Is It Possible to Make Benefit Cuts Without Destroying Trust?

Some prominent U.S. companies recently announced they were eliminating or reducing program benefits such as parental leave and fertility treatments. Yet, several surveys indicate there’s still a focus by employers on providing family-friendly benefits:

A survey on paid family and parental leave by the Integrated Benefits Institute found that, since 2020, 66.1% of organizations offering these benefits have reported policy changes. The trend is predominantly positive, with the findings revealing 70.9% expanded benefits, 61.5% increased employee eligibility and only 31.8% reduced provisions.
Research from the Employee Benefit Research Institute showed 96% of employers said their benefits budget has grown during the past two years, including 76% whose benefits budget has kept up with or exceeded inflation.

Still, it remains to be seen what will happen over the next several months as employers address rising healthcare cost increases and reevaluate the return on investment (ROI) of benefits that were expanded during the COVID-19 pandemic to attract and retain talent in a tight labor market.

If you find yourself facing significant benefit changes, put employees at the heart of the benefit strategy and take a careful approach to communicating change.

Strategies for Communicating Benefits Changes

Consider these four strategies to help maintain employee trust through benefit changes and reductions.

1. Let Real Insights Inform Change

Before you make any changes, you should understand your workforce and their needs, desires and preferences. To do so, conduct deep research via focus groups and conjoint analysis to discover what matters most to these employees. Ideally, this research can uncover areas to trim costs without disrupting the employee value proposition, and it is often possible to identify ways to enhance the perceived value of benefits (including their ability to attract key hires) while reducing costs.

Virtual focus groups and modern survey tools can be deployed much more easily than older methods, such as in-person focus groups and lengthy survey formats. Set expectations about addressing feedback throughout the effort.

2. Understand the Impact

Conducting a rigorous impact analysis also is key to planning for significant benefit changes. Recently, a Fortune 50 organization initiated massive changes to its healthcare benefits. The transition impacted different groups of employees in different ways, especially those who were gaining or losing eligibility for certain benefits.

What made this project a success, though, was the amount of time put into doing a detailed impact analysis to understand exactly what each group would experience, how to position change transparently and how to help them understand what to do. While many of the changes were not positive, the organization was clear and honest about what was happening and why. In this case, being direct and transparent about change made it more palatable.

Likewise, a prestigious university implemented its first benefits change in 10 years. It carefully reviewed what was being asked of employees and their family members, including understanding new plan options and the required actions to get new well-being incentives. By extending the incentive timeline and making the process easier, a large burden was removed for workers, which allowed the rest of the benefit changes to be absorbed and understood.

3. Engage Managers and Leaders

Managers and leaders aren’t just another audience to inform — they are a group you need to fully engage. When a global organization was the first in its industry to roll out flexible time off, they knew support from managers and leaders would make or break the program. Even though it was the entry-level new hires asking for the change, managers became a core audience, and the work started with educating them and turning the managers into champions. It paved the way for a successful employee rollout and easier change management along the way.

4. Take the Long View

Trust typically builds over time and can erode quickly with inconsistent decisions. Investments in benefits are core to talent strategy and attracting and retaining the workforce that makes organizations thrive. A benefit strategy that truly supports the employee base and the business shouldn’t change drastically year to year. It should be aligned with the organization’s business strategy and people strategy — and it should take a long-term view of both. When a large defense contractor implemented a five-year rewards strategy, they were able to bring employees along through significant changes while reinforcing well-being and driving meaningful health and financial outcomes for individuals and the business. By looking at their strategy over multiple years, rather than one renewal season at a time, they were able to maximize their programs and fulfill their promise of being an employer of choice.

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