3 ways businesses can optimize their benefits spending to support diversity

This article was contributed by Jason Fan, CEO and cofounder of Forma.

Over the past two years, how and where people work has fundamentally changed. With growing technological connectivity, companies have extended their reach globally and reaped the benefits. More employees have flexibility around where they work, and thanks to software-as-a-service (SaaS) tools like Zoom and Google, employees can have effective communication, regardless of where they are located. The rise of the remote and hybrid workers has opened the door for companies to recruit a wider and more diverse talent pool. As such, efforts to increase diversity, equity and inclusion (DEI) in the workplace have become more important than ever. Businesses recognize how a diverse set of skills and perspectives can improve problem-solving, increase innovation and create a more inclusive place to work.

However, — despite companies rethinking their hiring practices to advance DEI efforts, many still have the same antiquated approach for employee benefits, a core element to talent recruitment and employee retention. Employee benefits that give employees more choice and flexibility play a crucial role in improving workforce diversity. It is time for companies to optimize their benefits spending to be more responsive to diversity and inclusion needs.  

Here are three ways employers can reimagine employee benefits to promote and improve diversity and inclusion within the workforce and attract and retain diverse talent. 

1. Offer flexible benefits options

To build a diverse workforce, companies can no longer operate with a top-down approach to employee benefits. Every individual has specific abilities and needs that should be met with a more flexible approach. Companies must recognize the inequities and bias some individuals experience and offer a holistic approach to ensure benefits align with their commitment to DEI.

Employee benefits options, such as flexible spending accounts, provide employees a way to customize how they spend funding provided by their employer. It puts more power in the hands of employees. Rather than offering workers the same cookie-cutter benefits, companies can offer options that fit each individual. For instance, some employees may have a greater need for more family-focused benefits like fertility and childcare support, while others may value financial wellness benefits that offer budget counseling or tuition or student loan repayment programs.

Employers that include a degree of flexibility in their benefits offerings will discover a wider array of diverse applicants for their staffing positions, and retain employees more successfully. In fact, a Glassdoor diversity and inclusion workplace survey indicates that more than three in four employees report a diverse workforce is an important factor when evaluating companies and job offers. Flexible benefits play a key role in supporting DEI efforts that correlate with what jobseekers are looking for today. 

2. Be open to global culture-specific benefits

With employees dispersed across the world, companies must prioritize culture-specific employee benefits when developing offerings to include individuals with different customs and cultures. For example, someone based in Singapore may have different needs for a benefits program than someone based in Italy.

Holidays are a good starting point for addressing cultural diversity and employee benefits, such as flexible paid time off for international workers. Companies can offer floating holidays as part of, or in addition to, flexible time off to support individuals of varying cultural and religious backgrounds.

However, prioritizing DEI in flexible benefits is much more than a difference in observed or celebrated holidays. Employers should offer additional options, like flexible spending accounts, to fill the gaps that traditional benefits programs leave out, such as cost of living adjustments. This will ensure employees receive relative living costs, no matter if they are living domestically or abroad. 

3. Provide equal opportunities for the same employee benefits

In addition to providing flexibility for each employee, inclusive benefits should offer universal access to the same common employee benefits, regardless of the employee’s condition or status. Companies can optimize their benefits program to ensure everyone has equal access, which will help create a more inclusive workplace.

For example, this can include gender-neutral parental leave that provides equal access to this benefit regardless of the individual’s gender identity. Companies who prioritize DEI in their parent leave offering can attract and retain more employees. This ensures that new parents can share responsibilities and focus on the new addition to their lives. Additionally, creating fair and equal learning and professional development opportunities is another example. Companies can offer programs that allow employees to pick up necessary skills. This lets employees hired for specialized abilities diversify their skill set.

Ultimately, when a business emphasizes the equality of employee benefits, the organization also wins by weaving diversity and inclusion into the fabric of the organization.

Redesign your employee benefits program to meet the needs of your diverse workforce

Workforce diversity is essential to the business. By redesigning employee benefits to be more flexible and inclusive, companies can better appeal to today’s modern global workforce and improve employee retention. Of course, improvements won’t happen overnight. But with these three strategies, businesses can be well on their way to make smarter, more holistic benefits decisions with DEI in mind.

Jason Fan is the CEO and cofounder of Forma