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© Copyright 2000 Rogers Media. The following article first appeared in the July 2000 edition of
BENEFITS CANADA magazine.
Gimme gimme
Many employees have come to regard benefits as a right. With costs soaring, employers are taking a
hard look at how they can combat this entitlement mentality.
By Sonya Felix
A couple of years ago, the newly amalgamated Kawartha Pine Ridge District School Board in Peterborough,
Ont. found itself in a position where it could do something about a troubling mindset that plagues many
organizations--entitlement syndrome. Prior to amalgamation, the district's school principals were members
of the provincial teachers' federation. But with a restructuring of provincial school boards under Bill
160, principals and vice-principals were deemed management and removed from the collective bargaining units
of the teachers' union. For Dick Malowney, director of education and chief executive officer of Kawartha
Pine Ridge District School Board, this meant coming up with new terms and conditions of employment for the
board's now non-unionized 160 principals and vice-principals.
"We decided to introduce a flexible benefits plan," says Malowney. "We perceived it as an answer to the
entitlement syndrome. We wanted to have individuals appreciate and understand that they are consumers of
benefits and re-sources. And as consumers, they have to realize that benefits are no longer invisible
things that just come out of the air."
Battling entitlement syndrome is a challenge that many plan sponsors face as they search for cost
containment and cost shifting strategies to get a grip on escalating benefits costs. To be fair, Canadians
come by the mentality honestly, with universal medicare, unemployment insurance, various social welfare
programs and the implementation of traditional employee benefits packages designed to take care of
families.
"It seemed to make sense, at the time, to offer a paternalistic plan to everyone where everything is
covered with little need for employees to understand the design of the plan," says Bessie Wang,
vice-president, wellness consulting, Buffett Taylor & Associates in Whitby, Ont., speaking of the
introduction of benefits plans decades ago. But paternalism isn't cost effective or even desirable anymore.
Families have changed, workers don't stay in the same jobs for life, and most employers don't want the
responsibility of providing for employees' every need.
Ask a benefits manager about entitlement syndrome and you'll get a response that's laced with frustration.
"Throughout our whole Canadian culture, beyond the boundaries of the workplace, we see entitlement
mentality," says Julia Koe, assistant manager, benefits development, Royal Bank of Canada in Toronto. "It's
give me, give me, without appreciating what you get. But nothing is free. It's not realistic to expect the
government to take care of you, so why should you expect your employer?"
Pat O'Brien, manager, compensation and benefits for NBTel in New Brunswick, agrees that entitlement
syndrome is a serious problem. "We see it with sick time where people think they are entitled to so many
days off sick so they might as well take them. They think, 'Hey, I pay $50 for the benefit and get to claim
up to $600 so I might as well beat the insurance company for the money!' They don't realize they are
beating their employer."
This attitude costs employers a lot of money. With benefits costs, especially for drugs, going through the
roof, employers are taking a hard look at how to wean employees from the notion that they are entitled to
benefits.
FIGHTING BACK WITH FLEX
Flexible benefits is one of the most effective ways to counter entitlement. When Malowney sat down with
representatives from the principals' group he explained that cost cutting wasn't the objective of the new
flexible plan, although it would cap the employer's exposure to long-term costs. "We told them that we were
providing an allocation, a benefits package worth $3,500, that would allow them to tailor the benefits to
them as individuals. They saw how benefits coverage could be applied to their own world and it caught their
attention."
Employees choose their own benefits coverage and have the option of receiving cash for the portion of their
allotment that isn't used. "Plan members now view themselves as consumers," says Malowney, adding that
employee morale and satisfaction rates have risen, while some costs have declined. "We're now doing the
same sort of thing with our non-union administration and support groups, and a number of principal groups
in the province are looking at our plan. That's quite a compliment."
Entitlement syndrome typically comes to a head when previously provided benefits are eliminated or
decreased. That's what happened at Gulf Canada Resources Ltd. in Calgary a couple of years ago when cuts to
benefits coverage resulted in disgruntled employees.
While the company didn't give back any of its benefits, it did inject more cash into the plan last year by
opening personal development accounts worth $2,500 for each of its 450 employees. There are restrictions on
what the money can be spent on, and a portion must go into a health spending account. "People who used to
complain about things like not covering chiropractors 100% anymore, have stopped complaining," says Louise
Campbell, the company's pension and benefits adviser.
