People crave certainty. They like to know when things are going to happen. Some will sit in the same seat in a workshop or a classroom every time. They adopt the same daily routines. Some even eat the same food for breakfast or lunch every single day.
In a Psychology Today article, Dave Rock writes that the brain craves certainty in the same way we crave food and other primary rewards. He writes that information is a reward and that a sense of uncertainty about the future generates a strong threat or alert response in one's limbic system. It is as if the brain detects that something is wrong. When there is this sense that something is wrong, the ability to focus on other issues diminishes because the brain doesn't like uncertainty.
Dr. Bruce Lipton writes in his book, The Biology of Belief, that when the brain's craving for certainty is met, there is a sensation of reward. There is comfort in predictability and in believing that one knows what is to come.
Let's think about this need as it pertains to pension plans and retirement planning. Before the dawn of defined contribution plans (DC), the predominant workplace pension arrangement was that of a defined benefit plan. It gave members a sense of certainty. Regardless of market fluctuations, a formula was applied and a promise was made to pay the member a certain amount on a monthly basis at retirement.
Who offers predictability?
While defined contribution plans are easier to communicate and less of a resource drain for plan sponsors, they create greater uncertainty for plan members. Even with a plethora of savings and retirement tools, there remains the unpredictability of what a DC plan will buy when a plan member decides to retire. Here lies the bulk of the uncertainty. The plan member can't predict with any certainty what his investments will buy him at retirement.
What the brain craves.
The brain likes to predict outcomes. It craves information and takes comfort in picturing the future. The financial market free-fall of 2008 didn't create a sense of predictability or comfort; rather just the opposite. When DC plan members opened their eyes in the aftermath, they felt vulnerable and uncertain. As they helplessly witnessed the yo-yo like behaviour of the stock markets, they were forced to realize that they couldn't predict what might happen to their investments.
Feed the need for information.
DC plans appear to have an unshakable hold on the Canadian pension landscape. Knowing that DC plans come with a greater sense of unpredictability, there are steps a plan sponsor can take to feed the need plan members have for predictability. It starts with gaining a better understanding of the types of employer-sponsored pension plans. It is difficult to know the knowledge level employees have about pension plans and retirement planning. Providing a list of frequently asked questions (FAQ) creates a comprehensive foundation for all.
As a solid starting point to a fulsome FAQ, the Government of Canada offers the following list of questions on their website:
Creating questions for specific life stages is another approach. Additionally, targeting communications 5 years out from the earliest possible retirement date is helpful. Retirement readiness communications add another much needed layer of information to feed the brain's need for what is to come.
There are many communication tools and resources to feed the need for certainty and predictability. We invite you to contact us to learn more. We're here to help so that you can focus on what you do best.
In the world of benefits, certain issues tend to receive more attention than others. The big ticket items like prescription drugs and paramedical service expenditures tend to hog the cost management discussion limelight. Hiding in the background is a growing problem for both employees and employers -- eldercare. Statistics Canada predicts that our population will continue to age quickly until 2031 and this means that eldercare issues are likely to becomes a much greater concern. Unlike childcare, eldercare becomes more complex and the level of support required tends to increase over time.
What is eldercare?
It is unpaid assistance provided to a person 65 years of age or older because of a long-term health condition or physical limitation. For an employee who provides eldercare to an aging parent or loved one there are many issues facing them.
The issue for employees.
According to a report by CIBC Capital Markets, 30 per cent of workers with parents over age 65 lose 450 hours per year of time off to support eldercare needs. At present, more than 8 million Canadians are caregivers.
Eldercare support is provided in all kinds of ways.
Notably, more care is needed for those between the ages of 75 and 85. The predominant conditions caregivers face include:
Employees who provide eldercare may experience stress, anxiety and exhaustion. According to a Met Life study, 16% of respondents said they had to quit their jobs in order to meet the needs of elderly parents. Others said they passed up job promotions, training or career advancing opportunities. They used sick or vacation time to attend to eldercare issue. In so doing, less time or no time remained for self care or attending to their own needs.
The issue for employers.
According to a report by CIBC Capital Markets, 30 per cent of workers with parents over age 65 lose 450 hours per year of time off to support eldercare needs.
