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Global employers that want to advance workplace diversity, equity and inclusion (DEI) goals may be able to harness their employee benefit programs and policies in their efforts.
Promoting DEI through benefits design can help create programs and policies that cultivate and nurture diverse talent effectively—a key recipe for improved business performance, according to a recent McKinsey and Company report.1
This article outlines strategies for enhancing inclusivity through benefits structure and design changes. It provides country-specific examples of benefit design needs to guide global benefits professionals.
Benefits Framework
Because of the complexities of providing benefits to employees in multiple countries, global employers should start with a practical framework designed to navigate these challenges. The framework includes the following core elements.
- Global versatility: This principle underscores the importance of recognizing varying requirements across the globe. Instead of a one-size-fits-all approach, benefits professionals should research and understand each market’s unique characteristics, such as statutory requirements or workplace cultural norms.
- Iterative feedback: In a world where benefits and employee needs constantly evolve, cyclically updating benefits based on employee feedback is crucial. This iterative process helps in addressing blind spots and adapting to changing local trends.
- Market maturity variations: It is crucial to acknowledge that different global locations vary in their maturity levels regarding DEI-relevant benefits. This variation is influenced by several factors, such as the availability of insurance products, the acceptance of family formation benefits and the recognition of same-sex partnerships.
By integrating these principles into benefits design, organizations can more effectively harness global benefits to impact DEI.
Building for DEI: Structural Approaches
Before considering benefits design changes, employee benefits leaders should consider the structures— including organizational factors and external partners—that are involved in employee benefits and shape overall programming and policies. Key steps include the following.
Align Objectives and Establish Leadership Support
Benefits leaders and human resources teams should identify and define their shared objectives, including DEI, to help organization leaders recognize that benefits can drive DEI. Working together not only maximizes resources but also showcases organizational efficiency. Given the scrutiny that benefits often face due to their costs, a united front can promote wider acceptance of DEI-forward benefits. Benefits proposals should be crafted with compelling evidence, such as quantitative or qualitative data, to ensure the broad-based support needed for DEI-focused employee benefits.
Build Employee Benefits Philosophies That Encompass DEI Values
Establishing employee benefit philosophies can lay the groundwork for determining how to integrate DEI into benefits design. Global employee benefit leaders should consider the following points when building those philosophies.
- How do employee benefits objectives align with the overall rewards strategy and organizational priorities, including HR and cross-functional internal partner teams?
- What specific needs are addressed by employee benefits, and which are not? Why?
- Reflecting on organizational values, what is the baseline for benefits, like health services not covered by state systems, or time-off and leave policies that are not statutorily protected?
- How can benefits design evolve beyond traditional market benchmarks to ensure inclusivity and alignment with firm values, especially considering the potential exclusion of marginalized communities?
Develop the Capacity and Activate the Structures That Deliver Employee Benefits
The fact that many benefits are products developed by the insurance industry is a fundamental challenge in designing inclusive benefits. Benefits leaders, especially those with strong purchasing powers, who want to advance DEI goals may need to push insurance product development teams to fill the gaps in existing benefit solutions. A few examples of areas where changes could improve DEI include:
Mental Health
Using technology and diversifying the provider pipeline can improve the “goodness of fit”—the patient’s ability to connect with a mental health practitioner—which is central to the success of a therapeutic relationship.2 A patient may find an improved fit with a provider who has similar lived experiences or who has specializations that match their needs. This is particularly important for historically marginalized and underrepresented groups with exposure to trauma. For veterans, the ability to choose treatment modalities that are most responsive to possible exposure to war violence is critical.
Providers such as employee assistance programs (EAP) can address this need by investing in technology that allows employees to search for or match with a provider of their choice. Mental health organizations can also look to expand their definition of provider to recognize those who have alternative or nontraditional mental health care training in addition to psychologists, psychiatrists and licensed mental health and social workers. This may allow them to respond to more nuanced needs of diverse populations, like those for individuals from the transgender and Indigenous communities.
Financial benefits and well-being
Employers can partner with firms that offer innovative investment products. For example, employees of Islamic faith may forgo retirement savings and skip out on company matches if funds are not Shariah-compliant, which are socially responsible investment funds that respond to the principles of the Islamic religion. Yet, some financial markets, such as the U.K. and Canada, may have limited solutions that allow Muslim employees to participate in retirement savings.3 Encouraging retirement recordkeepers to develop Shariah-compliant funds may help employees unlock additional tax-efficient savings pathways without compromising the ethos of their faith.
Providing an option to invest in target-date funds (TDFs) that automatically invest in more conservative funds as employees get closer to retirement may help protect the financial interests of aging workers by helping them preserve and protect their retirement capital.
Employers may also want to regularly evaluate the effectiveness of environmental, social and governance (ESG) funds in terms of their historical performance and cost structure to determine their suitability as an investment fund option for retirement savings plan portfolios. ESG funds support DEI initiatives by investing in companies that prioritize human rights, ethical supply chains, fair labor practices and DEI-related work governance (e.g., gender parity, retention, advancement and board diversity, and employee representation).4,5
Furthermore, prioritizing providers that offer financial advice or coaching can help address a wide range of needs—for example among the Black, Indigenous, people of color (BIPOC) and disabled communities—who contend with intergenerational wealth inequality.6,7 Partnering with firms that offer financial coaching or advice that is unbiased and not sales-based can help build knowledge and shape behaviors that promote long-term financial well-being and resilience.
