How to inspire and make way for innovation
More than half of CIOs today say they are currently facing a skills shortage, and it has been predicted that by 2020, there will be 825,000 unfilled vacancies for ICT professionals. This is a result of two factors: the shortage of individuals with relevant IT skill sets, and the sheer wealth of different opportunities available to the top candidates that do have strong IT skills. Just think of all of the startups competing for developers. In this competitive landscape, companies are looking for the most effective ways to acquire and retain top IT talent – one of which is updating their employee benefits strategy.
Traditionally, the way benefits worked is that all employees received the same benefits package. These benefits were targeted at middle-aged or older employees, as this demographic made up a large part of the workforce. Today, the composition of the workforce has shifted dramatically, with millennials surpassing Generation X as the largest generation in the workforce. These younger employees are also much more likely to have the IT skill sets that employers need.
As they seek to attract skilled IT workers, multinational organizations are shifting their approach to benefits. They’re increasingly thinking of benefits, not as a checkbox, but as a competitive differentiator to set themselves apart in the war for talent. It’s important to offer personalized benefits that employees value. By using analytics to gain insight into benefits uptake, employers can better understand which benefits employees want – down to a generational, and even individual employee level. Similarly, you can identify which benefits aren’t popular and discontinue those that aren’t cost effective.
Our research has shown that benefits are fundamental to the employee’s choice of employer. In other words, benefits (along with pay) are the "food and shelter" of the engagement hierarchy of needs.
There’s been an emerging focus on “wellness” and “lifestyle” benefits and Silicon Valley companies are offering a new range of unique benefits – like fitness reimbursement, daycare, pet insurance, candy walls and more. One startup has even gone so far as to pay for employees’ weddings. While these types of wild benefits can help attract talent, the problem is that not every company can afford to get into a benefits war with Silicon Valley.
If one company offers pet insurance, competing companies are expected to offer it too. But at what point does this stop? Companies can only allot so much for overall compensation, and finding the balance between salary vs. benefits can be tricky when unique, expensive benefits are factored in.
I’ve found that many of my clients have been successful in attracting IT talent with flexible benefits. This type of approach allows employees to choose from a variety of options for their total rewards package, customizing it to their specific needs – and it doesn’t cost an employer anything more than their traditional benefits would have.
For example, a developer in her twenties may not care as much about life insurance as a baby boom generation. Unique benefits, like language lessons, may be higher up on her list of priorities at this stage in her life if she plans to travel. By adjusting her life coverage to a lower option, she can use that money to take Spanish, Portuguese or French language lessons. The benefit to employers here is twofold: While this doesn’t cost you a dime more than a traditional plan, your talent can choose personalized benefits and feels rewarded for it. Also, when she’s taking these language lessons or using the newly learned skill, she’ll feel more engaged with her employer because they made it possible.
Say your company is providing great, flexible benefits. Awesome, that’s the first step. Step two is communicating this to employees in a way they’ll appreciate and understand. Few employees know the value of their benefits or even what is being offered to them – especially those that only receive communication about their benefits once a year during the enrollment phase (23 percent!).
Some of this responsibility lies with the CIO – your IT employees are obviously particularly tech savvy, and they expect a consumer-grade experience when interacting with HR. You need to make it incredibly easy for employees to access and understand their benefits. Using highly targeted and personalized communications to connect with employees and increase uptake in benefits programs will lead to employees that feel more engaged with their employer, thus lowering the rate of turnover.
For example, one of my clients wanted to increase global participation in retirement plans, so they sent targeted communication to employees between the ages of 25-30 who weren’t taking full advantage of matching benefits. The message was that the person sitting next to them was earning more toward their retirement than they were, creating a watercooler moment among employees. They saw participation in full matching jump from 32 percent to 87 percent!
If employees don’t know what they are being offered, they won’t be able to appreciate it and fully understand the impact of their benefits. The opposite is also true – the better understanding employees have of their benefits, the more they will appreciate their employers for offering them.
By providing the right combination of benefits, you’ll be able to attract and retain top employees – and be able to effectively compete in the war for IT talent.