Employee benefits are often seen as a key tool for attracting and retaining top talent, building morale, and enhancing workplace satisfaction. But when benefits are poorly designed, they can unintentionally widen pay gaps and negatively impact employee morale in significant ways. For organizations, particularly those striving toward diversity, equity, and inclusion (DEI), overlooking these issues can be an expensive mistake.
This blog will explore how poorly designed benefit programs can exacerbate existing inequities in the workplace, identify the hidden costs of these exclusions, and provide actionable tips to create fair and thoughtful benefit policies that work for everyone.
The Hidden Inequities in Employee Benefits
While salary is a primary factor in compensation, employee benefits make up a critical component of the overall package. Unfortunately, many benefit programs fail to consider the diverse needs of employees and can unintentionally exclude certain groups.
Limited Access to Family Support Benefits
One of the most glaring examples of exclusion lies in benefits geared towards families, such as parental leave or childcare support. Often, these programs reflect outdated assumptions, such as that women are typically the primary caregivers. This can lead to inadequate paternity leave or no options at all for adoptive parents or LGBTQIA+ families. When such benefits are not inclusive, employees who don’t fit the mold are left unsupported.
Healthcare Benefits That Don’t Fit All Employees
Many healthcare benefits packages leave out essential services like mental health support, gender-affirming care, or treatment for chronic conditions that disproportionately affect women and minority groups. Employees who can’t access the care they need might feel unsupported, driving higher turnover rates and increased absenteeism.
Gendered and Unequal Retirement Contributions
Retirement plans can also reflect and exacerbate inequities. Women, for example, often take career breaks or work part-time due to caregiving responsibilities, resulting in lower employer-matched retirement contributions. Without adjustments in benefit design, these policies can add to the gender pay gap over time.
The Emotional and Financial Cost of Exclusion
When certain employees or groups feel excluded from benefit programs, the consequences are far-reaching. Here’s how exclusion can impact organizations:
Widening the Pay Gap
Exclusionary benefits amplify existing pay gaps, particularly for marginalized groups. For example, when parental support policies benefit women disproportionately, they can unintentionally perpetuate stereotypes, limiting women’s career growth while leaving men without adequate resources to share caregiving responsibilities.
Declining Morale and Productivity
When employees feel unseen, resentment grows. This impacts morale and decreases productivity. Workers who believe that their organization’s policies are inequitable are less likely to contribute positively to the workplace culture or go the extra mile on key projects.
Higher Turnover and Recruitment Costs
Poorly designed benefits can drive dissatisfaction among employees, leading them to leave for organizations with more inclusive policies. The cost of replacing employees—from recruiting to onboarding—is significant and directly tied to benefit inadequacies.
How to Design Inclusive and Equitable Benefits
Creating inclusive benefits doesn’t mean a one-size-fits-all approach. Instead, HR professionals and business leaders must evaluate their programs through the lens of diversity, equity, and inclusion to ensure fairness and accessibility. Here’s how to get started:
1. Assess Your Current Benefits Package
Start by conducting an audit of your existing benefits to identify gaps. Engage with your employees through surveys or focus groups to understand their unique concerns and needs. Are certain groups underrepresented or overlooked by your current programs?
2. Offer Flexible Options
Flexibility is key to inclusivity. Consider implementing flexible spending accounts, childcare stipends, or different categories of leave (e.g., for caregiving or mental health). Providing a range of options allows employees to choose benefits that suit their individual circumstances.
3. Promote Parity in Parental Leave
Ensure your parental leave policy is equal and inclusive across the board. Offer the same amount of leave for all parents, regardless of gender or family structure. Doing so normalizes caregiving roles and promotes equity within teams.
4. Focus on Mental Health and Well-Being
Include comprehensive mental health benefits and wellness programs. Support services such as counseling, stress management resources, and wellness reimbursements can make all the difference to employees who might otherwise feel unsupported.
5. Close Gender Gaps in Retirement Contributions
Implement programs that help women and other affected employees close retirement savings gaps. Employer programs that contribute on behalf of employees during caregiving-related absences or offer catch-up contributions show a commitment to long-term financial equity.
6. Commit to Continuous Improvement
Employee needs evolve over time, so it’s important to periodically revisit your benefit policies. Commit to gathering ongoing feedback and adjusting your programs to keep them relevant and equitable.
Build a Workplace Where Everyone Thrives
Inclusive benefit programs are more than just a value-add; they’re a necessity in today’s diverse workplaces. Designing benefits with equity in mind not only narrows pay gaps but also drives morale, productivity, and retention. When employees feel genuinely supported, they bring their best selves to work, fostering an environment of trust, loyalty, and collaboration.
HR professionals and business leaders have a unique opportunity to demonstrate their commitment to DEI by taking a close look at their benefits packages and addressing inequities head-on. The cost of exclusion is too great, while the rewards of inclusion are invaluable.
Join EBPA Today
Established in 1948, Employee Benefit Planning Association (EBPA) is a non-profit educational organization providing support and professional development opportunities to members and all those engaged in employee benefits by serving as a forum for the exchange of knowledge, information and ideas.
