

“What do you want to watch?” She asked. “I don’t know,” I replied, “how about that series about the history of baseball? I think it’s under ‘History’.” “Yeah that sounds good,” she said, “but wouldn’t it be under ‘Documentaries’?” Here we go again.

Well, it turns out the baseball documentary was listed in both the history and documentary categories. In fact, it also came up when I did a search on baseball, and a search on sports. Our search even discovered three other similar movies that we agreed to watch another time. It seemed like Netflix had read our minds, or at least managed to categorize shows in such a dynamic way that made them almost impossible to miss.

Too bad HR portals can’t be this easy to navigate. Or can they?

HR and Netflix: So close, yet so far apart

Most HR technology firms offer a robust solution full of data feeds, tools and features. They often push personalized content unique to each member through dashboards or pop-ups. Some offer total rewards information while others have modelers, calculators or estimators. Unfortunately, most are also loaded up with old pdfs with content that HR believes can’t be deleted. For all their capabilities, users like me have to sift through so much content and make so many decisions that finding the one thing you’re after is frustrating and time-consuming.

Yet every software vendor wants to provide a solution that is useful and that delights and engages employees. Can they learn anything from the Netflix experience to make the HR portal more usable? After all, they both have more things in common than you might think:

  • Both have lots of information, with new content being added regularly.
  • Both will push targeted messages to the user, based on your previous activity and stored data.
  • Both have to sort and categorize all this content, so users can find what they’re looking for quickly and easily, even if they’re not completely sure what they’re looking for.
The future of portals, by Netflix

As technology evolves, user behaviour and expectations evolve as well. Instead of treating navigation, content and personalization as independent components of the online experience, portals need to combine them all seamlessly, delivering a portal that for the most part, is all on one level. Content should be revealed to you through thoughtful transitions, presented in logically grouped neat little modules.  You can sort modules using a number of parameters and, as our baseball documentary showed, modules can belong to more than one category.

Essentially, Netflix has turned the content into the user interface, providing you with an experience that showcases content you want and helps guide you to content you might find relevant. And don’t forget, nearly all of it happens without leaving the home page.

A new approach to the HR portal

An HR portal modeled after the Netflix approach would present content in interactive modules right on the home page. Modules could be grouped into HR categories like ‘Health’ and ‘Wealth’. And remember, it would be okay to include a module in more than one category. You’ll look for it in the places that make sense to you.

Including a powerful search engine lets you search for your content using the search terms of your choice. A sortable results page is an opportunity to serve up, not only your search result, but also any other related content that may be helpful.

It the end, you’d have an HR portal that is searchable, findable and sortable all on one page. As with Netflix, the content itself would become the user interface, eliminating most of the cumbersome traditional menu buttons. Your employees would be guided through a logical flow of interactivity to the right content, in the right place, at the right time.

As Netflix and other digital powerhouses like Airbnb, EBay and Amazon all look to the user experience as a driving consideration for their success, maybe it’s time for HR technology to get on board, too.

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Xerox HR Insights by Steven Laird - 4M ago

Apparently I have been a little too quiet lately. Some of my colleagues are asking about my wellbeing, so I will take a moment to remind everyone that I am still very much here and alive and well. And I have a big question.

Is cash king?

This morning on the train I got into a discussion with some employment recruiters regarding compensation. (Okay. Full disclosure. I was eavesdropping until I inserted myself in the conversation. I rarely do that but something had to be said.) One recruiter was bemoaning the fact that the government agency she worked for had much lower compensation than the private sector. Her colleagues who understand these things were pointing out that she had an amazing pension plan on her side. “Sure,” she said, “but in interviewing candidates I rarely get past the compensation, so the pension doesn’t come up.”

“What is insurance other than a tool to protect your cash?”
Lizann Reitmeier, Health Practice Leader, Canada Things have changed

That raised my question: is cash king? Are employees really only interested in cash compensation to the exclusion of the retirement and benefit plans? Perhaps this is the next logical step in the evolution of work. In my father’s day (note I didn’t say my mother’s day, but the evolution of women in the workplace is another story) you got a job and you stayed with that employer for many, many years until you retired with a gold watch and a pension guaranteed for life. But that was before Nortel, before rightsizing, before the gig economy.

Now employees change companies and even careers multiple times through their working lives. Now companies regularly rightsize, downsize, merge and globalize. Employers are likely to hire contractors where no benefits or pensions are offered or expected. If you had a job that could end tomorrow, would you be focused on what your employer could do for you in the future?

An employee in good health would get a greater benefit from an extra 10% of pay annually than from a benefit plan he or she doesn’t use. The extra dollars could be stashed away to be used in the future, when health expenses do come up, whether the employee is still with this employer or not. (Although human nature being what it is, that extra 10% would have been spent on shoes months ago. Not human nature? Just me? Okay maybe shoes aren’t your thing, but you get the idea.)

