How HR should handle rolling back employee benefits
Telling employees they’ll no longer receive a benefit they highly value, or that their compensation structure will change, is never easy. And it almost always falls on HR. It comes as companies today are cutting back wherever they can. Big tech companies like Zoom and Salesforce for example are reducing stock options for staff.
Other examples of benefits rollbacks may include changing unlimited paid time off policies or removing flexible work policies.
Diana Scott, leader of the US Human Capital Center at the Conference Board, remembers a time when workers across industries had a key benefit taken away — pensions. “I’ve had to navigate similar situations where you’re changing the benefit structure, the compensation structures, total rewards in general, and how you communicate about that, and how you share it, and how you decide to equitably roll it out,” Scott said.
Poorly-handled announcements can harm morale, lead staff to quit and break their trust in their employers. Scott said the first questions HR leaders should ask themselves when navigating these situations are: Who are the populations most impacted? What is the businesses need? And can we offer any replacement benefit?
When handling pension rollbacks, some of the populations most affected were those who were older and longer-tenured with higher investments in those plans. In such situations, a good approach is to identify staff who should be grandfathered in and allowed to still receive that benefit.
But a major challenge overall is communicating rollbacks to staff. When doing so, HR professionals should focus on the business need and be transparent about why the change is needed to maintain business operations. “Because what you don’t want in these situations is have your employees be disgruntled, upset, feeling like, either the rug has been pulled over them, or it was a bait and switch,” Scott said.
“I think understanding the audiences, understanding how they might react and then planning very carefully as far as what can soften the blow or help shift the perspective that you’re giving them something else that better aligns with business needs,” she said.
And while it’s important to provide clarity around the business need for such a change, HR leaders should be cautious around explaining the decision in purely financial terms, said Brent Cassell, vp advisory at Gartner.
“While it’s possible that they may be discontinuing the benefit due to cost pressures, my concern is that it might seem ‘tone deaf’ to focus on the company’s hardships at the expense of any hardships that the employees themselves might be experiencing,” Cassell said.
When rolling back a benefit, HR leaders should identify other replacement benefits they could offer. One benefit many employees are losing – that they highly value today – is flexibility. In fact, many consider flexibility to be a key part of their compensation, according to a report from the Conference Board.
When asked what five non-salary compensation elements they considered most important, 65% said workplace flexibility, according to that survey of over 1,500 U.S. workers conducted last September.
If a company is rolling back a benefit, another question to ask while considering replacements is: “What was the original problem that we were trying to solve?” Cassell said.
If an employer is discounting a student loan benefit, for instance, they should emphasize other benefits or reinvest that money into something more relevant to employees needs – like internal learning and development programs, he said.