The webinar was sponsored by the New England Employee Benefits Council and the International Foundation of Employee Benefit Plans.

"Many times organizations spend as much as $1,000 to $1,500 per employee per year on parts of their reward system that employees don't value all that much," Friede said. He advocates polling employees on their preferences-not with open-ended questions such as "What would you like to see from your benefits program?"

When asked that way, an employee is likely to answer "more," Friede pointed out. Instead he encouraged employers to offer choices like "more base compensation, lower deductibles on the health plan, higher retirement contributions, a fast track to the corner office by age 35,"and so on.

"It has to be realistic. You need to give them choices," Friede continued. "Employees can be told, 'We have a certain amount we can spend on employee benefits. Which is more important to you-Option A or Option B?'"

Assessing preferences represents a step toward personalization, Friede pointed out. It moves an employer past the "executive-driven one size fits all" stage, where management determines what's right based on its own instincts. But assessments may only lead an employer to provide a "data-driven one size fits all" benefits menu where the data is used to establish "choices" that are simply an average of the preferences revealed by the aggregated data of the majority.

Instead, Friede said, employers should move toward providing significant choices and options, where some of an individual employee's compensation is earmarked for personal choices, including some "at risk" compensation. The "at risk" choices could be "based on performance of the individual, a team or the entire organization," he explained.

"Personalization is where employers are going to win the talent wars because there's no way an employer can determine which options are right for which employees," Friede said. The process, as he envisions it, is to establish a core or baseline level of compensation and benefits, and then to move toward shrinking the core and expanding the options and alternatives available to employees.

The webinar was titled "A New Benefits & Rewards Frontier for a New Age of Talent Management," and at this point "frontier" seems like an appropriate label for employee benefits personalization. Significant personalization of employee benefits does not appear to be widespread, but employers are intrigued by it.

About half of the employer representatives attending the webinar who answered an online poll during the event said their benefits programs fall into the category of either "executive-driven one size fits all" or "data-driven one size fits all." Almost half also provided some limited choices and options, and fewer than 10% said they provided significant choices and options for personalization.

Measuring the return on talent

The ultimate goal of benefits personalization, Friede said, is to maximize an employer's return on talent investment (ROTI). The ROTI takes into account all the objectives of a compensation program: attracting, retaining and engaging the workforce. Unfortunately, he says, it is an underused tool. "I tell CFOs, 'You do a Return on Investment (ROI) calculation on all your major expenditures except talent-which is your largest one.'"

If there is one thing that COOs and CEOs understand, it's the importance of ROI. But when you add the "T" (Talent) to the mix, it becomes a more complex calculation-sort of a hidden gem that is highly valued but elusive. It's a part of the benefits frontier that senior management is more than willing to explore, Friede believes. He quoted a recent study by two British talent management firms to prove his point.

The study found that 84% of non-HR executives agreed that "it is important to present a robust business case to obtain approval for talent investments"; 84% also agreed that "organizations should do more to measure and evaluate financial return on talent investment."

Yet, while 70% of respondents thought that human resources departments "should be doing more to justify talent investments with a business case," only 28% agreed that "most HR professionals have the skills to develop a financial business case for talent initiatives."

Friede believes that technology will play a key role in this "new age of talent management." If benefits menus trend more toward personalization, employees will need technology to guide them in their decision making.

Employers will need technology that supports the full range of functions related to talent, including recruiting, onboarding, core benefits offerings, wellness, performance evaluation, and management of employees' time. (Benefits personalization could well lead to greater use of flextime.)

If, as Friede suggested, performance-based compensation will become part of the personalization of employee benefits packages for leading employers, it's fair to wonder how that concept will play out with rank-and-file workers. The only variable compensation that lower- to middle-income wage earners may have experienced is a surprise bonus at the end of a good year. What if part of their regular monthly paycheck is tied to meeting certain goals? Can the average family handle that kind of uncertainty?

For workers at the youngest age levels it may not be such a big adjustment, thanks to their comfort level with technology. The generation currently coming into the workforce is accustomed to being measured for performance. In high schools, students verify their own performance constantly via their smartphones. Teachers upload their recent test grades as soon as they are available, and students can see up-to-the-hour results of where they stand over any time frame.

To be sure, there are differences between the school environment and the work environment. But at least the mindset of the young person is already predisposed to this kind of data-driven performance measurement.

Ultimately, talent is going to define any employer. It can make or break an organization. Friede's view is that the "total rewards" of the organization-"everything the employees value in the employment relationship" should be determined not by starting with budgets ("How much has management set aside for salaries, retirement plan, etc.?"). Rather, the strategy should determine the budget. The goal is to create an integrated total rewards management process, one that carefully chooses which rewards to offer and how to deliver each type of award in order to maximize the return on talent investment.

Brokers can encourage their clients' CEOs, CFOs and HR executives to think about their approach to their investment in talent. Is the money being spent in ways that match up with individual employee preferences? How can this be measured? Is their investment in talent serving the firm's strategic goals? How can this be measured? These are questions that cannot be answered quickly.

They may need to be part of ongoing discussions at executive meetings where the focus is on the long term.

Thomas A. McCoy, CLU, retired in 2013 as editor-in-chief of Rough Notes magazine.