Employers also may want to consider extending financial coaching or advice programs to family members, including “chosen” or “found” family or nonbiological relatives, to recognize the role that these surrogate family members play in certain communities, particularly the Transgender community.
Broader benefits integration
Employers may need to advocate with insurance companies to innovate and fill in gaps of the current health care systems.
Private policies in countries like the U.K., Ireland, South Korea and Canada act as second payer to the national or social health care systems. Because they provide complementary coverage, these policies tend to exclude features that are provided by the national health system. For example, diagnosis or treatment of neurodevelopmental disorders are not covered by private insurance in the U.K. since these are considered as falling within the purview of the U.K. National Health Service (NHS). Neurodiverse individuals needing support often face long wait times and possibly costly out-of-pocket personal spend when specialized support is not provided by private coverage.
In some cases, the national health system may have gaps that impact diverse communities. State health care benefits may not recognize cosmetic surgeries as part of their gender affirmation benefits. The health system considers such procedures as purely elective (i.e., for cosmetic reasons) rather than a necessary step to complete the gender-affirmation process.
Some non–United States markets, like India and the Philippines, consider the parents of employees as eligible participants to group insurance policies. Employers may want to consider this approach in countries where parental coverage is possible. Addressing this need will be relevant in societies where caretaking responsibilities are a cultural norm.
Employers will likely need to educate their globally mobile employees as they pursue internal transfers outside of their country of origin. If certain countries have structures that are particularly discriminatory toward specific communities (e.g., punitive rules or illegal status for members of the LGBTQ+ communities), HR should flag these challenges to employees considering a relocation. Such limitations could mean denial of access to care, so organizations should work diligently with employees to avoid such dilemmas.
Designing for DEI: Practical Program and Policy Ideas
The following section provides practical suggestions on how to design global employee benefits supportive of DEI.
Needs Assessment
Understanding the problem statement, which identifies the issue that a program or policy needs to address, is a critical first step in the design process to ensure that chosen interventions address DEI-related gaps.
Partnering with employee resource groups (ERGs) to gain insight into the unique needs of each community is an effective approach.8 A global or regional ERG is sufficient to enable conversations between employees and HR, as opposed to needing to establish country-specific ERGs. Community members may have a point of view and knowledge on how to address their own community’s challenges. In fact, the contributions of women ERGs have been instrumental in bringing attention to previously undiscussed issues, such as breastfeeding as well as menstrual and menopause care. Further, this approach increases awareness of the needs of all communities, which can help benefit specialists discover intersecting issues that impact multiple communities. Since time and resources are limited, employers can prioritize concerns based on the breadth of impact to focus on solutions that will yield the highest impact across communities.
Collaborations with ERGs can also be leveraged to host focus groups. On top of soliciting design feedback, their input will also be essential for communications planning. Co-creating collateral materials will ensure that content and messaging resonate with different communities, allowing them to have full understanding of their benefits.
Program Design and Policy Making
Following are some considerations for employers when embarking on designing programs and policies.
Adopt an inclusive eligibility definition
For example, broadening the definition of family to include domestic partnerships, cohabitating partners and same-sex partnerships can foster greater inclusion by expanding the definition of who qualifies for employee benefits.
Allowing employees to self-identify and define their family members can create a culture of empowerment that recognizes the unique circumstances of each employee. When set up to encourage employees to be judicious about whom they enroll in their benefits, organizations foster a culture of shared responsibility; employees will self-manage their eligibility, cultivating trust and a respect for employees’ individual agencies.
A caveat: Since benefits are governed by tax rules, HR and benefits must be clear on any employee tax liability when benefits are extended to an expanded definition of family members. Benefit professionals should review local requirements in each jurisdiction to ensure that inclusive benefits are feasible.
Increase choice and flexibility
Employers can provide greater choice and flexibility that allow employees to select components of benefits that are most meaningful to them. For instance, aspiring parents may choose to redirect their employee benefit funds to family-forming benefits like fertility support, surrogacy or adoption services.
Flexibility can also be applied to time-off policies. For example, offering floating holidays allows employees of different religions to take days to observe holidays according to their faith-based needs and breaks away from set public holidays, which are typically centered around Christian holidays, particularly in the Americas and Europe. Flexibility could also mean gradual return to work for parents who are rejoining the workforce after parental leaves, employees who are victims or witnesses of violent crimes, employees navigating or managing disabilities as well as those recovering from a long-term illness, or veterans who are coming back from their military duties.
