It’s an exciting and challenging time to be an HR professional and building a recession-proof employee benefit plan is more important than ever. With a possible recession looming and inflation at historic highs, belts are tightening, and organizations around the country. At the same time, the labor market still favors job seekers which means candidates often have the leverage to turn down offers that don’t meet their needs
So in this blog post, we’ll take a look at how to build a recession-proof employee benefits plan that’s still competitive. We’ll cover how you should approach your benefits plans strategies for meeting employees’ needs while sticking to your budget and ideas for low-cost perks that can help you stand out to potential future team members.
By the end, you’ll have everything you need to design an employee benefits plan flexible enough to navigate a changing economy without sacrificing the well-being of your employees. We’ll discuss the practices that will assist in building a recession-proof employee benefit plan, viz; keeping the big picture in mind, and choosing the plans that give employees options and perks that will show employees that they’re valued.
3 Steps to Build a Recession-Proof Employee Benefit Plan
Keeping The Big Picture In Mind.
When designing your organization’s benefits offerings, it’s easy to get caught in the weeds of individual benefits; their exact costs, how many employees will use them, and all the various rules and regulations. While all that is important, it’s also crucial not to lose track of the big picture.
A zoomed-out perspective can help you set guidelines and parameters that will make it easier to select individual options later.
First, establish your organization’s priorities. All your decisions should be guided by your company mission statement. If you don’t have one yet, create a good one at the earliest and set the goals for your organization.
Your mission statement can help you prioritize based on what’s best for the overall goals of your organization. For example, if your company wants to improve access to a service for underrepresented demographics, it makes sense to prioritize benefits that promote diversity, equity, inclusion, and belongingness in your workforce.
Establishing priorities can also help you balance your bottom line with your employees’ best interests.
For any benefits you are considering, you have to weigh the pros and cons which are both immediate and long-term.
- What will the benefit cost you now?
- How will it affect turnover rates?
- What will high turnover rates cost you over the next 5-10 years?
- How will attracting top talent help you move the needle on your goals?
- What can you realistically afford when revenue is down?
There are a lot of questions to consider here, and no easy answers, but the big-picture perspective will help you strike this balance, making it the first step of building a recession-proof employee benefit plan.
A big-picture view will also allow you to see your benefits plan from the perspective of total compensation. While job seekers are looking for competitive salaries they’re also considering the whole package and how it will impact their lifestyle and retirement plans. So to build a recession-proof employee benefit plan, you should think this way too.
Consider developing a transparent pay structure. Include salary range in job descriptions, and communicate what it takes to get a raise in each department of your organization.
Pay transparency helps you keep compensation fair and equitable and can help avoid pay compression, in which huge salary bumps for new hires can throw off the balance between entry-level and more advanced roles. Plus, think about the benefits you can afford. If you avoid giving a few new employees inflated salaries just because the market is tight right now, it may help in building a recession-proof employee benefit plan.
Finally, transparent pay can include variable compensation based on reaching team goals. While it’s not fun to get a lower paycheck in a difficult quarter, employees will prefer that option to more aggressive money-saving measures like layoffs or furloughs.
Choose Plans That Give Employees Options
Once you’ve got a good sense of your overall strategy it’s time to start considering individual benefits and that’s when things get tricky. If inflation is high, employee expectations are even higher and it’s up to the employer to sort through plans, benefits, and perks, all of which come at a cost and none of which get cheaper if a recession strikes.
That’s why, to build a recession-proof employee benefit plan, it is recommended that your organization should develop a defined contribution plan. With this kind of package, employers determine a set number of dollars that they’ll contribute to each employee’s benefits, and the employee decides which options to spend that money on.
For example, offering different types of benefits to team members, who can essentially go shopping for their favorites with a defined contribution amount. This way is much easier than trying to guess which few benefits are most important to the greatest number of your employees.
Offering more benefits to choose from may sound more expensive, but it actually saves both your organization’s and your employees’ money. For example, if pet insurance is part of everyone’s plan, then everyone’s plan costs more. But if you offer it as an option employee can opt into, then only those team members with pets they want to insure will pick it. Every employee benefits from every option they’re paying for, and no dollar spent on benefits goes to waste.
The biggest challenge to a defined contribution plan is the paperwork. If you offer a lot of benefits and every employee’s plan is a little different it can take a lot of administrative work to keep it all straight but an all-in-one HRIS can automate most of the process, making it easy to track all the details of each employee’s benefits elections with minimal manual data entry. Thus assisting in building a recession-proof employee benefit plan.
Consider Perks To Show Employees They’re Valued
With an eye for cheer organization’s goals, a transparent compensation structure, and a defined contribution plan, you’re well on your way to building a recession-proof employee benefit plan.
But in addition to pinching pennies, organizations should also dig into retention efforts.
Since employees are looking for positions where they’re valued and appreciated, consider these four perks to show your team members that you care about their well-being and personal success.
Consider parking or commuter benefits
Unless your organization is fully remote, your employees are commuting at least some of the time and it’s important for organizations to recognize and offset the costs of those commutes especially if your office is in a busy downtown area or many of your team members spend a long time getting to and from work.
Parking and commuter benefits can come in the form of a stipend or pre-tax benefit or both. If their parking or commuter costs aren’t covered by the stipend, they can choose to deduct pre-tax funds from their gross pay to reimburse themselves for the remainder.
Look into student loan assistance
Not every organization can afford to help out with these payments but it’s still worth considering.
Student debt can sometimes be crippling, especially for millennials and GenZ workers and even a modest contribution can make a big difference in your employees’ quality of life
Paid Parental Leave
The United States is one of only a handful of countries in the world that does not mandate any paid leave for new parents. So the more time you can offer, the more competitive you’ll be. And also, your company’s recession-proof employee benefit plan will be more robust.
Parental leave is a long-term tactic. While it can sometimes be costly in the front end and may lead to a decrease in employee productivity. The return on investment is huge as you’ll be able to attract and retain top candidates who are unwilling to settle for roles that don’t support their families.
Finally, there are a number of budget benefits you can consider that will give you a lot of bang for your buck and enhance your recession-proof employee benefit plan. Employees will appreciate several free or low-cost gestures to improve their mental health and work-life balance.
For example, loosening up your dress code costs zero dollars but it can help team members feel comfortable and included at work. Thereby, increasing engagement and productivity in their day-to-day tasks.
Gift cards, company lunches, and extra PTO(Paid Time Off) can also ease financial work stress without breaking the bank in helping employees avoid overwhelm and burnout will make them more engaged and invested in the success of your organization, a valuable asset when times are tough.
So, in this blog post, we’ve covered everything you need to know about building a benefits plan that can withstand a recession. Whether or not your organization is facing recession right now, developing a flexible, relevant, and most importantly, recession-proof employee benefit plan will help keep your organization strong, your team members engaged and your financial future secure no matter what the future holds
As always, remember that your profile is as strategic as you make it..