By J. Madison McKimm
Employee Benefits and the Power of Affinity
Introducing and maintaining an employee benefits program can be a challenge for any business, across any industry. It can be a complex task depending on the maturity of the business and number of employees participating in the program. Both small and large market employers have unique workforce needs and as such, each has its own financial resource requirements. The same holds true for Canadian biotech companies and industry stakeholders, who are presented with a human capital challenge and untapped market opportunity.
Human capital represents the people resources and talent needed to drive business growth. Industry stakeholders consist of employers (plan sponsors), employees (plan members), affinity (advocate) groups, associations and other third-party service providers.
Employee benefits are an important component of an employer’s total compensation/rewards strategy. Canadian biotech firms face direct and indirect competition with other businesses and industries, both domestic and international, when trying to attract and retain key employee talent. Adding to the challenge, benefit plans are not economically conducive for the venture capital-backed biotech start-ups that comprise much of the industry. Several barriers prevent small market employers from accessing the cost and risk transfer models that are traditionally available to large market employers. Access to these models supports sustainable and scalable benefit plans, enabling companies to offer more attractive compensation. Not having access can force companies to market (shop) their plan more frequently, which can have a negative impact on both the insurer and employees’ perception of the stability of the plan.
Large market employers have the advantage of spreading their employee health risk across a greater number of employees which can grant access to preferred financial arrangements with insurers. The barriers often faced by small market employers begin with the size of the participating employee group, followed by a firm’s (limited) knowledge-base and the finite resources available to self-direct and align benefit programs with business objectives. Furthermore, staying current on benefits and insurance industry trends and technology can be a challenge for businesses of any size and stage.
For biotech firms, the ability to overcome these barriers is linked to the ability to capitalize on the market opportunity.
Until recently, no single (comprehensive) group benefits program provider existed to serve and solve the benefits-related problem(s) of the Canadian biotech industry. Such an opportunity, combined with the industry’s existing affinity network, supported by organizations like BioTalent Canada and Life Sciences Ontario, gives way for a provider to introduce a national benefits distribution network. The current network is well-positioned to support a single source offering for all benefit types. This can help promote a consolidated human capital strategy, while empowering small market biotech to overcome barriers to access the more favourable cost control and risk transfer strategies associated with large market plan sponsors.
The link between the human capital challenge and employee benefits compensation is strong. Through “risk pooling,” the existing affinity network can drive greater purchasing power across the small market employers in the industry. Risk pooling offers plan sponsors the opportunity to participate in a shared (life and health) claims experience beyond its own demographics, which can promote stable and sustainable benefit program costs year-to-year.
As not-for-profit associations continue to advocate for a consolidated national life sciences strategy, an industry-pooled benefits program is an attractive incentive model that can support membership growth and participation across the affinity network collective. A strong affinity network promotes trust and loyalty, further strengthening the voice of industry to help advocate for other challenges like best practices and funding.
The biotech industry is competitive from both a product and talent perspective. As firms compete to bring life changing molecules to market, they are also competing for the people needed to support the next big breakthrough. The need for the industry to capitalize on these opportunities is both critical and necessary for the Canadian biotech community to thrive in the global marketplace and acquisition of talent.
Biotech firms are pioneers of the future and need to approach their employee benefits program with a similar mindset. It is important they work with benefit providers who drive meaningful change in partnership with and for their clients – offering high-end support at both the plan sponsor and plan member level(s). Plan sponsors should expect their providers to continuously deliver needs-based advice, updates on benefits and insurance trends (including developments in plan design) and enable easy access to health and wellness with tech-driven administration and service. Plan members should expect ease of access at each benefit level of the program and be mindful of receiving knowledge-building advice that supports their decision making within a given plan design. With recent trends in group insurance, both plan sponsors and plan members should expect their provider to offer access to plan designs with embedded cost containment features and new (voluntary) products. These enhancements do not require greater employer costs and give employees choice to participate in the benefits most important to them, at their own cost.
The power of affinity networks supplies the industry with an influential tool that can not only enhance the value employees place on benefits and total rewards, but offer a sustainable cost control model for employers. Many of the products and services commercialized by the biotech industry are health-related products and services. The successful commercializing of these products and services has a soft link with the cost-model and design of employee benefit programs, as it is often group insurance programs in conjunction with government-funded programs that pay for these products and services, on behalf of the end-consumer. The power of the industry’s affinity, as it relates to employee benefits for biotech, can empower the industry to become their own best advocate and reference in the application, distribution and commercialization of the health-related products brought to market.
J. Madison McKimm is President and CEO, BioBenefits Inc.