Balancing act

While I understand the reasoning for not caring about benefits and pension while you are healthy and under age 65, allowing the healthy people to opt out of the health plan and the young to stay away from the pension plan undermines the fundamental tenets of these plans. Everyone participates to spread the risk and minimize the actual per capita cost. If every one of us claimed $30,000 annually under the employer’s health plan, it would be unsustainable. Balance is only achieved when high claimers are offset by lots of low claimers. On the retirement side, in a defined benefit plan, the contributions for all fund the benefit for those who make it to retirement and beyond. Can an employee bank on that pension that they don’t control and don’t hold in their own account?

Similarly, is the employer’s promise of Long Term Disability coverage the same as an actual personal policy or an enormous sum of money in the bank? Experience suggests there may be flaws in that promise of “a benefit to age 65” or “guaranteed annuitized income”.  Ask a Nortel retiree or a Sears employee.

HSA – on a good day

So, back to the question at hand: Is cash king? The statistics are conflicting. Employees seem to be favouring Healthcare Spending Accounts over traditional benefit plans. I understand this. Spending accounts are great on good days. Do traditional plans need an overhaul? If every day is good enough that a Healthcare Spending Account is adequate, maybe it is time for high deductible Health plans to cover catastrophic events. Plan members who don’t have high health claims would have coverage for routine expenses through a Healthcare Spending Account and plan members with high claims would probably be out-of-pocket more than they are under the traditional plans we have today, but they would have a safety net with the high deductible plan.

Part of the household budget

What about the big risks? What about Life and disability insurance? This is coverage that employers can provide to employees without evidence of good health, and that protects them and their families from long-term hardship. If we change the mandatory nature of these coverages, in the name of flexibility, insurers will change the underwriting requirements, especially for small groups.

Over the course of my career, I have paid out thousands of dollars for Long Term Disability insurance coverage and, I am happy to say, I haven’t claimed a single penny. This coverage, like car, home and life insurance should be considered part of the household budget. This is the benefit that will replace your income if you are unable to work – and is the one benefit everyone should be asking from prospective employers.

What is insurance other than a tool to protect your cash? Properly designed plans protect you from financial losses. At its core, a health plan is not designed to keep people healthy; it is designed to protect them from paying the costs associated with sickness. Employee benefits are an integral part of financial wellbeing. While cash may be king in our short-term focused world, we need to teach plan members and society in general that the value of benefit plans far outweighs the $500 of massage therapy a member can access in a year.

And to my new recruiter friends from the train I say, start with the benefits. Explain the benefit plans and the retirement plans to prospective employees before you talk about salary. Reinforce the value these bring to your employment proposition. Ensure all the cards are on the table so prospective employees understand what you have to offer and can compare apples to apples when considering other options. I guarantee you will change the conversation with recruits and increase the appreciation of your overall offering.

And recruits may realize that, since cash is king, it makes sense to protect it.

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The worst has happened. Today alone, 565 people will be diagnosed with cancer, according to the Canadian Cancer Society. We’ve been busily rolling out a new Critical Illness benefit and, unfortunately, in the time it takes to implement a plan, one of our people could have received a diagnosis of a Critical Illness.

“…we can encourage people to invest in the tools that protect themselves and their families at the worst of times.”
Lizann Reitmeier, Health Practice Leader, Canada

Now, I am not so optimistic as to believe that Critical Illness coverage will make all the challenges of a critical diagnosis vanish, but I learned very early on in my career that the one thing we can do is help people financially at a time of need. As a veteran Life Insurance agent, we’ll call him Mr. Rea (because that was his name) told me, when someone is grieving, giving them the financial resources to deal with their immediate challenges is the best we can do. We don’t have a cure for the illnesses that plague the world and we cannot “put a stopper in death”, but we can encourage people to invest in the tools that protect themselves and their families at the worst of times.

The cost of medical treatment can add up even when you have a drug plan and provincial health care. Parking or travel expenses, care for a child, and lost earnings due to illness, and doctors’ visits take their toll and are not covered under any plan. But Critical Illness coverage pays a lump sum to the insured in event of a covered diagnosis. This is not a reimbursement for expenses: the money can be used as needed or wanted.

I encourage you to consider this coverage. Don’t think about it too long though, as, with our aging population, the incidence of illness is increasing. Group insurers have developed robust offerings over the last decade. Most policies have limitations and survival requirements following diagnosis and the covered conditions vary, so pay attention to the details; but almost any Critical Illness plan is better than
none at all.

Call me if you want to discuss the pros and cons and what might be the best fit for your group.

Stay well.

Lizann

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