By - November 29, 2021

Five Risky Biases to Avoid in Benefits Planning—and What to Do Instead

benefits planning

The future of work requires companies to be nimble. For instance, consider the demand for skilled employees. A Korn Ferry study foresees a global talent deficit of 85.2 million people by 2030, which could cause about $8.5 trillion in unrealized annual revenues. 

Successful benefits planning is a major driver in recruitment and retention, now more than ever. Employee benefits “will likely play a stronger role in attracting talent, as organizations experience a ‘turnover tsunami,’” according to a report from the Society for Human Resource Management (SHRM). SHRM previously found that benefits are important to overall job satisfaction for 92% of employees.

If you want to improve your company’s benefits planning process, you need fresh thinking—but sometimes, it’s easy for biases to creep in and affect decision-making. Let’s walk through five common biases that can keep your organization from finding a productive path forward, along with a solution for each.

Status Quo Bias

Amid the global health crisis, some companies don’t want to create more uncertainty by making major changes to benefits programs. Sometimes, it’s easy to believe that sameness equals safety.

Helping employees feel safe is a noble goal. But if fear of change is the underlying issue, your company is experiencing status quo bias. With this form of bias, people prefer the current situation simply because it’s familiar.

Resisting needed changes doesn’t help your employees or your organization. Keeping the status quo may lead to continuing cost increases and spiraling medical trends. And employees feel the trickle-down effect in their premiums.

The status quo bias affects team members’ decision-making, too. When employees know that nothing is changing with their benefits, they often “check out” from the process and keep their existing selections, which may be the wrong fit for their current needs.

Better than the bias: Revisit your benefits offerings. Do you need to support team members differently than you did pre-pandemic? According to MetLife research, 60% of employees are interested in their employer providing a wider mix of non-medical benefits that they can choose to purchase on their own.

Even if you’re keeping benefits the same, you can help employees understand, select and get more out of their benefits with a decision support tool.

Anchoring Bias

With anchoring bias, people latch on to the first piece of information they encounter in their decision-making. Then, they view every other piece of data through that lens, which can distort their ability to see facts clearly.

Companies with an anchoring bias have a disconnect between what executives think their workforce wants—and what employees actually want.

For instance, if your company is paying a premium for office space, those rental fees could become an anchor in decision-making. As a result, it can be tempting to think that employees want to return to the office rather than work remotely.

But if you ask employees, you may find they may want the option to work from home sometimes. If your industry’s norms are shifting to embrace remote or hybrid work, your company risks getting left behind.

Better than the bias: Assess whether your company can be more responsive to what employees are asking for. If you don’t know, consider using surveys or focus groups to capture the voice of your employees.

Listening to employees can inspire transformative programs. After learning that employees needed help paying for college, Waste Management (a Tango Health client) launched an education and upskilling program with access to more than 170 fully funded programs and plans to cover benefits-eligible dependents, as well.

Confirmation Bias

Confirmation bias leads people to “gather evidence that confirms preexisting expectations, typically by emphasizing or pursuing supporting evidence while dismissing or failing to seek contradictory evidence,” according to the American Psychological Association (APA).

In the workplace, this could translate to sending an employee survey, but interpreting the results to confirm what the company already wants to do. This approach defeats the purpose of gaining insight on employees’ needs and opinions. It’s better not to send the survey than to ignore the findings.

Better than the bias: To mitigate this bias, companies need to be willing to change their plans based on contradictory evidence. If your plans are truly set in stone, be careful about seeking employee input. People can sense when employers respond to honest feedback by changing the messaging, rather than the substance, of a policy.

Functional Fixedness

We’ve all heard the cliché “thinking outside the box.” This is the opposite of functional fixedness, or the tendency to see an item or an idea in only one way. For instance, the APA notes that most people perceive cardboard boxes as containers, which keeps them from possibly flipping the boxes to use as platforms.

One way this scenario plays out at work is with limited flexibility around parental leave programs. Family dynamics and societal conversations around paid leave are changing, so using the same playbook may not be enough to keep your top talent.

Better than the bias: Consider whether your benefits are flexible enough to meet employees’ unique needs. You might be able to offer more options while maintaining current costs. To continue the family leave example, many companies now offer the same length of paid leave to new parents regardless of gender, so both can bond with their newly born or adopted child.

False-Consensus Effect

The false-consensus effect is related to the confirmation bias—it’s another way that leaders can get caught up in their own way of seeing the world. The APA defines it as “the tendency to assume that one’s own opinions, beliefs, attributes, or behaviors are more widely shared than is actually the case.”

The APA calls this bias a “robustly demonstrated phenomenon” that often results from “a desire to view one’s thoughts and actions as appropriate, normal, and correct.”

Case in point: In Microsoft’s Work Trend Index survey, 61% of business leaders said they were “thriving” during the pandemic. Only 38% of workers without decision-making authority said the same—these team members were more likely to merely “survive.”

In the same vein, leaders might think that because they’re well-versed in the company’s medical plan, that employees are, too. But that assumption doesn’t consider the experience of other employees.

Sometimes, new employees hesitate to speak up if they have questions or concerns about their benefits. And they may not know where to turn if their onboarding team isn’t closely connected with recruitment or talent management.

At Tango Health, our support team often fields support tickets from employees in their first professional job, who don’t understand their insurance plans but are reluctant to ask their managers or HR for help.

Better than the bias: To break free from this bias, leaders need to set their own opinions aside and dive into what employees are experiencing. Assess whether employees really understand and are empowered to use their benefits.

A decision support tool can give your employees a dynamic comparison of various plan options based on real-life claims data.

Tango Health Can Help.

Benefits are a major driver of employee engagement, so it’s worth looking at your planning process. We’re all human, and it’s easy to fall back on familiar habits and thought patterns. But when company leaders are willing to approach benefits planning in a new way, everyone wins—employers and team members alike.

You can upgrade your benefits planning process by giving team members the information they need to select the right plan. Tango Health’s software reduces the benefits learning curve and offers a central hub for helpful program information, so employees can understand, choose and use the plans and programs that fit their needs.

Learn more about how our Tango Decision AssistTM tool could engage and help your employees actively make better benefits decisions.


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