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Making Benefits Worth the Trouble

By Liz Ryan I'm old enough, barely, to have been in corporate human resources when people still spoke of "fringe benefits." Even so, I'm not sure if that meant "not critical" -- the icing on the cake, in other words, as in: "You're lucky to work here -- and look at these nice benefits!"

Either way, nobody mentions fringe benefits anymore.

In fact, of all the changes in HR over the past decade, those affecting benefits may have been the most sweeping. That's because the old definition of benefits -- which included vacation, health insurance, dental, and 401(k) plans, and so on -- becomes less relevant to working people every day.

Your company may offer a generous 401(k) program, for instance, but if you're 25 and don't expect to stay, the value of that benefit is zero. A company may maintain a child-care center, but it's of no value if your kids don't use it.

NEW SET OF RULES. The point is that employers need to take a hard look to make sure benefits aren't only available and cost-effective, but are doing their job -- which is to help attract and retain the most talented employees.

So, a lineup of blue-chip plans isn't worth much if it isn't helping to get and keep talent. Look, for instance, at your company's under-30 population: Apart from the health plan and vacation, are they using any benefits at all? No? If not, the plans aren't just under-utilized: your staff is under-served.

Back in the day, it was OK to say: "Yes, we spend company funds on expensive family health-care and child-care benefits and other programs that you (as a twentysomething or fiftysomething) may not be using. But that's OK -- we'll all use these as we move through the stages of life."

WHAT'S IN IT FOR ME? And that was fine when you could expect to stay at a company for life. You didn't mind, in effect, subsidizing someone else's baby care, because, by gosh, when you needed it yourself, the company would provide.

Employees don't see things in those terms anymore. If you stay with a company for just five years, you may never use the family health plan, the college-savings plan, or a mortgage benefit. If you're a short-timer, "What will you do for me next year?" is less relevant than "What are you doing for me now?"

Thus, employers need to think about individual value as they evaluate benefits programs. If you adopt a talent-magnet framework for your benefits, you'll quickly see that lots of stuff not traditionally associated with benefits becomes relevant.

BROADER DEFINITION. For example, a flexible work schedule may be the greatest benefit of all to some employees. That's not a benefit, you may think, that's a policy. Well, that's my point. Your employees don't care about the nomenclature. If it feels good, it's a benefit.

Working with the smartest people on the planet is a benefit. Working from home is a huge benefit. All of a sudden, the benefits department of HR -- if it wants to be relevant -- needs to go far beyond its traditional comfort zone and deal with issues like leadership training, international exposure, and mentoring. Are those benefits? You betcha!

Remember, benefits are the things that make employees choose your company over others. Great bosses count, and so do dress-down Fridays (or dress-down every days). Meanwhile, those discount quick-lube coupons you negotiated are useless to your urban-dwelling employees who take a train to work.

HIDEBOUND IGNORANCE. There are a couple of items of takeaway wisdom for corporate leaders in this new era. The first is to answer this question about your benefits: What makes our company appealing to talented workers?

The traditional approach is to list all of your programs, then stand back and say: "Aren't we wonderful?" But that doesn't work anymore. Instead, you need to look at every cross-section of your workforce, and ask your people what they value. The results may shock you.

The second lesson is that the traditional HR department isn't well-suited to this new view of benefits as employee-keepers. Benefits today range far outside the realm of old-fashioned benefits managers, into employee relations, diversity, training, and internal communications.

WORK HARD, LOSE PERKS. For example, access to the senior leadership team is a critical benefit: So who on your HR staff will champion the idea that division heads should hold roundtable meetings with employees every quarter? That might be a better use of the benefits manager's time than renegotiating a quarter-percent discount of some kind.

When you turn your mind around to viewing benefits from the employee's point of view, you quickly see where the old-school approach may be hurting you.

Here's an example from my friend Tracey, who manages a sales team in an embattled industry. After fighting back from near bankruptcy to a respectable position, she committed herself and her sales team to challenging goals for this year. Just after she did, a memo arrived from the benefits department that said, in effect: "Dear employees, we have just become aware that our tuition-reimbursement program pays benefits at 55% of the area norm. We are correcting this right away, and are reducing benefits such that we will fall in the midpoint of the range for other employers in our area."

PENNYWISE, DOLLAR FOOLISH. Wow -- and thanks ever so much! That move may have saved the company a few thousand dollars a year, but in an environment where Tracey is laboring to keep employees from leaving, at what ultimate cost? Are we thinking of our benefits programs as employee-retention vehicles? Clearly not, in this case: Save a penny, lose the only thing that will keep the company getting its clock cleaned by the competition.

Here's my offer: If you or anyone you know feels a compulsion at any time, even at 3 a.m., to issue one of these bonehead corporate-bullpucky memos, write to me and I'll talk you out of it.

Sometimes, corporate leaders get so caught up in their spreadsheet world that they forget the impact decisions have on desk jockeys, and that's when the worst of the silliness occurs. There should be a group for these people, called Administrators Anonymous.

ALL EARS. So check with me first if you feel the need to eliminate the free coffee for employees, remind staff that polo shirts aren't acceptable work attire, or dial back the tuition-reimbursement benefit to match the survey norms of the local employer's council.

Write me, please. You'll be glad you did.

And tomorrow morning, ask the first staffer you can find: "What do you like best about working here?" Listen hard to the answer: There's your real benefits program. Do you have any great business leadership tips to share with BusinessWeek Online's readers? Send them to Liz Ryan, an at-work expert, speaker, and writer, and CEO of online networking organization WorldWIT

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