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Benefits Column

Should We Give Employees What They Want?

Employees generally seek more lifestyle-related benefits, such as pet insurance and discounted day-care, as opposed to what the experts say they need -- such as disability insurance. Isn't the purpose of employee benefits to benefit employees?

Monday, September 26, 2011
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The year was 1883 and Otto von Bismarck, Germany's "Iron Chancellor," had a couple of challenges. The country's young men were emigrating to America in droves in search of bigger paychecks. And his political party was trying to hold off the Socialists.

Bismarck created a strategy that would kill the proverbial two birds with one stone. He implemented social legislation that kept the boys home and trounced the Socialists.

Bismarck decided to give employees what they wanted -- insurance. These non-cash benefits had more value to workers than the larger take-home pay offered in the United States.

Even though the German government didn't foot the bill for the new program -- the new benefits required cost sharing between employers and employees -- employers profited, too. Bismarck not only halted the mass exodus of workers, he designed the insurance programs to increase productivity.

Between 1883 and 1889, German workers gained health insurance (a combination health and sick-pay benefit for 13 weeks with a one-third/two-third premium split between employers and employees, respectively), accident insurance for up to 14 weeks at two-thirds of the employee's wages, disability insurance and retirement pensions (which kicked in at age 70).

It took about 50 years and two world wars before the United States caught on to the value of benefits as a way to enhance employee compensation and loyalty.  

Over time, U.S. employees began to desire a broader array of offerings beyond traditional health, retirement and life-insurance products -- for example, pet insurance.

In fact, workers now appear to want benefits they know they'll probably use -- such as dental, vision and, yes, pet insurance as well as access to lifestyle benefits, such as discounted childcare services and onsite massage therapy.

Now, I have to be honest with you. I'm in favor of lifestyle benefits but am not the biggest fan of what I view as higher-premium/lower-value benefits such as dental insurance.

In general, employees seem more focused on benefits that will help them in the near term and are less interested in insuring themselves against something that may never happen -- such as an unexpected illness, which could result in income loss.

If you ask me to help you choose between long-term disability insurance and pet insurance, I will tell you to choose disability insurance -- every single time. I've spent a good part of my speaking and consulting career trying to figure out how to be more persuasive about the value of disability insurance over what I see as fluffier benefit offerings.

But, what if I'm wrong? What if it's more important to give employees what they want -- as Bismarck did -- than to give them what I think they need?

Perhaps the real purpose of employee benefits is to benefit employees. Maybe it's time to consider how to stop taking care of employees and listen, instead, to their desires, wants and needs -- even when they don't match our well-researched opinions.

I've been thinking a great deal about this conundrum since I participated in an August 2011 CoHealth tweetchat where a sidebar conversation developed around giving employees what they want. On the heels of that discussion, I spent time Skyping with Paige Craig, president and founder of a new company called BetterWorks -- an employee perks provider.

While executive perks are looked at now with a jaundiced eye by investors, the more egalitarian concept of perks for all possesses tremendous appeal. And perks for the common man and woman is what BetterWorks helps employers provide.

It's a pretty simple concept. BetterWorks establishes a beachhead in a city (they started in Los Angeles). They negotiate discounts with local establishments such as restaurants, yoga studios, day-care centers, specialty-food stores, dog-walking services and even surf instructors to create "hyper-local perks" and then round them out with discounts at national chains such as Subway and Equinox.

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Once an employer signs on for the perks program (contracts work on a month-to-month basis), BetterWorks enrolls employees and asks them what other perks they'd like to see offered. Craig says they're able to fulfill the requested services 80 percent of the time.

BetterWorks' early statistics are interesting. Currently, seven percent of employees log onto the website every day and they often bring other employees with them to the perks they select.

Craig believes this approach to non-cash employee rewards will create "employee loyalty 2.0" and improve employee engagement, retention and social engagement within the company.

Right after my initial conversation with Craig ended, I posted a quick YouTube video about my feelings on giving employees what they want. Bob Merberg, of Paychex and the Employee Wellness Network, and Craig gave some additional follow-up thoughts.

I believe that Craig's approach to providing perks that are meaningful to employees resonates with what Limeade researchers have found -- that the biggest driver of employee performance and productivity is organizational culture.

If employers can create a culture that reflects what is important to their employees, including benefits and perks, they may get what they want -- maximized profitability.

And, it's probably possible -- by offering core benefits combined with perks -- to give employees both what they want and what they need.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.

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