Lifestyle benefits emerging as key strategy for talent management
Core benefit offerings will always play a role in talent management, but times have clearly changed. With group insurance products and services having become commoditized, brokers and advisers are looking to freshen up their portfolios and stand out in the crowd.
That quest has taken on a sense of urgency in an airtight economy with pressure to recruit and retain top talent across multiple generations with changing expectations about their employment contract. The answer may be a growing category of lifestyle benefits that transcend traditional fare in favor of soft perks or unusual offerings.
With unemployment at its lowest level in nearly half a century, employers must “be at the forefront of offering really innovative and key benefits,” notes Paul O’Reilly-Hyland, CEO and founder of Zeamo, which provides a flexible monthly subscription for health club access. Similarly, he believes that brokers who suggest innovative lifestyle benefits with a wide appeal will have an easier time retaining corporate clients and growing their business beyond core insurance options.
While the word lifestyle implies nice-to-have benefits, any such offerings have become necessary in today’s competitive workplace, says Lindsay Bailey, founder and CEO of FitPros, a health and fitness company that brings wellness to the workplace. As such, she says lifestyle benefits that include wellbeing offerings and appeal to each company’s demographic mix should be woven into corporate culture.
But what exactly are these emerging benefits? Greg DiCarlo, co-founder and CEO of the perks and rewards startup Work2Live, defines lifestyle benefits as purchasing an experience over goods and services per se “with an experiential component that is delivering in a tangible way on work-life balance and satisfaction.”
There’s no denying their appeal to younger workers. Millennials prefer “almost anything that makes their lives seamlessly easy and accessible via the internet, primarily mobile,” explains Jay Parkinson, M.D., who co-found Sherpaa, which was recently acquired by Crossover Health where he’s now chief designer. Every startup in San Francisco “is designed to do what your mother used to do for you,” he quips.
Since modern expectations are driven by consumer experiences, Netflix, Uber, Open Table and similar services have raised the bar for today’s employee benefit offerings. “Your service has to be easy to use, mobile, incremental, intuitive and consumer-like,” insists Dave Freedman, general manager of group plans for LegalZoom. “It’s about engagement, consumer experiences and things that are relevant to employees’ lives.”
With experience-oriented millennials moving frequently from one job to the next, retention of this group is a challenge. “Lifestyle benefits ties into an employer’s need to expand their benefit offering in a way that truly speaks to what the employee market is now looking for,” explains Beverly Beattie, co-founder of Work2Live, as well as CEO and founder of SeldenBeattie, and an EBA advisory board member named one of the Most Influential Women in Benefits Advising.
She says medical, dental vision and other traditional types of benefits employees pale in comparison to unconventional benefit options that opportunities to “do things that are separate from work that expand them on a more personal level.”
“We see innovation and new experiences around team-building, fitness and personalized perks that are evolving with today’s workplaces,” says Alexa Baggio, co-creator of the PERKS Convention, whose regional events in four major U.S. cities showcase nontraditional service providers.
For example, she says virtual reality (VR) technologies, escape rooms and play-based experiences for employees and their families “leave the party tricks of yesteryear in the dust.” Key players include TeamBonding’s Infinite Loop VR simulation, Adventure Games and Perfect Parties.
In the fitness category, she notes that ClassPass, Peerfit and Zeamo have created flexible programs that allow multi-generational and multi-skilled workplaces to customize their exercise schedules. She also lauds Fringe, Compt and Zestful for allowing employees to personalize subscriptions and allowance-based perks.
Wellness is top of mind in the lifestyle benefits category considering that employee health benefit costs represent the largest P&L expense after payroll and two-thirds of the nation is overweight, O’Reilly-Hyland notes. He says evidence shows that physical fitness lowers medical insurance costs and absenteeism, and gets employees more engaged.
Whereas the average gym member is age 36 and up, it falls to 26 for subscribers to Zeamo, which has sought to make health clubs more accessible to Millennials and Gen Z that account for more than two-thirds of the U.S. workforce. The service provider’s digital platform offers employees and their spouses no-strings-attached access to an aggregated network of more than 1,000 fitness facilities worldwide without expensive long-term commitments.
Thanks to the emergence of low-cost, high-volume clubs such as Youfit, Retro and Planet Fitness, O’Reilly-Hyland says pricey memberships that were once largely confined to executives or managers are now accessible to more working Americans. This changing landscape also benefits business road warriors who find it difficult to work out when traveling, he explains. Harvard Business Review published a study last year suggesting a higher body mass index for people who spent more than 14 nights away from home.
A recent Unum survey of 1,227 working adults shows corporate gym membership or health club access as one of the top five benefits requested by employees. “An employer can offer over 700 clubs on our platform for less than the cost of free coffee, which isn’t so good for you and less requested,” he reports.
