Brian Davenport
Vice President, Total Rewards
Asbury Communities
Episode 382
Beyond ROI: Why Executive Buy-In Is Total Rewards' Toughest Challenge.
Current chapter: Covering monthly expenses is the number one concern for employees in 2024
Built By PeopleDecember 5, 2024 · 12:42
Thesis
“The success of total rewards programs hinges on securing executive buy-in and fostering strong relationships with C-suite leaders, especially given the inherent difficulties in directly quantifying the ROI of benefits.”
Show notes
In this episode of the Built by People podcast, Brian Davenport shares his extensive career journey from healthcare underwriting to HR leadership. He discusses the evolution of employee benefits programs, the critical importance of executive buy-in, and the challenges associated with proving ROI on benefits. Brian emphasizes the need for strategic relationships with C-suite leaders and the use of modern tools such as AI to enhance compensation strategies. He also provides practical advice for optimizing benefits while maintaining minimal impact on employees. 00:51 Guest Introduction: Brian's Career Journey 01:46 Key Lessons in HR: Executive Buy-In 02:36 Crafting Relevant and Compelling Benefits Packages 03:33 Driving Utilization for High-Impact Offerings 05:09 Leveraging Analytics in Compensation 06:41 Illustrating ROI in Benefits Programs 08:17 Cost Management in Benefits and Compensation 10:18 Challenges and Overcoming Them in HR 11:29 Parting Advice for HR Leaders 12:36 Conclusion and Farewell
What you'll take away
- 1Prioritizing executive buy-in and building rapport with C-suite leaders is fundamental for the perceived value and successful implementation of compensation and benefits initiatives.
- 2Effective benefits package design balances the richness of offerings, employee out-of-pocket costs, and crucially, paycheck contributions, which are highly sensitive for certain employee segments.
- 3To drive benefit utilization and manage costs, dissect large cost centers like healthcare premiums into granular components (e.g., claims, admin, specific diagnoses) and deploy targeted management programs.
- 4Leverage emerging AI-powered tools that analyze real-time job postings to gain immediate compensation insights, overcoming the lag associated with traditional compensation surveys.
- 5Acknowledge the challenge of proving direct ROI for benefits; instead, focus on building trust with leadership and exercising good judgment, as visible returns can be delayed or difficult to isolate.
- 6When reducing benefit spend, identify areas that are highly impactful financially but least disruptive to employees, while also being prepared to make more drastic, impactful changes when necessary.
What most organizations get wrong
- •Despite its importance, proving a quantifiable ROI for benefits programs is 'exceptionally hard,' often requiring leaders to operate on good judgment and trust rather than concrete financial metrics.
In Brian's words
“I would say that's the biggest lesson is connecting with the executive leadership team, the CEO, the CFO, Chief Administration Officer, whoever it may be, and really getting them to buy into the value of benefits, the value of compensation programs instead of compensation, developing an ROI.”
This highlights the primary challenge and a crucial skill for total rewards leaders: securing C-suite buy-in for their programs.
“It's evolved over the years, you know, the types of programs, et cetera, but it still boils down to 3 things, I think, and that's what is in those benefit programs and what's available to the employees. That's number 1. Number 2 is their out-of-pocket costs in the plan, the copays, the coinsurance. And number 3, what do they pay out of their paycheck?”
This quote distills the complexity of benefits design into three fundamental, employee-centric considerations.
“And the newest trend is the use of AI. There are several companies that are able to look at all the job postings across the country and kind of pull out what the expected compensation is for those roles and then relay it back to us almost in real time.”
This points to an innovative application of AI in compensation, providing real-time market data to overcome traditional survey lags.
“ROI on benefits is very important, but at the same time, very challenging. You can implement something in 2025, you might not really see the results until 2027. And you might be impacting employees, and then 2 years from now, they are not your employees anymore. But if you don't do anything, you probably can see runaway costs.”
This explains the core dilemma HR faces with benefits ROI: the long-term nature of results versus immediate cost pressures and employee turnover.
“It's really looking at what's most impactful from a cost standpoint. Least impactful to the employee. You know, are there things that you can do in which it will create no noise or reduce the amount of noise that you're going to hear back from employees?”
This offers a strategic framework for HR leaders to approach cost-cutting in benefits while minimizing negative employee reactions.
“But developing the rapport with the CFO, building that trust, that, that is something that is extremely important so that you can collaborate and come up with something that, that is going to make the employees happy, will be cost effective at the same time.”
Reiterates the paramount importance of strong C-suite relationships for achieving both employee satisfaction and cost-effectiveness in total rewards.
The problems this episode addresses
- •HR leaders struggle to secure executive buy-in for benefits and compensation programs, as ROI is challenging to quantify and often requires trust.
- •Measuring the direct ROI of benefits initiatives is difficult due to delayed results, employee turnover, and the inability to isolate program impact.
- •Companies face escalating healthcare costs, particularly from prescription drugs and emergency room utilization, necessitating granular analysis and targeted management programs.
- •Reliance on traditional compensation surveys leads to outdated market data, hindering quick reactions to real-time compensation trends.
- •Balancing necessary cost reductions in benefits with the potential for employee dissatisfaction and 'noise' when changes are implemented.
- •Designing complex incentive compensation plans is challenging due to numerous stakeholders, varied levers, and the need to align with profit-sharing goals.
- •The heavy administrative burden of managing total rewards (payroll, 401k, merit cycles) can divert HR's focus from strategic relationship-building.
In this episode
Covering monthly expenses is the number one concern for employees in 2024
Built by People
Brian Davenport is VP of Total Rewards at Asbury Communities
Built By People: Brian Davenport
Ryan, what's your process been like for putting together a benefits package
The Challenges of Crafting a Benefits Package
Benefit utilization is an inherent challenge for many companies
Healthcare Benefit Utilization
Analytics obviously plays a pivotal role in compensation. How are companies using them to guide decision-making
Compensation Strategy: The Future of Analytics
ROI on benefits is very important, but at the same time challenging
MR: ROI on benefits
Looking at what's most impactful from a cost standpoint
Choosing the right benefits package
I was an early adopter of consumer-driven health plans back in 2003
Employee-centered Compensation and Benefits
Ryan Miller: Designing incentive compensation is always a challenge at any company
Challenging Incentive Compensation
Topics covered
Organizations and entities mentioned
Full transcript
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