Do you know where you’re going to?

One of the songs that was very popular when I was a kid growing up was the Theme from Mahogany.  As some of you may remember, the words go like this:

Do you know where you’re going to?
Do you like the things that life is showing you?
Where are you going to, do you know?
Do you get what you’re hoping for?
When you look behind you there’s no open door.
What are you hoping for, do you know?

Decades later, I have been asking human resource professionals this same question, but in the following manner:  what is your strategic plan when it comes to employee benefits?  To my chagrin, many have talked about what the strategic plan of their companies are, but that hasn’t translated to what that means when it comes to the people and the benefits that are offered to the people.

Someone once said, People don’t plan to fail, they fail to plan.  Is it any wonder that so many are being led by their insurance renewals instead of leading the process?  Here are some examples of an HR executive who is being led by the process:

  • Waiting for the renewals to determine what you’re going to do
  • Relying on the insurance carriers to manage your costs
  • Not having any inclination as to what your upcoming renewal is going to look like
  • In the dark about how your plans are being used
  • Waiting for your annual broker meeting to find out what is new
  • Hoping for your wellness program to lower health insurance premiums
  • Lacking data from your wellness program
  • Looking at what other companies are doing as a gauge to determine what to offer

It’s no wonder that the average company is faced with an annual increase of 6-10% in premiums before making any type of benefit changes.

Getting a strategic plan in place means having thoughtfully documented how your benefit plans dovetail with the long term strategic plan of the company and having the metrics to track your progress.  Here are a few examples:

  • If your company’s goal is to move from a #3 position to a #1 position in regional market share within 5 years, one of the many questions to ask is what should a company who is #1 in your space do for its employee?  How do you get to #1, and more important, how do you stay #1?
  • The cost of materials and labor continue to increase and your organization is in a tight market that may require smaller margins.  If your health plan’s average annual trend corresponds with the trend of all employee benefit plans, that means your insurance costs are outpacing inflation and worker’s earnings by at least double. What are the levers that can be put in place without changing benefits or employee contributions that can cut your trend in half?
  • Most companies are looking at creating operational efficiencies to improve outcomes and minimize mistakes.  Most employee benefit plans have a lot of gaps (e.g. over-insuring, or not providing the right coverage for people in their life-stage, not enough personal responsibility, or not incentivizing the right behavior in healthcare consumerism).  What are the ways that you can achieve greater operational effectiveness when it comes to your health plan?

Almost all of the time, insurance carriers are providing a clinical profile that compares your claims costs with those in the benchmark.  But if you are relying on what other companies are offering to determine whether or not you are going to offer those same benefits or policies, chances are that you aren’t going to be any better than they are.  You’re back in a reactive mode.  Being like everyone else will only result in your being like everyone else.

But instead of always being in a defensive position, HR professionals have a tremendous opportunity to align their health plans with the corporate strategy by asking the right questions and identifying the areas that are most relevant to the future success of their company.  Doing so isn’t for the faint of heart.  It takes time, effort, and insight to craft a strategy and then execute and measure your progress year after year.

Alan Wang
Alan Wang
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.
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