When it comes to benefits, the standard fare is no longer cutting it. Vacation, basic healthcare, a traditional 401(k) plan — if you want to hire and retain valuable IT talent, you have to push beyond those basic perks, expand the definition of benefits, and customize your offerings to compete.
“I was giving a talk at an association of Volvo dealerships in Sweden, and one of their leaders said, ‘Maybe we should think about getting a beer tap and kegs like the Silicon Valley companies do; you know, try and hire more millennials and younger people,’” said Patty McCord, principal at Patty McCord Consulting, in a presentation at the 2018 Greenhouse Open conference. “And I looked around the room and I said, ‘You know what’s happening to all those millennials? … They’re getting older. They’re getting married and starting families. A keg and a tap in the breakroom isn’t going to cut it for long.’”
Former head of talent acquisition at Netflix, McCord created an HR manifesto that’s legendary in Silicon Valley and HR. While her anecdote speaks to automotive industry leaders, her advice easily translates to IT departments everywhere: Provide benefits that address the wants and needs of your workforce demographics and organizational culture — and adapt those benefits as the lifestyle needs, goals, and challenges of your workforce change.
Tailoring your perks and benefits
“When you look at the demographics of your organizations, not everyone looks the same, not everyone has the same socioeconomic background, nor do they all have the same goals,” says Chris Whitlow, CEO of financial benefits provider Edukate. “While they’re at work, sure, they’re working toward the same goals for their companies; when they go home, everything is individualized.”
For CIOs looking to attract and retain IT talent, that means identifying individuals’ “local currency” to determine what’s important to them and applying open architecture principles to benefits, Whitlow says.
“Benefits are part of compensation, right? And everyone looks at compensation and thinks, ‘How can I maximize the amount of money I have, for instance, while balancing that with the personal needs of myself and my family?’
“For my own family, it comes down to a trade-off between higher comp versus the flexibility to go home and take care of a sick child if needed,” Whitlow adds. “My wife and I decided, together, that it made more sense for her to sacrifice a bit on the compensation front to take advantage of that flexibility, and for us, that’s a workable compromise. For other people, what’s important to them might be pet insurance. Or a top-tier health plan. A plan that helps them take care of their aging parents. Student loan repayment. The point is, you have to look at your employees as individuals and then determine how to offer plans that fit their own needs.”
How can you do that? One approach is to solicit feedback from your employees and offer benefits based on their needs, as Jeff Weber and his team did at Instructure.
“We asked our workforce what kinds of offerings they wanted to see, and then we worked those changes into our offerings,” says Weber, Instructures’ senior vice president of people and places. “Things like updating our healthcare coverage to include benefits for gender reassignment surgery and doubling our maternity and paternity leave. And along with that, we also conducted pay equity reviews.”
Part of that process involves measuring benefits utilization to determine what’s popular, what’s not, who’s using which benefits and to what extent, Whitlow says.
“For example, one of our values is to help our customers — and our own workforce — achieve financial wellness. That looks different for different people,” he says. “Are you buying a house? Taking care of aging parents or children? Trying to save for retirement? Do you have student loan or medical debt or expenses? Employers should be connecting available benefits to these use cases instead of, say, offering a standard 401(k) that is only focusing on the segment of their workforce that can afford to take advantage of that.”
Plug-and-play benefits customization
Administration of customized benefits is already complex, and most of this has to be done manually, Whitlow says. In the future, benefits customization is only going to get more complicated, and Whitlow imagines a scenario that will mimic the open architectures of hardware or software, which make adding, upgrading or swapping out various components much easier.
“I imagine sometime in the future there would be a separate value placed on each role supplemental to compensation, and then employees can structure that value to accommodate what their benefits needs are. As those things change, you can readjust your allocation of that value — so, for instance, if you have $5,000 to spend on all these different offerings, you can choose healthcare, pet insurance, student loan repayment at first, but then later on perhaps a housing stipend, childcare and more vacation,” he says.
Customized benefits are a great hiring and retention tool, especially if they’re addressing relevant issues in a candidates’ life and provide flexibility for the future, Whitlow says.
“So many benefits are underutilized because they just aren’t relevant to employees’ lives. But if you can focus on individual realities and understand your demographics and what types of benefits they want, they’re going to want to come work for you, and they’ll want to stay,” he says.