Employee benefit packages are a critical piece of the compensation puzzle, as well as important engagement and retention tool.
However, benefit packages can also be a source of confusion for employees and require great effort from employers in communicating their value.
Indeed, 70% of employers face challenges in helping employees understand their benefits "and only 7% of global human resource (HR) professionals say they are consistently delivering against the benefits plan objectives,” says a Thomsons Online Benefits survey, as reported by the Society for Human Resource Management (SHRM).
Two gaps exist for HR pros in benefit strategies:
1. Failure to analyze benefits data. Those using data analytics enjoy great employee engagement. All told, 46% of employers fail to use analytics.
2. Benefits are not made relevant to employees. The challenge? A diverse workforce. HR needs to personalize messaging.
The result of poor communications, the article notes, is employee dissatisfaction, true for more than 60% of workers. Specific complaints include:
Nearly 70% of workers want to learn about benefits during important times in their lives, like when buying a home. But only 46% of employers reach out to staff during such life moments.
Also, staffers like to see total reward statements via a benefits portal and would consequently attribute greater value to benefits than those without such opportunity. Sixty-four percent of workers would like this option; 44% of employers offer it.
Read on to discover more employee benefits trends: Costs, employee preferences, what you might offer, and impact to your business.
‘The employer generally gets the employee he deserves.’ --J. Paul Getty
One example of a communication problem is that “Most Workers Don’t Understand Health Insurance,” notes benefitspro.com.
Only 7% fully comprehend premiums, deductibles, co-insurance and out-of-pocket maximums.
Further, workers don’t like investigating health care options: “25% would rather file their annual income taxes than select a health plan,” the article notes.
Another communication issue is that “Employees Report High Satisfaction with Health and Well-being Programs, but More Personalization is Needed,” notes the National Business Group on Health.
“Personalization, providing rewards, and understanding what employees want are key to maximizing value in employer-sponsored health and well-being programs,” the article says.
Health and well-being programs typically receive high marks: 81% of participants report “positive impact” and more than 60% say ability for family members to participate will incent them to do so.
Nonparticipants fail to join in because 37% do not find relevancy and 20% were unaware of the program’s availability, “a strong indication that greater personalization and awareness is needed to drive employee engagement.”
‘When employees are happy, they are your very best ambassadors.’ –James Sinegal, Co-founder/former CEO, Costco
Research findings reveal slight discrepancy in expected benefit costs.
“U.S. Employers Expect Health Care Costs to Increase 5% in Both 2016 and 2017,” according to Willis Towers Watson. This is an increase over 2015’s 4% hike.
In dollars, this translates to $12,338 per employee in 2016, and almost $13,000 in 2017.
“Despite these cost pressures, 81% of employers will make relatively modest changes to employee premium contributions and other cost-sharing provisions” like deductibles.
To manage costs, over the next three years, 88% of employers will make management of pharmacy for expensive drugs “their top priority,” the article notes.
Further, 28% of employers have cut spousal subsidies with surcharges when a partner can obtain benefits through their employer. On average, surcharges are $100/monthly, and by 2018, the percentage of employers charging for working spouses will almost double.
According to the National Business Group on Health, in reporting on The Large Employers’ 2017 Health Plan Design Survey, “overall health care benefit cost increases at large U.S. employers are expected to hold steady at 6% again in 2017.”
Affordability is threatened, however, as costs continue to rise at beyond twice the rate of inflation and wage hikes.
Still, many large employers will hold steady with 5% cost increases “by making some changes to their plans” and “the 6% increase employers project for 2017 is identical to the increase they would have experienced in each of the past two years had they not made changes to their plan design.”
‘Taking care of your employees is extremely important and very, very visible.’ --Larry Ellison, entrepreneur
Do you know employee preferences?
“Family Friendly Benefits Gain Popularity in the Workplace,” says the International Foundation of Employee Benefit Plans. Perks like fertility services, flextime, and paid leave contribute to family-friendly environments employees like.
Also note that “More People Seek Financial Advice Through Employers,” according to plansponsor.com. A TIAA Advice Matter Survey shows 71% of employees would like to get financial advice.
“Seventy-five percent of people said they would consider taking a job at a company that offers financial advice at no cost,” and the rate escalates to 87% of those in Gen Y.
Forty-eight percent have sought advice from an advisor outside of work, but “that trend is shifting,” the article says.
Another source corroborates: “Employees, particularly millennials, are looking to their employers for help when it comes to addressing financial matters,” says MetLife. Forty-four percent seek assistance from an employer, compared to 20% of boomers. Also, 75% of millennials believe employers “have a responsibility for the financial well-being of their employees.”
About 62% of employees will hope to find financial security via benefits, versus 49% who thought so in 2011.
The need for information is great, as only 52% of millennials understood life insurance, and 38% had awareness of long-term disability insurance.
Merely 47% of employees thought nonmedical benefits would be advantageous in lessening out-of-pocket medical costs.
“For employers, this is an opportunity to evolve into a more consultative role and provide meaningful education and training for employees, while also engendering loyalty,” says MetLife.
Finally, note that many employees are open to lesser pay in exchange for greater retirement security, according to Bloomberg. Sixty-six percent of boomers and 60% of millennials would make such exchange.
For millennials, this is an increase over 42% who were willing to take home fewer dollars in 2009.
A benefit for employers who heed these preferences is that “helping prepare employees to retire at age 65 can potentially save employers tens of thousands of dollars annually for each employee in higher costs for salary and benefits such as healthcare, disability and workers’ compensation insurance,” notes benefitspro.com.
Another plus is that assisting employees in assessment of their unique financial situations will help them to prioritize benefits: “The inability of many employees to choose benefits that make the most sense for their personal situation and budget is a huge problem, bigger than many employers may suspect.”
Where can you find efficiencies and advantages for your employees in your benefits package offerings and in sharing what it contains?
LORA BRAY is an information research analyst for CUNA’s economics and statistics department . Follow her on Twitter via @Bray_Lora and visit the CUNA blog, The Research Roundup: Economic Perspectives.