One of the biggest challenges for HR teams looking to introduce new programs, like Paid Parental Leave (PPL), is talking to Finance. Unfortunately, inflation is finally catching up, causing both insurance premiums and medical costs to surge. If you’ve been in the trenches with open-enrollment, then you’ve likely seen these increases already and they’re not expected to slow down. The reality of these rising insurance costs today means your Finance team may be less likely to approve additional spend, making it more challenging to get buy-in for much needed programs and policies. To help guide your conversations, here are three strategies to help HR show how PPL can help finance stay within budget and meet organizational goals.
The benefits pyramid is a great place to open up the conversation with Finance. If you read How to Integrate Employee Expectations with Organizational Goals, this may look familiar. The benefits pyramid is a simple visual to clearly show how benefits and programs are stacked and prioritized.
Starting at the base of the pyramid, the most expensive and common benefits are required and non-negotiable. All companies must offer these benefits, like health insurance and workers comp, but costs associated with rising premiums are making these required benefits less affordable. Insurance premiums are rising across the board, compounded by medical costs expected to increase by about 9% this year.
While least likely to be offered, the top of the pyramid includes the most highly valued benefits by employees. These optional benefits include Financial Security and Lifestyle, such as Flexible Spending Accounts (FSA), Paid Leave, Working from Home, Gym, etc.
These additions are no longer just for STEM and start-ups and expected across industries. Even if you’re working with a smaller budget available, cutting all of the Lifestyle benefits is going to backfire as employees value family friendly policies post-pandemic.
It's likely that your desired programs (like PPL) isn't considered "required" by Finance. So when talking with Finance, be prepared to show how optional benefits at the top of the pyramid can help them stay within their tight budgets. And if the program up for consideration can cover multiple areas for one low cost (or even cut other costs), you’re even more likely to get Finance’s attention. This is where this benefits pyramid and perceived value is going to be your best friend.
As budgets shrink, make sure you’re showing Finance you'll get the greatest ROI with benefits and programs offered. Don’t be tempted to offer trendy perks when employees want competitive benefits. Companies often implement programs and benefits that they think are important, but in reality, employees don’t place much value on them. Understanding what your employees perceive as being higher value may be less expensive than their real value. Sometimes lower cost programs have higher perceived value and higher cost programs have lower perceived value.
Here are a few examples of common employee benefits, perks, or incentives based on cost and perceived value.
A great example of a program that has high perceived value is Paid Parental Leave (PPL). It’s a highly requested program by employees that has high ROI, but SHRM found that only 39% of companies currently offer it.
While paid leave can be a challenge for companies to budget for and manage, PPL Insurance makes it as affordable as dental insurance.
As the first program of its kind, Parento is helping companies reinvent insurance with PPL. By pooling the risk, PPL insurance insulates companies to offset premium increases. Parento is tax deductible and helps companies budget for parental leave. The policy reduces risk AND includes two other programs: Leave Concierge and Parent Experience. This makes Parento an affordable program with extremely high perceived value for employees.
Since very few policies will apply to 100% of all employees, don’t be afraid to move forward with a high value policy that may be extremely impactful for a subset of employees. Benefits and programs need to meet multigenerational needs. Outlining goals and tying in KPIs, setting attainable and realistic metrics to measure program success, and making sure these align with your budget, goes a long way with your conversations with Finance.
Common KPIs to have on hand are: attrition rates, engagement rates, turnover rates, employee net promoter score (eNPS), and cost per employee.
As workforce demographics shift to millennials being the largest group in the labor market, organizations need to base their choices on employee demographics. This is where reviewing available data, analytics, and feedback is going to help. Find common trends among responses and analyze your benefit and program usage data, this will help you build your business case.
In light of the escalating challenges HR teams face in introducing new benefit programs amid rising insurance costs and tight budget constraints, leveraging the benefits pyramid and perceived value becomes paramount for talking to Finance. Companies need to get creative and stretch the programs for greatest value. Consider how adding or enhancing a program or benefit can reduce costs or support other prioritized organizational initiatives, such as DEIB programming, leadership development, and company culture. With a clear focus on the value proposition of programs like paid parental leaveand a strategic approach to financial discussions, HR teams can pave the way for the implementation of impactful benefits that drive organizational success and employee satisfaction.
