Companies have slashed their employee benefits budgets over the past three years due to the poor economy, causing employers to shift costs and decision-making to staff, according to “Employee Benefits Landscape in a Recovering Economy,” a study by the Society for Human Resource Management (SHRM).
More than three-fourths (77%) of employers say they’ve trimmed benefits since 2007 due to the poor economy, primarily health-care and retirement benefits, SHRM reports.
Other workplace benefits on the decline:
►Traditional (defined-benefit) pension plans. About 40% of employers offered these plans in 2007. Now, only about 21% offer these plans, which guarantee payments for life.
It’s now more common for employers to offer 401(k) and similar types of retirement accounts (92%). The proportion of employers offering 401(k) matches, however, declined from 75% in 2008 to 68% today.
►Long-term care insurance. About 28% of employers provide long-term care insurance for employees, down from 46% in 2007.
►Health maintenance organizations (HMOs). The number of employers with HMOs decreased from 48% in 2007 to 32% today. Preferred provider organizations are much more common, with 83% of employers offering this option.
►Paid family leave. About 33% of employers offered paid family leave in 2007, but now only about 24% do so for births, deaths, and other significant family events.
►Professional development opportunities. While nearly all companies (96%) paid for professional development opportunities in 2007, only 87% do so this year. The proportion of employers offering mentoring programs also decreased from 26% five years ago to 20% this year.
►Life insurance for dependents. About half (55%) of employers provide life insurance for children and other dependents, down from 65% in 2007.
►Incentive bonus plans. Bonuses for executives are also on the chopping block. Incentive bonus plans for executives are currently offered at half of the employers SHRM surveyed, down 10 percentage points since 2007.
►Sports team sponsorship. Only 18% of employers currently sponsor sports teams for employees or their families, a significant decrease from the 29% of employers that did so in 2007.
Pressure boosts creativity
Budget pressures have forced companies to be more creative in their efforts to recruit and retain employees, SHRM reports. More than half of survey respondents reported having difficulty finding skilled workers for certain job openings.
In response, employers continue to remodel their benefits plans, giving employees greater responsibility to manage their benefits.
A recent report by SHRM and the Families and Work Institute reveals that workplace flexibility has a positive impact on employees’ work-life experiences, leading to increased job satisfaction, lower turnover, and lower insurance costs.
“As opposed to a one-size-fits-all mandate for all employers, we support a new approach that reflects diverse employee needs and preferences, as well as differences among work environments, representation, industries, and organizational sizes,” SHRM reports. “This workplace flexibility policy should support employees in balancing their work, family, and personal obligations, and at the same time provide certainty, predictability, and stability to employers.”
As companies continue to shift benefits cost decision-making responsibility to employees, effective benefits communications become crucial.
“It is unreasonable for organizations to assume that employees are able to retain and understand elements of their entire benefits package from a distinct event, such as open enrollment or new-hire orientation,” according to SHRM. “Employers may need to develop a benefits communication approach that continues throughout the year. Continuous benefits communication can make it more likely that employees will value, understand, and use their benefits program.”
Other noteworthy findings from “Employee Benefits Landscape in a Recovering Economy” include: