One of the thought experiments I like to do is to take whatever the driver of a business is and eliminate it. Eliminating a core profit driver makes you think about your real value differently.
That type of experiment led me to the business I have now – designing incentive, reward and influence programs to guide and reinforce behavior – without making money on rewards such as merchandise and group travel. I got here because I asked – “what would happen if tomorrow the government made earning points in an incentive program illegal?” Since incentive companies make the majority of their profit from points redeemed for awards, how would they stay in business? What would clients buy that had nothing to do with awards? That led me to focus on the design side of the equation – not the fulfillment side.
What is Your Question?
From a talent management perspective, I now ask a similar question – “What would happen if the government eliminated the anchors that ‘most’ employees perceive as the reason they work for a firm?”
Those anchors in my mind are – health insurance, retirement, income and stability. After those basic needs come the more esoteric, but important, elements of feeling recognized, feeling in control, feeling connected, etc. I say importance – but the right word might be “fear” – employees do some things for survival and fear before they worry about engagement.
Well, it is a real possibility that companies could lose a couple of their anchors in the near future.
Think about it.
Could Company Sponsored Health Insurance Disappear?
There is real talk that health insurance could become something we buy individually, without our employers. Whether that comes in 2 months or 2 years – there is a real possibility that the government could create a business environment where health insurance could be cheaper and more targeted to individual needs, and purchased by individuals. What would happen to your employee base if they didn’t feel the need for the current co-dependent relationship between health insurance and employment? Could that cause employees to leave and look for greener pastures? Would that change the focus of Executive Management and HR? Will they need to focus more on those “esoteric” elements of employment when one of the main anchors is removed? I think it will.
Who’s Your Retirement Daddy?
What about retirement? Defined benefit plans are pretty scarce and getting scarcer. 401K plans were the saving grace for many of us (pun intended) but when the economy took a hit, so did the 401K plans – as did many companies’ contributions – one of the huge benefits of those plans.
The deferred tax advantage is another benefit of those plans that may not have the same drawing power as it had. Some experts believe that increases in taxes will be necessary to pay for the health care and bailout issues we’re consumed with right now. If that’s the case, will the future tax rate be higher than it is today? We might just have a situation in the future where companies aren’t matching the 401K plans, and the tax benefits of those plans may not be there. Wouldn’t that remove another anchor for most companies? If that benefit is effectively removed, what does a company offer to attract and retain talent?
I’m not prognosticating here – I don’t know where this will end up. However, as a thought experiment, it is interesting to think about the possibility that a couple of the major anchors that attract and keep talent in your organization may disappear.
Why Am I Working Here?
Imagine, if you will, what would happen at your company should insurance and retirement as benefits disappear? Would you have other reasons for employees to WANT to work there? How much of your retention and recruiting efforts are focused on and dependant on those particular benefits? I’m guessing a lot. I know that when I’ve interviewed for positions in the past, the conversation spent a lot of time on those particular things.
While I may believe that changes in health care and retirement support structures will create a vast entrepreneurial wave in the future – it also means that larger companies will experience an ebbing tide of talent due to that wave. Are you focusing today on the real possibility that your core benefits to your employees may not be a consideration for future employees?
Are you spending time on those second tier desires/wants/needs that most employees talk about? Are you:
- Finding ways to engage your employees outside the transaction nature of their job (income, benefits)?
- Connecting employees together to create a family of supporters focused on the mission of the organization versus focusing on individual talents?
- Grooming leaders with more “people” skills versus operational skills?
- Eliminating barriers to people doing their best?
It CAN Happen
I know in my old industry, the government seriously derailed group travel and meetings travel by its public deriding of AIG and other companies. It has become a PR concern for many companies that run top performer travel reward programs. In addition, due to the negative press surrounding some high-profile compensation packages at poor performing companies, the public at large is looking at incentives in general as a negative way to encourage behavior. In other words – the question I asked a few years ago is kind of coming true. It was a good exercise for me to think about the award side of the equation going away.
It is probably a good exercise to ask yourself what would you be doing today, if tomorrow you didn’t have crutches such as 401ks and insurance to lean on to keep and get new employees?
It’s worth the experiment to ask yourself these questions.
Excellent points, Paul. One of the underlying issues for health care reform is its possible effect on employment. The argument goes that many employees want to start their own business, but are “anchored” to their jobs due to their inability to purchase reasonably priced health insurance on their own. Freed from the bonds of their employer-based health care, entrepreneurship would soar. How will a company respond when a portion of their workforce leaves for greener pastures?
Exactly – add to that the retirement issue – and now that most of us can afford to be “in business” for free with all the web-based apps and the low cost of pretty impressive technology – it’s a pretty easy decision to make. For some. Thanks for reading and commenting.
paul, i sense your gentle prodding to take the right, long-term steps today.
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Paul, thank you for posting this. Unfortunately my take on the situation isn’t as sunny as the other commenters, and I want to present another look at the situation to provide people with a different perspective. The ripple effects of what’s going on right now will be felt many, many decades into the future. I posted the following comment yesterday on a friend’s FB page & I want to share it here with you and the FoT readers, because I think it speaks directly to what you’ve laid out here:
“A new era of employment is upon us: huge increase in contractor status vs. employee status. What is a company’s incentive to hiring direct when they have to pay such astronomical costs for benefits? Hire contractors; then they won’t have to shell out for that. Results of this: contractors paying out of pocket for health insurance ($$$ w/ the healthcare bill that Senate is trying to pass this week), & no ‘auto’ savings in the form of 401Ks or retirement plans through the company. Result of that: because a great number of people won’t take the initiative themselves, there will be little to no retirement savings by the majority of people, so when it comes time to retire & there is no savings, more fingers will be pointed away from oneself to blame anyone and everyone else. Government will be expected (once again) to handle this issue b/c it’s their ‘responsibility’ & people’s ‘right’ to retirement. (don’t get me started on lack of personal responsibility on that one!) This is a slippery slope that is going to lead to our demise and has already started doing so.”
Thank you for letting me share an alternative viewpoint to this, in a professional environment. I enjoy intelligent discussion about these types of issues as I think it helps for people to think about things from many angles.
Thanks for your comments Amybeth. The point of my post was not to “predict” the future as much as use some interesting issues of the day as a backdrop for creating new thinking about how to recruit and retain employees.
You have much more negative view of how people will prepare for their futures and for their healthcare. I won’t argue that here – only that if employers take those two elements out of their retention and recruiting strategies it opens up the mind to additional options.
Paul my apologies, I didn’t mean to be a negative nancy and rain on the parade here
It’s a good thing for corporate types to think about when devising employee attraction/retention plans for the future. Nothing is ever guaranteed is it! Please know that I found your post to be a fantastic read!
No worries – I think you have some points – just keeping my fingers crossed that regardless of how this thing shakes out – any attempt at social engineering by the government will create many, many, one more time, many unintended consequences. The ones you mentioned are very real indeed.