As flexibilities and choices get introduced, employers must take the extra step of checking compliance requirements (e.g., continue to satisfy minimum retirement contributions, autoenrollment provisions and tax rules).9 Employers should offer guidance to help employees balance their immediate needs, like health care coverage, with future must-haves such as retirement savings. This approach ensures comprehensive support for the unpredictable nature of personal requirements across individual life cycles. Last, employers will need to conduct further analysis to find the right levels of allowable benefits budget for flexibility to avoid antiselection.10
Consider tax implications and cost-effectiveness
Employers should consider the pros and cons of offering benefits through an insurance program or providing cash allowances. Cash allowances are typically taxed as additional income, which may limit the employee’s ability to take advantage of the benefit and inadvertently create further financial liabilities if receiving a cash allowance pushes employees to a new tax bracket. Thus, benefits like health care (commonly offered as a cash subsidy in locations with small head counts), fertility or family formation, gender affirmation, child care and caretaking may be more attractive if they are offered through tax-sheltered structures, when and where possible. Solutions remain limited across different countries, so this is an area that benefits professionals should continue to investigate.
Employee benefit teams should track utilization to gauge the impact of new benefits on claim costs. Conducting a breakeven analysis can help determine whether insurance premiums over time are more cost effective than cash allowances.
Address long-term systemic inequalities
Financial advice or coaching and student loan repayment assistance can be particularly meaningful to BIPOC communities and people with disabilities. These groups historically have not had equal access to job opportunities, thus limiting their chances to accumulate wealth, making them more susceptible to debt. Women face similar issues.11
In the same vein, providing accommodations to support employees with diverse physical, mental and neurological needs may be a meaningful pursuit. Offering support such as coaching, flexible scheduling, technology enablement tools (e.g., close captioning, AI note takers), training, and health coverage for diagnosis and treatment empowers employees of differing abilities to perform optimally and engage confidently in the workplace.
Activate end-to-end resources
Digital tools like leave and time-off calculators that integrate HR leave policies and statutory protections will allow employees—especially those who need time away to bond with their newborns, those who are recovering from long-term illnesses or those with long-term caretaking roles—to understand their entitlements for maximum use.
Offering benefits for child care, backup child care, respite care and long-term care touch on the multitude of caretaking roles that employees play throughout their lifetime. This is particularly critical for communities such as immigrants, BIPOC and women, whose family and cultural dynamics often lead to the introduction of new caretaking roles throughout their lives;12 a comprehensive set of caretaking resources respond to these norms and lived experience realities.
Conclusion
The ideas and suggestions for designing benefits for various needs across diverse communities are not exhaustive; however, they provide a starting point. In addition, global benefits leaders should keep informed about constantly changing environments that affect DEI considerations.
Although these ideas address the needs of diverse communities, the positive outcomes that may result from DEI-informed benefits can impact all employees. DEI through employee benefits also can foster a positive organizational culture that is frequently associated with increased revenue.13
Interestingly, the proposed ideas rest on the ability of organizational leaders to reimagine how things are done currently.14 For this reason, DEI-informed employee benefits design is not necessarily about doing or spending more as much as it is about thinking through and doing things differently.
Lee Cortez, SHRM-SCP, CDE®, LMSW, is the head of global benefits at Block (formerly Square), overseeing U.S. and non-U.S. employee benefits, well-being, leave policies, immigration and global mobility. He occasionally teaches “Workers and the Workplace” at the Columbia University School of Social Work. Cortez’s experience includes roles at Google, Aon and Mercer. He’s an executive M.B.A. degree candidate at the University of Cambridge Judge Business School, where he is an inaugural recipient of the Dean’s Diversity Scholarship and elected DEI representative. Cortez holds degrees from Columbia University and the University of California, Berkeley.
Endnotes
<1>Diversity Matters Even More: The Case for Holistic Impact. McKinsey and Company.
<2>“How to find the right therapist?” Better by Today. NBC News.
<3>“Gap in Shariah-compliant investment services, experts say.” FT Adviser.
<4>“Measuring What Matters in Gender Diversity.” Boston Consulting Group.
<5>“Measuring Diversity and Inclusion: Part of the ‘G’ in ESG.” Grant Thornton.
<6>F. T. Pfeffer et al. “Intergenerational Wealth Mobility and Racial Inequality.” National Library of Medicine.
<7>Disabled People’s Financial Histories: Uncovering the disability-wealth penalty. CASE. London School of Economics.
<8>“Effective Employee Resource Groups Are Key to Inclusion at Work. Here’s How to Get Them Right.” McKinsey and Company.
<9>“Flexible Benefits: Comprehensive Guide for Modern Workplaces.” Personio.
<10>Ng et al. “Controlling the Effects of Adverse Selection in Flexible Benefits Plans: A Pricing-based approach.” Insurance Mathematics and Economics, 105, 293-312.
<11>Chang. “Women’s Wealth Gap: What is it and Why Do We Care?” Oxford Academic.
<12>E. D. Hutchinson. ”The Life Course Perspective: A Promising Approach for Bridging the Micro
and Macro Worlds for Social Workers.” The Journal of Contemporary Social Services, 86(1),
143-152.
<13>“A Study Finds that Diverse Companies Produce 19% More Revenue.” Forbes.
<14>S. Akabas and P. Kurzman. Work and the Workplace: A Resource for Innovative Policy and Practice. Columbia University Press.
