How KPMG Canada flexed its benefits program with a plan redesign

In 2016, KPMG Canada’s benefits program was facing a perfect storm: the company was starting to see a change in its workforce’s needs; employees didn’t value some of its offerings, found the program difficult to understand and felt the pay and total rewards package weren’t competitive; and the organization’s new management team didn’t believe the program had a strong return on investment.

All of these elements led to the creation of a business case for looking closer at the offerings and making some changes, says Lisa Park, KPMG Canada’s director of total rewards.

Building value

Beginning in November 2016, the company underwent a two-phase redesign, first tackling its base pay, incentives and recognition model, followed by its benefits offering. It started by considering what it wanted to achieve, says Park, and then came up with five objectives: to ensure the program was agile and could be easily adapted to changing business needs; that it was valued by employees; that it was inclusive of its multi-generational workforce; that it was easy to administer and straightforward for people to access; and that it could be measured against clear key performance indicators.

Read: Developing a benefits plan to support a multi-generational workforce

The benefits redesign, which started in 2018, was a big undertaking, says Park.

When the process began, KPMG had around 20 different lifestyle programs available to employees on a use-it-or-lose-it basis, in addition to fixed spending for medical, dental and drug coverage.

To make it simpler for employees to choose their relevant benefits and lifestyle options, KPMG created a wellness pool. The pot of money is available to every employee to put towards a healthcare spending account, a lifestyle spending account and flexible benefits, as well as savings options such as a group tax-free savings account or a group registered retirement savings plan.

IN NUMBERS

2018
The year KPMG began its benefits redesign process

20
The number of use-it-or-lose-it programs KPMG’s former benefits plan offered to employees

5
The number of different buckets staff can put funds into from their wellness pool

$2,000
The amount every employee can spend on mental-health coverage each year

The lifestyle and health-care spending accounts cover programs such as backup childcare, elder care, nutritional programs, meditation apps and programs, fitness expenses, financial advisor services and even housecleaning services.

Read: Pitney Bowes focuses on prevention in benefits redesign

KPMG also changed its core medical, dental and drug benefits to ensure employees could customize them. “We got quite a bit of feedback in the early part of the process . . . and really it came down to the way programs were structured before. People had set amounts of money they could only spend on those particular programs,” says Emilie Inakazu, the company’s senior manager of total rewards. “If it wasn’t something that was valued by them, they lost out on the money the firm would have been giving them.”

Employees can now opt out of a benefit entirely, or choose from a basic, comprehensive or premium level of coverage for their medical, dental and drug benefits. They can also put money from their wellness pool into flexible benefits to add more coverage.

The redesigned plan also includes a set number of free programs employees can use when they need them, including an employee assistance program, adoption assistance program, maternity and adoption leave and a defined contribution pension plan. Everyone also has access to $2,000 a year in mental-health coverage.

The overarching goal of the new plan is to provide employees with as much freedom as possible, says Park. “We wanted to offer employees an innovative program that creates a personalized total rewards experience that supports them in terms of employee choice.”

Read: Majority of staff value personalization in group benefits plans

It also includes access to a simplified online portal, where employees can monitor their wellness pool as it adjusts during the selection process. KPMG also wanted to put employees who were supporting a partner or family on equal footing with their peers: if someone selects medical or dental benefits for a dependant, the system recognizes the additional premiums they’ll need to pay and adds extra money to cover it.

“If you chose coverage for your family in certain benefits, you actually ended up getting more in your wellness pool to subsidize the cost,” says Park. “The key . . . was to provide a consumer-grade experience and more affordable coverage for couples and families.”

So far, the response from employees has been positive. “We got lots of good feedback on how the experience simplified the process and brought everything together in one place so people could have a much clearer sense of what the firm was giving them in terms of funding,” says Inakazu.

Guiding principles

A benefits plan redesign requires a lot of work, so it’s important for an employer to first determine its goals, says Faizel Alladina, senior vice-president of product and underwriting for group solutions at People Corp.

“Organizations have constraints, so before you even embark on a decision around plan redesign, understanding some more important guiding principles around what you want to achieve [is important], as opposed to just adopting the idea of the day.”

Employers should also consider their plan cost and tax-effectiveness, value system and how the benefits offering stacks up against competitors, says Alladina.

“If you think about what you’re doing, you’re investing in people and trying to attract that talent in the door and keep them from leaving you, and you want them engaged.”

Read: 80% of Canadian employers concerned about retaining talent: survey

And any organization embarking on a redesign should also be aware of workforce demographics, with baby boomers retiring, millennials making up a larger portion of the workforce and generation Z starting to enter the job market, he adds.

“[With] a one-size-fits-all benefits program, you’re going to have some level of misalignment and dissatisfaction across some of those employee groups, because they’re not going to see the plan meeting their requirements.”

This can be particularly challenging for boomer or gen-X executives who’re managing a mostly millennial workforce. “They need to start thinking about the broader organization as opposed to some of the things they may have historically seen when they were coming up through that organization,” says Alladina.

Flexibility on the rise

For that reason, flexible benefits plans have grown in popularity. “Flexibility and choice are now becoming top of the list of things employers really want to think about, because we know . . . millennials are looking for programs that allow them to spend money more in line with where they see value,” he says.

Employees are also expressing a greater interest in voluntary benefits, which they can access by paying extra. Indeed, the 2019 Sanofi Canada health-care survey found 53 per cent of plan members would be willing to pay more out of pocket to receive extra benefits coverage.

However, notes Alladina, a move towards greater plan customization can also present a challenge for employers. How much choice should they really provide? For instance, younger employees who may see themselves as invincible, or at least too young to need life or critical illness insurance, may skimp on a crucial benefit to put dollars elsewhere and feel the pain later on.

Read: Gaps persist in plan sponsor, member views on benefits: Sanofi

“There’s a risk there that organizations that don’t think a little paternalistically may end up in scenarios where employees are making bad choices around benefits,” he says.

Employers must also communicate with staff throughout the process. “You can do a ton of great work on the front end, but if you fail on the delivery and change management you’ve probably done yourself a disservice,” says Alladina. “The heavy lifting that has to happen is, how do you implement the programs, the communication, the change management that go along with that?

“You really want to take your employees through that change process in a way that they understand and value where you’re moving from and to.”

Kelsey Rolfe is an associate editor at Benefits Canada.