Mumblr

In most of my client assignments, I get opporutnities to interact with employees during one-on-one interviews and focus groups. I try to understand their points of view about the organization they work for. Inevitably, compensation & benefits comes up as a discussion point. And no suprises here – nobody seems to be satisfied with what they get. Not only do I see people dissatisfied with their compensation, but the mix of benefits (insurance, retirements, vacation time, medical leaves etc.) too registers discontent. Employees compain of not getting what they want and the right quantum of benefits. To make the situation worse, most employees feel quite helpless about this situation, seeing ‘changing jobs’ as the only resort to get what they want. So, employees change jobs and land up in another company, where their needs may still be unmet and they may feel disillusioned again. The vicious circle!! And, ultimately, both the organization and the employee are at a loss. Organizations incur attrition costs and lose human assets, while employees continue to feel bad about their RoI from the relationship with the organization.

Optimization of benefits is a challenge which many organizations grapple with. Each employee has his / her own expectations and sometimes one wonders – how much can you customize! Customizing benefits is quite a task. How does one design systems that meets the needs of all the employees. The standard response of most HR professionals is – “do a survey”. Sure, surveys serve an important purpose and provide crucial data-driven intelligence about what employees want. But, the pitfall is that surveys report ‘averages’ and an average is merely a simple summary score. Employees are asking for customization, not averages!

So, how do leaders address this significant problem?

I have an experimental approach which would put the onus of the core task of ‘customization’ on the employees themselves. What HR should lay down is a “base set” of benefits mix. It should stipulate the minimum days of vacation, medical leaves, basic health / life insurance etc provided to all employees. This base set should act as the ‘floor’ or minimum entitlements. Next, employees need to be allotted “benefit credits”. And we transform the old one-way benefits system into a two-way “market” for benefits! Employees could use the credits to enhance any parts of the benefits program to suit their personal requirements. All “top-ups” or benefits enhancement would cost “credits”, reflecting their real world values. And, employees would be empowered to make their own choices from the basket of benefits available to them. Of course, the basket should have a reasonable number of options for employees to choose from. So, for instance, Mr. X who has already taken up a medical plan for 10 years on his own and doesn’t want anymore, could use his “benefits credits” to get more vacation days or enhance contribution to his retirement corpus or simply redeem the credits for cash to boost base pay!! The system empower the employees and puts them in-charge of their benefits, subject to “regulation”. In fact, the “trade” data from such an experiment would help HR leaders derive the importance of the various benefits options and help in fine-tuning the program for subsequent years.

The system descibed above may appear unstable and too unstructured. But, “structure” is afterall structure, and is inherently inflexible. We can’t be using traditional system design techniques to solve problems which the same techniques have not addressed adequately in so many years. Of course, the system I propose may fail too, but I feel it is about time we start trying new things!