Employers are offering personalized benefits packages to employees to meet individual needs. To do this successfully, the HR role must become more consultative and collaborative with employees, organizational leaders, and vendors year-round. - BY Sharon Ross

The process of offering benefits to employees has not changed much over the last few decades. New benefits have been added, and benefits chosen from a menu have emerged. However, traditional structured benefits selected by the employer without flexible options are not filling the needs of today’s employees who want to customize their benefits to better fit personal circumstances and preferences.

Customized benefits packages that enable employees to develop individualized benefit plans are a better fit for all employee generations, but successful implementation and utilization relies on Human Resources (HR) adapting its role in numerous ways. The HR function must engage individual employees in benefits selections, implement and maintain benefits management systems that can handle more complex benefits options, maintain privacy and security, and increase collaboration with vendors on benefits and software selection, to name a few. In the elevated role, HR becomes even more strategic in helping the organization attract and retain employees.

Suiting Individual Employee Needs

Traditionally, benefits packages are rigidly structured, and employees are unable to personalize their benefits. The emergence of flexible benefits packages have offered employees the ability to customize their benefits based on personal needs. Today, most employees prefer flexible benefits, and they expect a broader range of options that include non-medical benefits. These benefits include options like gym memberships, professional development opportunities, time off to care for family needs, mental health benefits, financial wellness benefits, and many others. Flexible benefits programs are more complex to establish and manage than structured packages, meaning the role HR plays must adapt.

HR faces challenges in developing a successful flexible benefits plan that supports benefits personalization. One is ensuring the benefits offered cover the needs of a multi-generational workforce. A young single employee with no children may not need childcare benefits but will likely want access to financial wellness resources. A baby boomer employee with elder care responsibilities does not need educational stipends but does want time off to fulfill personal responsibilities when needs arise, like elder medical emergencies.

An effective and successful flexible benefits program usually gives employees an amount to “spend” within available categories. The categories chosen should reflect employee needs and support the company culture. For example, an organization that values wellness may offer a dollar amount that can be applied at a gym of the employee’s choice. Lifestyle Spending Accounts (LSA) are individual employee amounts that can be spent on the employee’s choice of wellness and lifestyle activities. The flexible spending amounts in any flexible benefits package are in addition to fixed benefits like health insurance.

There are several implications here for the HR function to consider. HR has been transforming into a strategic function, and successfully designing, implementing, and monitoring a flexible benefits program requires even more strategic planning and analysis. The first step is identifying what employees want for benefit options. As labor market demographics shift to become younger and more diverse, benefits will continue to play a critical role in keeping the organization competitive in the labor market. Personalized employee engagement is crucial to understanding individual needs and preferences. This will involve conducting regular surveys, holding one-on-one meetings, and using data analytics to gather insights into the benefits most valued by different employees.

An element of increased employee engagement is improving communication strategies to clearly explain the available options and guide employees through the selection process. This might include creating detailed informational materials, hosting workshops or webinars, and providing personalized consultation sessions. Training employees on the benefits platform is essential to encouraging them to take advantage of the benefits options the organization is funding. Providing personalized benefits may lead to an increased need for HR to offer support services to help employees make informed decisions. This might include financial counseling, health and wellness programs, and other support services that align with the customizable benefits.

Increased Role in Technology

Managing a diverse array of benefits packages will obviously be more complex than handling a one-size-fits-all approach. HR must ensure the systems and processes in place can handle this complexity, possibly requiring new software solutions or the enhancement of existing ones to manage individual benefits packages efficiently. Increased collaboration with vendors to offer a broader range of options is necessary, but negotiating with vendors involves more than ensuring benefits quality and options.

Vendor relationship management becomes a critical HR responsibility. Vendor services should be reliable and collaborative, but there are also data privacy and security issues. HR will work with vendors to ensure that sensitive information about employees is always protected and secure. The HR functions will also work with IT internally to implement an accessible but secure benefits software package that includes the different benefit options. The more complex a benefits program gets, the greater the chance for problems to develop. Accurate reporting is crucial to complying with labor laws, tax regulations and legal requirements because different benefits may have different requirements.

Also involving technology is the need to improve administrative efficiency through automation to free up time for increased employee engagement on an individualized basis. This may involve automating specific processes, using advanced HR management systems, and streamlining workflows to handle the personalized nature of the benefits package. Artificial Intelligence and machine learning tools are also being utilized as chatbots for inquiries, for employee decision support, and to produce predictive analytics that assist with benefits customization.

Human Resources Readies for More Benefits Customization

The continuing shift to customizable benefits packages will require HR to adopt a more personalized, strategic, and technologically savvy approach to managing employee benefits. Annual enrollment periods may remain intact, but HR will actively manage the benefits programs year-round, maintaining employee engagement to promote utilization of all resources offered. Managing a holistic personalization program may be more complex, but HR's role in fostering a more engaged, satisfied, and productive workforce that feels heard benefits employees and the organization. Human Resources becomes even more “human.”