Employee Benefits – The Humaculture® Perspective
Photos above: Just as different plants thrive in different soils, different people also thrive in different organizations. Aloe vera thrives in thin, rocky, dry soil. Similarly, there are also certain organizations that employ people who may primarily have access to benefits through a spouse or parent and don’t require rich benefits. Other organizations may need moderate benefits (like drip irrigation on grapes) designed and structured to nurture them to thrive properly. Still other organizations may require benefits designed to protect and nourish employees, much like lettuce requires mulch and abundant moisture.
Did any person, or any organization, ever become great by striving to be average? Many business leaders instinctively look at what every other organization in their particular industry is doing, then defensively adopt benefits that make their organization “competitive” with their peers. But, does this approach really make an organization distinctive and magnetic to talented people who will lead to success? Is it really a good idea to attract employees who are concerned primarily about benefits?
Understanding the Nature of the Organization – Vision, Mission, and Strategy
The horticulturist understands that different plants, different production goals, and different climates require soils to be built in specific and intentional ways. Each planting bed is designed with climate, soil texture and drainage, fertility, pH, and other factors in mind based on the types of plants and crops desired. So, the successful horticulturist begins with a vision and mission, then develops a strategy based on the vision and mission while considering climate and available resources. While other inputs may be required (irrigation, support, row covers or other protection), the soil is the key. Without well designed soil one can typically expect mediocre results at best. The most successful gardens “feed the soil, not the plant.” A well-chosen plant in well-designed and prepared soil will naturally thrive and produce the desired fruit.
To be successful and highly effective, organizational leaders must take a similar approach. Each organization has different goals, different purposes, and operates in different business, social and legal environments. All of these factors will have tremendous impact on how the organization is able to attract, engage, grow, retain, sustain, and transition employees or other people who will in some way be a part of, and grow, in the organizational “soil.” Many leaders have at least some idea of their organization’s vision and mission, even if only informally. They also know they need the “right” employees to carry out the strategy to accomplish the vision and mission, so much so that the focus becomes “feeding the plant, not the soil.” But failing to understand the importance of building a good organizational “soil” substantially reduces the effectiveness of recruiting, compensation, benefits, well-being initiatives, engagement, safety, and any other perk or program directed at employees.
Pitfalls of the “We Offer Excellent Benefits” Approach
One large health system sought to have only the “very best” benefits, desiring to be viewed as cutting edge to potential employees and to motivate current employees, which is popular among progressive and innovative organizations. The health system combined the Paid Time Off (PTO) benefits for 7 recently integrated entities by adopting a richest benefit approach. This put the new, larger system above the 75th percentile of its peers. However, the workforce plan and job designs did not allow employees to effectively use those benefits, which led to a lot of frustration and inequitable use. It’s a little like over fertilizing plants, they may be “burned” by the excessive fertilizer. The intent of PTO is to recharge and re-energize people so they can better perform in their job. In this case, the employees felt resentment over a benefit they couldn’t readily access and still meet the patient and business needs of their jobs. There must be an appropriate balance between no time off and full time off. It is important that the PTO be designed for optimal performance. The strategic workforce plan and jobs should then be designed for the level of time off provided (e.g., preparing organizational “soil” to allow the employees to use the PTO benefit to help them thrive).
Similar scenarios are repeated in many organizations, especially as organizations look to benefits and other benchmark surveys to guide their benefit choices. So often, organizations implement or modify benefits programs based on benchmark studies, then struggle with high benefits costs and look for the latest “cost containment” measures, programs, or services. For example, a large utility maintained a traditional sick leave program to remain “competitive” with its industry peers. The 100% pay replacement led to over-utilization, excessive costs, scheduling challenges, and increased time to manage employee relations issues related to absence. It simply became much harder to manage and was not attracting and retaining the employees who would best thrive and contribute to continue to build the organizational “soil.” Yes, “everyone else” was doing it but the choice to be average led to high costs and failed to make this organization distinctive and magnetic to the employees who could best produce the intended “fruit” and nourish the “soil”.
