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Budget or Points? A Core-Flex Conundrum

We continue to see many companies making a move away from traditional mobility benefits approaches toward core-flex structures. These policy types aim to balance consistency and control over core provisions with flexibility for employees to make individualized choices among a set of flexible benefits. Technology is increasingly enabling these more complex benefit structures by automating much of the give-and-take workflow that comes with accommodating benefit choices. This automation also avoids burdening program managers with a cumbersome gatekeeper role just at a time when we know they are striving to elevate their roles as strategic contributors. 

Once the decision is made to pursue a core-flex policy structure, among the choices program managers must make is whether to structure the flex components within a spendable budget expressed in the applicable currency or a bank of points that are allocated to individual provisions based on estimated costs. Each option carries pros and cons and the following are some considerations for selecting the best approach for your program.

A budget approach is good for managing choice within a firm spending target. 

When mobility is relatively decentralized or if costs are charged back to individual business units or receiving/hiring managers or departments, a budget-driven flex approach may be the best choice. This is because the variability of costs of the benefits an employee chooses can be tracked and deducted against the total flex budget in real time. This informs limits on the choices they make from that point forward. 

A budget approach may also be a better fit for some cultures. The frustration among a population of investment bankers asked to manage their flex benefits without knowing a clear and transparent budget might far outweigh any appreciation they may have for the opportunity to have choice.  According to the findings of Benivo’s 2023 Core-Flex Policy Benchmark Survey, 16% of respondents with an active or planned core-flex policy define the availability of flex provisions via a monetary value whereby the benefit options selected in total may not exceed a specific currency budget.

A points approach is good for highlighting the value rather than the cost of benefits. 

By contrast with the investment banker example mentioned above, early career technology talent may greatly appreciate being relieved from any care for the currency value of every choice they make. The simplicity of a points approach is well-suited to driving benefit decisions that are based solely on personal value of the benefits rather than a concern for their underlying costs. 

The upfront investment in allocating points to each flex provision can be a bit complex, but usually manageable with some analysis of past spend on the benefits and/or clear estimates of future costs based on the input of supplier partners. A points approach does require program managers to embrace the law of averages to some degree since there will be variability between actual costs and the estimates originally used to assign points values to benefits. Estimating costs conservatively and committing to an occasional recalibration of points allocation based on accumulated cost data tends to mitigate this successfully. Among the participants in Benivo’s 2023 Core-Flex Policy Benchmark Survey with an active or planned core-flex policy, 29% assign a points value to each flex benefit option and the total options selected may not exceed a specific allotment of points.

Choice is the best choice

Whichever option is selected, the premium today’s talent places on the ability to self-navigate their mobility experience should be the motivation program managers have to strongly consider core-flex approaches. The transition can be complex but engaging peers and professionals who have made the journey successfully is a great way to start. Knowing your culture and the profiles and preferences of your talent profiles should inform both the categorization of mobility provisions as core vs. flex and the management of the flex provisions as budget-driven vs. points-driven.

Contact Benivo’s Client Advisory team today to request a free consultation. Our experienced advisors stand ready to offer insights into effective strategies for optimizing the performance of your mobility program. 

Additional Core-Flex Related Resources:

Russ Haynie


Russ Haynie

Created on 7-6-2023