Over the past decade, the Royal Bank has made several shifts in benefits, going from 100% paid with small
deductibles to cost sharing, which introduced employee premiums. "If the employee doesn't pay, they don't
think about spending," says Koe. "We've taken logical steps over the last decade and we will eventually go
to flex."
With 51,000 employees across Canada, the Royal Bank's program is gradually encouraging people to take more
responsibility not only for their health, but for their professional life. "We want employees to understand
that none of these programs is going to take care of them," says Koe. She notes, however, that if the
company expects employees to share responsibility, it must provide tools to assist them such as education
and software.
DIFFERENT APPROACH
The Saskatchewan School Trustees Association in Regina actually shied away from flex because it was
conscious about off-loading costs to employees, says Karen Keuler, director of the employee benefits plan
for the association's 4,500 members.
Still, five years ago the association adopted several cost-saving measures that addressed entitlement. For
example, an employee statement is issued annually and when there are changes that affect benefits coverage.
"Employees can see their coverage and what the cost sharing differences are," says Keuler. The association
also holds seminars to explain benefits and their costs to members. "For instance, we'll point out that
most people will go to several shoe stores before buying a pair of shoes and they should shop around for
the best price at pharmacies too."
After the Saskatchewan government increased its provincial drug deductible, the association cut its drug
plan coverage from 100% to 80%. "Co-insurance helps make employees more conscious about paying for
prescription drugs," says Keuler. "For the most part, we've had no complaints about the changes and our
efforts to reduce entitlement mentality have had an impact. We've experienced stable claims activity since
we introduced the change--the rate actually [decreased] the first couple of years."
Plan sponsors say educating employees is crucial to minimizing entitlement syndrome. "We have to make
people see that every dollar the employer spends on benefits is a dollar less for wages or other things,"
says O'Brien at NBTel. NBTel also issues an annual benefits statement detailing coverage paid by the plan
member and the sponsor. "They can look at it and say, 'boy, my employer is spending big bucks on benefits,'
" says O'Brien.
Alcan's non-unionized employees receive a detailed total compensation statement, which identifies the real
cost for each employee showing their benefits costs, their salary and bonus. "They can understand how
important the cash/benefits package is," says Richard Garand, manager compensation and employee benefits
for Jonquière, Que.-based Alcan.
Koe doesn't think that benefits statements alone can effectively combat entitlement syndrome, but she does
believe they fit into a communications strategy that consistently delivers key messages. The Royal Bank has
such a strategy but still, not everyone gets it. In a focus group that asked employees how they felt about
benefits changes and whether they were aligned with the company's vision, some people said the changes were
against family values.
"We're not against family values," maintains Koe, "but we can only provide the tools for people to look
after themselves." With the entitlement mentality so strongly ingrained, she concedes it's a long process
to make the necessary changes.
It's possible to address entitlement syndrome within a union environment, albeit the challenge is tougher
when benefits are negotiated. Jim Norton, senior vice-president, Aon Consulting in Toronto, says that
telling unionized workers how expensive benefits are can help. "Unions have been very positive about prior
authorization [for certain prescription drugs] because it doesn't involve taking benefits away from people
who need them but it does address drug costs."
Alcan takes a certain amount of money per hour per employee and gives the funds to the union to manage
benefits for its 9,000 unionized workers. Although Garand says the union is less influenced by costs, "they
know benefits are expensive and hard to manage."
Kueler of the Saskatchewan School Trustees Association isn't so sure that this approach is effective.
"There tends to be increased pressure for benefits from members and a struggle by the union leadership to
reconcile costs," she says.
Kueler doesn't believe that entitlement mentality is a union/non-union issue. "I've found that people in
higher salary brackets or management types are more apt to nickel and dime you for benefits than people at
lower income levels."
In the end, entitlement syndrome is really a reaction to losing benefits that people have accepted as their
due in the workplace. "Employers must recognize that this ingrained attitude cannot change overnight," says
Wang of Buffett & Taylor. But it stands to reason, however, that as the next generation of workers gets
used to limitations on benefits, the entitlement mindset will likely diminish.
Sonya Felix is a Toronto-based writer.
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