One hot trend Bailey has noticed taking hold involves one-on-one wellness coaching for sessions that last 25 or 50 minutes. Some focus solely on the nutrition component, while others involve wellbeing detours. For example, dermatologists have visited worksites and met briefly with various employees to address their concerns and offer safe-skin tips. There are even corporate social responsibility programs with community partnerships that involve painting murals that are donated to hospitals or writing get-well cards to their patients.
Some emerging lifestyle benefits in the healthcare category Parkinson has seen involve breastfeeding services on corporate campuses, egg freezing to enhance fertility and erectile dysfunction treatments.
Lifestyle spending accounts
The number of potential offerings under the lifestyle benefits umbrella may seem nearly infinite. Work2Live’s portfolio is partitioned into a travel and leisure package featuring more than 13,000 hotel properties, as well as experiences and well-being. These options are respectively branded as “explore,” “live” and “breathe” – a break from conventional descriptions of largely commoditized items.
“For us to really latch on to the ethos of what we were talking about delivering, we needed to choose those verbs and really help someone envision how their interaction with those components in our system were going to work,” DiCarlo explains.
These benefits are enhanced by a unique lifestyle spending account (LSA) Work2Live created whose funds can be used to finance a variety of endeavors. The concept, which has been used in Canada and the UK, is brand new to the U.S. Although taxable to employees unlike a health savings account (HSA), it’s a tax deduction for employers that can serve as a powerful talent management tool.
The LSA is much sexier than an HSA, Beattie opines, noting that “the ROI for employers is tremendous because employees would be a lot more excited to talk about experiences and travel as opposed to the very important, yet somewhat mundane, contributions to the other types of benefits.”
If retention is the chief objective, she says an employer could earmark a certain amount of money into the LSA for every year of service. It also can be used as a team incentive in sales-driven companies to help achieve targeted goals or reward loyalty. “Any broker-advisor that’s able to offer this now is definitely going to stand out among their competition,” she believes.
Improving financial wellness
The financial component of lifestyle benefits may be just as important as it is for core offerings. While most FitPros services revolve around physical health, other related hot topics include mental health and sleep hygiene. In addition, financial wellness workshops have proven to be one of the most popular offerings with Millennials looking to paying off college loans and Baby Boomers needing extra help with retirement savings.
“Companies are realizing that they have to do a variety of ongoing things” to keep their employees engaged, Bailey observes.
Parkinson believes student loan refinancing and debt counseling are particularly valuable services for Millennials, many of whom are priced out of the housing market because of the soaring cost of their higher education.
While Freedman has noticed many younger employees are increasingly health conscious, that’s not the focus at his company, whose LifePlan service casts a bright light on comprehensive legal services and financial wellbeing for LegalZoom employees. “It’s almost like necessity is the mother of invention,” he says. “We were one of our own early customers before we took it out to the world.”
With so many employees part of the club-sandwich generation, Freedman says LifePlan’s price is inclusive of children and elder dependents living within the home for LegalZoom employees and their customers alike. “The fact that it’s accounted for is table stakes at this point because that’s the need in the market,” he explains. Indeed, mounting student loan debt and rising real estate prices, particularly on both coasts, have forced more people to cohabitate “in ways that they probably haven’t in a few decades,” according to Freedman.
Mindful that most companies cannot match Google’s breathtaking benefits package, Bailey explains that smaller businesses can still pursue meaningful team-building activities without any budget. It could be as simple as a squat challenge in the middle of the afternoon or a walking meeting with packed lunches under a nearby tree. She says managers need to learn more about what team members do in their everyday lives and which benefits would resonate most.
While onsite physical fitness will appeal to some employees seeking an after-hours workout, she says a lunchtime cooking class with healthy fare might be more appealing to others. FitPros has about 25 offerings to choose from as part of a holistic approach to employee wellbeing.
Affordability is critical to this category. “These benefits are awesome for all companies, and especially among smaller groups who might not have larger buying power for the entire team, but still want to opt in on a larger array of perks and benefits at smaller group sizes and price points,” Baggio explains.
Awareness of these emerging benefits could pay meaningful dividends for producers. “The best brokers and benefit advisers are those that are highly curious and always paying attention to the latest and greatest things that might not be popular just yet,” Parkinson says.
Given how the broker consultant industry is effectively selling the same core insured products supplied by a finite number of providers, Freedman sees a strong need for differentiation. He says the emerging lifestyle benefits category allows them “to develop unique perspectives and have offerings that are substantially differentiated from one another.”
Having access to specialty vendors that are vetted and do all the back-end work saves brokers time and effort, Bailey notes. “I think that brokers are starting to wise up to how they can look like the hero if they have an immediate go-to solution for their clients,” she says. One such example is Sequoia Consulting Group, which Bailey says “have just gone above and beyond to have resources for their clients,” whose blue-chip roster includes Twitter, Uber and Fitbit.