How We Design Benefits from a Humaculture™ Perspective
Humaculture™ recognizes that the organization itself is the key to a thriving, engaged, and contributing workforce that leads to success. Benchmarks are good against which to test designs and cost levels to assure they are distinctive and magnetic, but the designs should first support the vision and mission of the organization. While many advisors may suggest, for example, a healthcare organization should provide rich health care benefits, the Humaculture™ approach would view it a little differently. Humaculture™ would focus on the vision to model healthier behaviors, understand the consumer choices their patients are making, and differentiate the type of talent that may choose their organization (e.g., make the benefits less rich for those who aren’t willing to engage in healthier behaviors).
Such a design would support the organization’s effort to attract, engage, grow, retain, sustain, and transition employees who will buy-in to the vision and mission, be fruitful, and contribute to the tilth of the organizational “soil.” Well-designed soil requires fewer inputs of fertilizer, pesticides, water, etc. to successfully produce a crop. Likewise, well-designed organizations, including benefits and compensation that are aligned to support the vision and mission of the organization, will have much lower costs and achieve greater results than those organizations who “burn” the employees with rich or misaligned benefits. For example, one health plan had a copay for emergency room (ER) visit but applied the deductible and coinsurance for office visits. After switching the design to copays for office visits and increasing the ER copay, ER utilization dropped by 20% and non-emergent ER costs dropped by 99%. Overall, the broader behavioral redesign rolled back the cost levels 3 years of double digit increases without increasing plan participant costs.
So, what steps should be taken to design and implement benefits that support the organizational vision and mission, as well as reduce costs and support employees who thrive? How should you begin to develop an effective Humaculture™?
- Either develop or formalize and articulate the Organization’s vision, mission, and strategic priorities.
- Consider and design benefits that support the vision, mission, and strategic priorities.
- Optimize benefit design by applying principles of behavioral economics and choice architecture.
- Develop metrics that will provide actionable insights into the performance of the benefit designs.
- Evaluate benefit effectiveness relative to vision, mission, and strategic priorities and performance.
- Modify designs accordingly and continue to measure and evaluate.
Applying these Humaculture™ principles will move your organization toward providing fertile “soil” for employees, reduce benefit costs (even before “cost management” techniques or services are used), and contribute to a much more productive and profitable organization. Please see our real world applications of this approach and the outcomes achieved with time off, health care, and financial well-being benefits. Take the Humaculture™ Benefits Assessment to conduct a high level analysis of how you are doing.
About Humaculture, Inc.
Humaculture, Inc. transforms organizations—the way organizational leaders understand the organization and the relationships among the people in it, and the way people think about their position and role in the organization. Humaculture™ is a philosophy and systematic approach for creating profitable, aligned, and healthy organizations conceptualized as “soil” in which people can thrive. Humaculture™ helps organizations create the right culture in order to naturally attract, engage, retain, sustain, grow, and transition people who enable the business—and each other—to thrive. More information can be found at: Humaculture.co. Learn more about our team at https://humaculture.co/who-are-we/.
Wes Rogers, Chief Guidance Officer for Humaculture, Inc. Wes has almost 35 years’ experience in consulting and senior management positions with a variety of organizations, facilitating groups of people with diverse perspectives and objectives to coalesce around a singular vision and marshal resources to achieve the vision. This experience provides exceptional insights into how organizations operate and succeed. Contact Wes at Wes.Rogers@humaculture.co.
Steve Cyboran, ASA, MAAA, FCA, CEBS, Chief Behavioral Officer, Consulting Actuary for Humaculture, Inc. Over the past 30 years, Steve has worked extensively with leading corporations, higher education institutions, and health systems across the country to articulate a vision for a healthy and effective workplace culture, develop a total rewards strategy to support that vision and brings deep benefits expertise with a behavioral approach and sound analytics to achieve and measure the desired outcomes. Contact Steve at Steve.Cyboran@humaculture.co.