Employee benefits strategies to attract and retain a diverse workforce
Customizable employee benefits like spending accounts can help attract talent and retain employees to build a more diverse and inclusive workforce.
Deliver inclusive employee benefits for a diverse workforce
The modern labor pool has been globalized, and as a result, businesses are attracting a more diverse workforce than ever before. Diversity in the workplace are always favorable; the more perspectives involved in any endeavor, the more well-rounded the end result proves to be.
However, with increased diversity, employers are tasked with ensuring that the offerings in employee benefits programs are inclusive and designed to accommodate varying individual employee needs. Building employee benefits programs that are flexible enough to satisfy diverse employees can help businesses find and keep top talent from the recruitment pool.
For example, employee benefits such as flexible spending accounts can often provide more incentive and value than competitive salaries and bonuses alone. In fact, studies show that 80% of employees prefer to take additional benefits when given the option instead of a salary increase.
Flexible employee benefits like spending accounts can enhance engagement and productivity and encourage employee loyalty and retention. From wellness stipends to work-from-home supports, time away accounts to family caregiving funds—offering benefits spending accounts that accommodate all employees’ needs is empowering and demonstrates they are valued.
Provide account-based employee benefits with flexibility
As businesses strive to build and maintain a desirable workforce in a modern international labor market, they are faced with a broader range of employee needs across cultures. Considering the upwards trend toward decentralizing the workplace and empowering workers, it only makes sense to provide workers with more flexibility.
In fact, more than 75 percent of senior HR leaders say that allowing employees to work flexible hours is one of the most effective things they’ve done to improve employee well-being, according to a 2021 report by McKinsey & Company on women in the workforce.
Employee benefits spending accounts can offer workers greater flexibility and benefits coverage—encouraging a well-rounded lifestyle regardless of individual preferences, needs, or geographical location. No matter where or how employees live and work, benefits spending accounts help support their health and wellbeing—which makes for happier staff members, both during and outside of work hours.
Spending accounts types for employee benefits
Employee benefits spending accounts generally fall into one of three categories:
- Lifestyle spending account (LSA)
- Flexible spending account (FSA)
- Healthcare savings account (HSA)
Organizations should strive to design and implement spending account options that maximize flexibility. For example, rollover features give employees more wiggle room with how they choose to use their funds since they don’t have to race to spend all their funds by the end of the month. Rather, employees can use their benefits on their own terms, to best benefit their unique lifestyles.
Lifestyle spending accounts (LSA)
A lifestyle spending account (LSA) can make an attractive benefit for employees focused on health and wellness—and for companies that want to prioritize this. LSAs are employer-funded accounts that give diverse employees the autonomy to choose benefits that best support their needs. For example, a wellness spending account might include physical fitness benefits, such as gym memberships or exercise equipment, and also support counseling, talk therapy, mindfulness therapy, and emotional or spiritual wellness activities, such as meditation.
Some lifestyle spending accounts may even expand to cover financial health and well-being, such as financial advising and planning, financial seminars and classes, estate planning, credit counseling, or identity theft services. Other lifestyle spending account offerings might reach yet further to include education, travel, and entertainment benefits.
Flexible spending accounts (FSA)
Flexible spending accounts (FSAs) work slightly differently from LSAs, both in what they cover and where the money comes from. Healthcare FSAs primarily cover expenses outside of general coverage: think vision, dental, chiropractors, prescriptions and over-the-counter medications, medical devices, counseling, and birth control. Employees can also use an FSA to cover insurance-related expenses such as copays and deductibles. Dependent care FSAs cover child and eldercare expenses.
Unlike an LSA, an FSA is usually funded through employee pre-tax contributions. Employees can set an amount to deduct before taxes from their paycheck for FSA funds, thereby reducing taxable income. FSA funds are subject to IRS regulations. They do not roll over and are not portable; employees must use them within the benefit year and cannot take funds with them to a new job. Employers set the ceiling on how much they allow their employees to contribute, as long as it does not exceed the IRS limit.
Health savings accounts (HSA)
Not unlike an FSA, healthcare savings accounts allow employees who are enrolled in a high-deductible health plan to set aside pre-tax healthcare-specific funds for later use. Employees receive a triple tax benefit on HSA funds: contributions, interest on funds, and withdrawals (as long as they are used for eligible healthcare expenses) are all entirely tax-free.
However, HSAs do roll over from year to year, and employees retain full ownership of the funds when they move jobs or retire.
Often, employers will also contribute to HSAs to seed the account. This is because, per IRS regulations, employees must be enrolled in a high-deductible health plan in order to be eligible for an HSA. Employer contributions offset high deductibles for employees who enroll in those plans.
Flexible employee benefits programs solve problems in the new normal
The COVID-19 pandemic fundamentally changed how both employers and workers view employee benefits. New attention to the interconnectedness of life and work as teams were forced to work from home made it necessary to establish new models of work across remote workers, hybrid workers, and in-office workers.
Employee benefits had to adapt to these new realities as well—helping employees with their unique situations, rather than offering a rigid one-size-fits-all plan based on antiquated practices. Employee spending accounts offer a modern flexible solution.
Even as the workforce returns to more in-person work environments, the lessons remote work taught us all is that it is fully possible and not just a temporary solution.
Jabra’s Hybrid Ways of Working Report showed that 75 percent of workers want to continue working remotely in the future. Organizations have made pandemic-era accommodations more permanent—and will need to do the same with employee benefits.
For example, remote workers in another state or country can’t access a company gym like an in-office worker. Spending accounts allow off-site workers to take advantage of key wellness employee benefits in a way that suits them. Perhaps as a stipend for personal gym equipment or credits toward online workout classes.
When planning employee benefits plans, it’s critical for organizations to ensure they are relevant to employee needs. Survey staff to ascertain what they’d actually use, especially if they are spread out across several states or dispersed internationally. Focus on employee benefits that are accessible to staff regardless of location. The employee benefits that remote and hybrid workers find attractive are as diverse as they are.
Consider international and cultural differences
In addition, it’s important to remember that cultural and personal needs vary across countries. A globally-informed approach to employee benefits makes your business more inclusive and helps you appeal to talent no matter where they are located. For example, someone stationed in Southeast Asia is not going to benefit from the same holiday and health insurance benefits as someone in the United States. Showing this cultural awareness demonstrates to employees that you care about them as individuals. In turn, this can increase job satisfaction and result in less attrition.
While designing a benefits program that makes sense geographically, it’s also important to consider cost-of-living discrepancies. Spending accounts can provide helpful buffers when you have employees working in areas with wildly different costs of living. Healthcare services will be dramatically more expensive for an employee in California compared to an employee in, say, West Virginia. A spending account might allow these workers spread across regions to make up the gaps in their coverage and how far their dollar goes.
Offer a modern solution for the modern workforce
In order to create a successful flexible benefits spending account program, companies must get to know their employees and their needs. Partnering with a trusted employee benefit management provider can ensure the program is designed, implemented, and improved upon in a way that it meets the needs of diverse employees.
Forma understands that in today’s labor market, flexibility is the name of the game. In order for employees and companies to thrive, organizations must offer a modern approach to employee benefits with customized spending account options. Forma’s detailed employee benefits management offerings allow companies to build a plan that best represents their team members, in all their diversity.
Contact Forma today to get started building an inclusive spending account plan for your company’s modern diverse workforce.