Adjusting executive benefits to suit the times

You know that teeny, tiiiiiny leak that you kept meaning to fix? The one that eventually caused the gaping hole in your ceiling?

Well, that’s how many organizations are treating executive benefits—and the clock might be running out on that strategy.

Organizations have often “approached executive benefits through a familiar lens: retention, attraction, and compensation competitiveness,” Tony Greene, president of NFP’s executive benefits division said in a new executive benefits trend report. And while all of those factors still matter, “the pressures shaping the highly compensated workforce strategy are becoming far more complex,” Greene said.

“Economic uncertainty has become persistent rather than temporary. Leadership movement has become less predictable. Retirement timelines continue to shift. Succession planning is becoming more urgent while, at the same time, many organizations still lack formal transition strategies,” he explained.

As a result, executive benefits strategies are going to need to do a lot more than just retain current employees in the years ahead, Greene added. “They are using them to support continuity, leadership transition, and long-term workforce planning.”

But many organizations lack a plan to evolve their existing strategies: 49% of respondents to the NFP survey said their companies haven’t implemented any executive benefits strategies to manage leadership transitions.

Even so, everyone seems to agree executive benefits matter…a lot.

Won’t you stay? Nearly all of the 273 executive benefits decision-makers (99%) NFP surveyed said executive benefits have “successfully retained top talent,” while 94% said executive benefits are “useful for attracting talent.” And talent retention is similarly top of mind: 81% of organizations said they couldn’t afford to lose their top talent.

“Many organizations know exactly what is at stake, but knowing isn’t the same as being ready,” Greene said in a press release. “The planning window is closing faster than many organizations realize, and retaining key employees has to move to a formal continuity strategy.”

So, what’s it going to take to get started?

Greene told CFO Brew via email that “the first step is to identify the people who create the most value for the organization and understand the impact should they leave or retire,” adding that “too many employers begin with a product discussion.”

“The better approach is to start with the business objectives, for example by asking, ‘What talent is critical to future growth, leadership continuity, and client relationships?’” he explained. “Once these priorities are clear, executive benefits can be designed to support retention, succession planning, and long-term organizational stability. The most successful organizations begin this process years before a transition is expected.”

There are a number of common missteps that organizations might make as they begin the process, like the aforementioned tendency to use executive benefits exclusively as a retention tool.

“Another common mistake is assuming one solution will work for everyone,” Greene told us. “A 45-year-old top producer and a 62-year-old executive approaching retirement often have very different priorities. The best programs recognize that.”

Greene also stressed the importance of education around benefits programs. “Even a great plan won’t accomplish much if participants don’t understand it,” he told us.

“The organizations that stay ahead won’t view executive benefits as a stand-alone offering,” he wrote. “They’ll connect them to retention, talent attraction, and long-term business objectives. The best strategies are built around the people who drive value inside the organization and what the business is trying to accomplish over the long term.”