This is all great, right? Choice is a right that we have as human beings, we shouldn’t be confined by anyone or anything in our thinking. That’s where disruption comes from as well.
Barry Schwartz’s book , “The Paradox of Choice” (2004) argues that having too much choice is harmful to us. It causes some strange behaviours, and these are not the best when it comes to benefit design and delivering the information that employees need in a clear and understandable way.
He argues that choice creates a decision paralysis, if we grant too many options, then we are proven to make less decisions. Also, when we do get around to making those decisions, we are less satisfied with them, because we keep wondering about what else we could have had. When was the last time you regretted that menu choice at a restaurant or your choice of resort on holiday? Oh, what could have been.
It got me thinking about benefits design in general.
We all know that we have a default investment option on our pension funds and why. It’s this very principal. If we leave the choice up to the members, then likely they won’t choose wisely. It’s not surprising. The likes of Legal and General who are one of, if not the largest pension provider in the UK, manages £63 BN in defined contribution schemes. They have 133 fund links, with 43 different lifestyle choices, and many external fund managers, across dozens of asset classes. You get the picture?!
The charges and performance vary wildly. When a member makes a choice outside of the default, if they make the wrong choice then this can have a rather fundamental impact on their retirement, because the other mistake that is made is that they probably don’t ever amend the choice either. Points towards making sure that they are financially well educated as well.
Flexible benefit schemes are great, they are meant to provide choice, and that they do. The design of these has to be right though, it has to present relevant and clear choices for your employees. It’s not about the number of benefits or the about the number of choices that they have to grade their cover, its about making sure its relevant and usable, that is doesn’t produce the opposite effect to that which you were trying to create.
Medical plans have options galore now, and unless you have the Ferrari version, then choices may need to be made or disappointment could reign if a claim is submitted and refused. Again, the opposite effect of what was intended.
Mental wellness within the workplace is clearly a top priority. You can’t miss the coverage within our industry press. The decisions and choices that employees make on a daily basis impact on their engagement at work, their productivity and connection with you as the employer. If employers don’t appreciate that benefit design and communication are linked to the engagement piece which in itself is allied to mental and physical wellbeing then a trick is being missed.
Whatever choice you make on benefits design. Choose wisely.
And another thing, when was the last time you went to renew your mobile phone plan? Are you kidding me……..
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