As Canada’s post-recession economy recovers, attention is returning to the challenge of shifting demographics—specifically, the impact the impending wave of baby boom retirees will have. While many organizations have taken steps to ensure a good internal pipeline of senior managers and leaders, the question arises as to whether employers will be able to hang on to “homegrown” talent. Are they training and grooming tomorrow’s executives, only to lose them to competitors?
For some organizations, whether attempting to attract or retain senior staff, the solution lies in paying competitive—or even more than competitive—executive compensation. However, as salaries, along with short and long-term incentive programs, come under greater scrutiny and recent stock market performance has, in some cases, made company shares a less appealing form of compensation, certain organizations are looking at alternative means to ensure they have the key people they need to achieve competitive advantage.
Executive group benefits under review
The results of Aon Hewitt’s June Rapid Response survey on executive group benefits indicate that the question of whether or not to offer a separate group benefits programs for executives is garnering a lot of attention. Of the 213 Canadian employers that replied, 44% have either reviewed their executive group benefit programs in the last year or plan to do so in the coming 12 months. Amongst larger companies—those with at least 250 employees—interest is particularly high, with a third having reviewed their executive benefit programs within the past year, twice as many as compared to smaller employers.
These results don’t necessarily mean that executive benefit programs have gained traction, however. Half the survey respondents stated their executives participate in the same core programs as other employees, with only minor differences, while another 38% indicated that benefits programs for their executives are exactly the same as those offered to other active salaried employees. Only 7% of organizations had a completely separate executive program. With so few employers currently offering separate programs, the level of interest in reviewing this question is high, perhaps suggesting the advent of a new trend.
Eligibility and reward
If there is movement towards introducing executive group benefit programs, some of those who have already implemented them may want to take a moment to better define eligibility; 19% of those who offer a separate program have not defined who the members of the executive group are. However, one-third define eligible members as the CEO and his/her direct reports, while slightly fewer (31%) also include certain functional or line leadership positions, amounting to less than 5% of their employees.
As for what executives are exclusively receiving as part of their package, the top five benefits are as follows:
- Company car or car allowance (57%)
- Medical exam provided by a private health service (45%)
- Vacation or time-off policies (31%)
- Higher long-term disability maximums (31%)
- Club memberships (30%)
When it comes to intentions to provide executive benefits in the future (from amongst those employers that don’t currently differentiate), certain trends emerge from the data. There is little interest in increasing the prevalence of “typical” executive perquisites, like car allowances and club memberships— in fact, some respondents indicated that the prevalence of these types of benefits might decrease, regardless of position. Limited growth is expected in “traditional” benefits like medical, dental and long-term disability. The greatest uptake is expected in executive programs that offer private health services and wellness benefits— medical examinations, health spending accounts, personal or wellness accounts, and additional vacation time, for example. This suggests that employers are recognizing that long working days, lengthy wait times and reductions in government health services are having an adverse effect on executives’ ability to get care. It also, of course, acknowledges that healthy executives are more productive.
Effectiveness of group executive benefits
Research from Aon Hewitt’s annual Best Employers in Canada study reveals that employee benefits are not a major driver of engagement, although they can be a deterrent to high engagement if they are not communicated and administered well. Benefit programs can, however, help to push engagement higher when appropriately tailored to meet the needs of employees. They can certainly differentiate one employer from another.
In order to attract and retain key talent, organizations should focus on engaging senior managers and executives by creating a rewarding work experience that includes, for example, learning and development options, career opportunities, increasing responsibility and interesting tasks. Engaged executives are not likely to switch employers simply because another organization covers a club membership. However, group executive benefits may be worth a second look as a means of distinguishing the total rewards package for executives.