Simran, the Director of HR, logged in to Microsoft Teams for her biweekly check-in with Eve, Otter Manufacturing’s CEO. One of the topics up for discussion was how the company could reduce the increasing benefit costs it was facing. Simran was excited to discuss her ideas for some wellness initiatives that might support the transition back to the office, now that the pandemic was waning. Both came prepared with copies of the recent annual financial statement and the proposed benefit renewal report prepared by the external benefits broker. The financial statement indicated Otter’s benefit costs had reached almost 40% of the company’s total annual payroll. Eve shared a benchmark survey that showed the manufacturing sector average was closer to 25%.
“Simran, why are our benefit expenses so much higher than our competitors?” Eve asked.
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Simran was prepared for this question. Over the past year, during the pandemic, the company has made purposeful increases in the extended health plan provided to the company’s 100 employees. Specifically, prescription drug coverage, dependant coverage, and an employee and family assistance program were expanded significantly. The intention was to provide these additional benefits while people were working primarily remotely. Now, with many employees working a hybrid schedule of three days in the office and two remote days, Simran wasn’t sure if the company was getting its money’s worth. Obviously, neither was the CEO.
“Leave it with me, and I will come back with a plan to tackle these rising costs,” shared Simran.
Reflecting on the problem, Simran recalled the HR course she took at SFU. She remembered learning that HR initiatives should have performance measures and be results oriented.
Revisiting her notes, she looked at the focus on results chain:
She wondered if the overall corporate outcome for Otter Manufacturing was to reduce benefit costs as a percent of payroll while at the same time supporting the company’s strategy, what HR program could she create and what would be the resulting employee behaviours.
Simran reviewed Otter’s strategic business plan for clues:
She also reviewed the most recent renewal report provided by the benefits consulting firm. It showed since the pandemic started, prescriptions for stress related causes had skyrocketed, and seemed to be the primary reason for the increased healthcare costs.
Simran considered how might she introduce a wellness program that resulted in less stressed employees, which supported the company’s strategy and desired outcomes.