By the early ’80s, flexible benefits had really taken off in the U.S., but it was still a relatively unknown concept north of the 49th parallel. “With such a different environment in Canada, a lot of people thought Canadians really didn’t need choice in healthcare, because it’s not the same issue,” says Bob McKay, retired last year from Aon Hewitt (formerly Hewitt Associates).
It was at Hewitt that McKay got involved with flexible benefits plans. His 33-year career began in 1978 in the firm’s U.S. office, where he and “a little SWAT team of consultants” supported Hewitt’s clients throughout the U.S. and Canada in understanding the technical aspects of flexible benefits.
Around that time, Cominco, a large mining company headquartered in Vancouver, was facing some financial turmoil, which affected many of the company’s non-union employees in the form of frozen salaries. But, as the company began to recover in the early ’80s, Cominco began looking for a way to give something back to these employees without spending a huge amount of money, says McKay. One of the areas it explored was flexible benefits.
Cominco approached Hewitt—at that time the only consulting firm in Canada with experience in flex—for assistance in implementing Canada’s first full flexible benefits plan. The plan was set to launch March 1, 1984, for Cominco’s roughly 2,000 non-union employees.
Hewitt worked with Cominco’s HR team to consider plan objectives, financial constraints, range of choice and employee demographics. Once the proposed plan was developed, Cominco took it to an employee focus group for feedback. McKay says the focus group reacted favourably.
For Hewitt, interest (and therefore business) increased as other Canadian organizations heard about flex and wanted to explore it. “And, a number of insurance companies wanted to put in flex for their own employees to learn about it, so they could market it to their clients or at least be prepared when their clients came to them,” says McKay. These insurance companies—London Life, Sun Life and others—turned to Hewitt for help.
Gradually, flex plans went from something that was thought not to work in Canada, partly based on the perception that Canadians have universal coverage and Americans do not, to something fairly mainstream, says McKay. (Hewitt’s 2009 Flexible Benefits Plans in Canada report showed that 47% of respondents sponsor some type of flex plan.)
Ultimately, Canadian flex plan offerings have proven more broadly focused than similar plans in the U.S. “Things like long-term disability, life insurance, and buying and selling vacation were more important in Canadian than in U.S. plans, where the absolute focus was healthcare.”
The structure of the plans also expanded. “There’s now a wide spectrum of what would be considered flex.”
All thanks to Hewitt, McKay and a little SWAT team south of the border.