Employees providing eldercare experience more partial absenteeism. To accommodate the eldercare demands, they arrive late, take longer lunches, leave early and use time at work to talk on the phone with eldercare service providers and loved ones.
Eldercare costs employers. They face various challenges including
Small measures can make a huge difference.
To reduce and avoid the negative effects of eldercare issues in the workplace and to support employees who are tasked with providing eldercare, employers benefits from considering:
Eldercare and other issues affect worker well-being, productivity and potential benefit plan costs. There are importance preventative considerations for employers that we're well positioned to support. We invite you to contact us to learn more. We're here to help so that you can focus on what you do best.
The HR Push.
In the last 40 years, business has pushed HR to evolve. In the 70s, 80s and 90s, HR followed business trends for finding effective ways to support and engage workers. HR has gone from the days of being known as "the personnel department" where the focus was on automating transactions and developing employee record keeping systems to the early 2000s where they measured success by way of integrated talent management, performance management and employee engagement metrics.
The HR Pull.
In recent years, HR departments began exploring cloud-based systems. They sensed the growing pressure from the business to keep pace. Now, HR is called upon to implement new technologies and ways to engage a workforce that is digitally savvy and ready to move with more speed and agility than any previous workforce cohort. HR must deliver faster, better and differently.
What is HR facing?
HR teams are asked to now lead the way. They are called upon to help transform businesses dealing with a digital transformation that continues to sweep the globe. This transformation ushered in the age of the "customer experience".
What does this mean for HR? It means that what was available to their industry predecessors in the 70s, 80s and 90s is not an option for today's HR practitioner. With the rapid pace of technological advancement, change needs to happen in weeks, not months or years.
This customer-centric approach also translates into an employee-centric approach where HR teams find themselves making changes based on:
1) How employees work.
How can HR support a highly productive work environment in the digital age?
2) Where and how work gets done.
Blended workforces mean that full-time staff find themselves collaborating with independent contractors and part-time employees. Work assignments can bid on projects. Their collaborative experiences are transparent and accessible. Work can be done remotely. No longer is 9 to 5 the norm for standard work hours.
3) What tools they need to stay in step with the business.
HR teams are starting to introduce digital design expertise into the mix. They are beginning to develop mobile first solutions and apps. The goal? To create experiences for recruits and employees that they are comfortable using and expect from their employer.
4) How will the make-up of an HR team change?
HR needs to have digital experience. According to the 2017 Global Human Capital Trends report, HR business partners working closing with the business and who are digitally empowered to leverage digital tools will be in high demand. HR will need fewer generalists. HR will look to re-skill for roles that meet the digital and employee-centric focus.
Technology produced the new digital age and this age demands innovative solutions to attract and retain workers. We're beginning to see examples of companies meeting the digital HR call to action. Companies like LinkedIn, CISCO, MasterCard, BMO Financial Group are introducing digital HR solutions to meet client demands. These changes include HR Hackathons, Chatbots and Artificial Intelligence (AI).
What are HR Hackathons?
Stemming from the computer world, developers use Hackathons to speed up the development process. They happen in a matter of hours, not days or weeks. Some HR teams are starting to latch onto the Hackathon concept. HR departments and, in some cases, employees from other areas of the business come together and think of ways to improve the HR experience.
What is a Chatbot and AI?
Chatbots are an artificial conversational entity. Still not sure what that means? It is a computer program designed to simulate conversation with human users over the Internet. They are used to answer questions about payroll, onboarding, vacation, and other HR questions. They make communications happen faster and they save time and money.
AI can be used to support the HR function through a chatbot that helps employees with career planning or helps new hires quickly learn about the history of their new employer and about employee culture, values and more.
With digital natives beginning to dominate the workforce, the demand for technology skills and a new HR mindset shows no sign of slowing down. HR leaders will be called upon to look for digital solutions that encompass the entire employee experience, including their benefits and pension programs.
Service providers continue to offer more digital solutions and online, real-time experiences for plan members. Keeping up to speed on these and other industry trends is important to us. We're focused on helping you meet the needs of the rapidly changing workplace. We invite you to contact us to learn more. We're here to help so that you can focus on what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.