Why and How to Incorporate Ancillary Benefits Into Your Compensation Package
The global workforce shortage now impacts nearly half of all employers. According to Manpower Group's 2018 talent shortage report, 45 percent of employers say they can't find the skills they need, up from 40 percent in 2017 and the highest figure in over a decade. In Wisconsin, the unemployment rate has plunged to an historic low and many businesses are struggling to find talent. "We have a saying at MRA: the war for talent is over, and the candidates have won," said MRA Director, Total Rewards Deborah Schultz, GPHR, SPHR, SHRM-SCP. Traditional, cookie-cutter benefits aren't effective attractors for today's empowered candidates. "The one-size-fits-all approach no longer works well with benefits," said Brian Siegenthaler, director – sales at WBA Employee Benefits Corporation. "Employees are looking for flexibility and choice. The right benefits package can make a huge difference, especially in the current environment of small salary increases."
As a result, many employers—including banks—are turning to ancillary benefits in an effort to stand out to the most qualified job seekers. "Organizations, banks included, are taking more of a total rewards approach," Schultz explained. "In the competitive talent community today, it's all about differentiation." Ancillary benefits are the "extras" beyond the retirement, health insurance, and life insurance products that round out a traditional rewards package, sometimes including other insurance products such as vision or hearing, cancer, and critical illness, or non-insurance perks such as remote work options and tuition reimbursement.
While quantitative research proving that ancillary benefits cause employees to join or leave an organization is limited, they are a motivating factor that can keep top talent engaged for a longer period of time. "Many employees put a high value on ancillary benefits," said Ed Caillier, human resources director, MRA. For many employees, the benefits carry more weight than salary alone. "Better benefits are usually more valuable than higher-than-average pay," said Kaydi Sobottka, human resources officer at The First National Bank of River Falls.
Five Keys to Success
If your bank is considering complementing your total rewards package by adding ancillary benefits, consider the following five keys to a successful rollout:
- Align with the bank's mission and strategy. The most successful benefits packages closely align with the company's strategic plan and also reinforce its mission and/or values, and often it's the ancillary benefits that do the most to create that synergy. "Benefits encompass more than insurance, 401(k) plans, and PTO," explained Molly Bauer, vice president – human resources officer at the Bank of Wisconsin Dells and Chair of the 2018-2019 WBA Human Resources Committee. "Culture and benefits are tightly entwined." For example, if the bank has a strong culture of community service, then paid volunteer time might be a good ancillary benefit to introduce. "Make sure you stay in alignment with the culture you're trying to create and your business strategy," Schultz advised.
- Determine what the bank can afford. Careful cost analysis is a critical component in launching any changes to a compensation and benefits plan. "Organizations need to do a careful assessment of what the organization can afford and sustain," said Schultz. Many banks provide benefits in an unofficial capacity, so it is important to factor in those costs, as well. For example, Bauer knows of one bank that offers unlimited bereavement leave simply because "for them, it's just the right thing to do," she said. "Generally, community banks look out for their employees in times of need. It's not always just about the written benefits." In order to offer that kind of support and flexibility, the bank needs to understand the costs it will need to absorb in order to do so. Working with the right vendor can help keep costs in check, Siegenthaler says. "Partnering with the right carriers is important," he explained. "Price is, of course, a major consideration, but working with a partner carrier that understands our industry is key."
- Communicate clearly, early, and often. Human resources leaders must establish clear communication with all staff before, during and after the implementation of any changes. "It's really all about communication," Siegenthaler said. "If employees don't understand how to utilize the benefits, the value of the programs isn't fully realized." In addition to increasing utilization, open communication can provide direction on what kinds of benefits employees will appreciate the most. "Doing an employee survey is a great way to cast a net out there to gauge interest in different types of ancillary benefits," said Kelly Greinke, survey project lead at MRA.
- Involve staff. Every company will have a unique benefits package because no two employees need the same things. "There is no one-size-fits-all package," said Bauer. She recommends polling staff or creating a committee with all levels of the organization represented to discuss benefits. "Most people are willing to tell you what they like and don't like if you ask," she said. Involving staff in the design and implementation of a custom benefits package not only increases the changes that package will meet the specific needs of your staff, but also provide the right number of choices so employees can further customize their options to fit their situation. "Each employee is uniquely different," said Sobottka. "Choice is key to meeting the needs of each employee."
- Demonstrate support from the top. Like any significant change at the bank, support from senior leadership is critical to rolling out new or updated benefits successfully. "Senior leadership's visible support and actions around a company's benefits program is very important in overcoming skepticism," said Caillier. He used the example of paid time off to volunteer. "If that's not fully supported by senior leaders with their words and actions, employees will view it as something they shouldn't take advantage of," he explained.
Across industries, organizations have added a wide variety of ancillary benefits to their rewards packages. Here are a few of the most common and creative:
Siegenthaler said offering dual or triple option health plans is one innovative approach he's seen. "Offering voluntary or supplemental coverages that allows the employee to pick and choose what's most important to them is also a good option," he said. Providers like Aflac often offer this type of coverage at no cost to the employer. In a recent banking industry survey, MRA found that cancer insurance and critical illness insurance were two popular ancillary benefits; vision and/or hearing insurance are also fairly common.
"We've definitely seen an influx of the kinds of benefits that work toward work/life flexibility," said Schultz, who says the term "work/life balance" is difficult as a goal because each individual brings his or her own definition. Additionally, MRA employer surveys have found that opportunities for time off and social interaction are very popular, especially among younger workers. Greinke cited spontaneous time off to leave early, summer hours, teambuilding events, and sporting events as examples.
Paid Volunteer Hours
Having paid time off to volunteer in the community "can tie in with the overall mission, vision, and values of the organization," said Caillier. "Building communities is a large part of what the financial industry is about." A related benefit banks might consider is charitable contribution gift-matching.
A company-sponsored wellness program is a good way to incentivize healthy living, and several banks have found them very popular with their employees. "Our wellness program has been incredibly successful," said Sobottka. "It's become a main pillar of our culture, aiding retention." Long-term, such programs can also lead to healthier employees and therefore lower insurance costs and less productivity lost due to sick days.
Wisconsin Banking Industry Compensation & Benefits Report
Do you need easy-to-understand, usable, and meaningful compensation and benefits data about Wisconsin's banking industry? As a banking HR professional, of course you do! Now available to you, the 2018 Wisconsin Banking Industry Compensation & Benefits Report is the largest Wisconsin-specific report, containing salary and benefit information for 113 different jobs with data from 111 participating Wisconsin banks! Visit www.wisbank.com/WICompensation for a sneak peek at this year's data and to order your report.
Cathy Yanke, human resources director at Bank of Prairie du Sac, and Kari Davis, VP – human resources director at State Bank of Cross Plains, also contributed to this article.
WBA Employee Benefits Corporation (EBC) is a wholly owned subsidiary of the Wisconsin Bankers Association.
By, Amber Seitz