Managing and Leveraging Benefits (So They Donít Leverage You)
Employee benefits are typically the second largest expense for employers only behind wages and salaries. According to a March 19, 2019 news release by the U.S. Bureau of Labor Statistics (BLS), as of December 2018, employee benefits on average cost employers 31.4% of payroll. At the same time, HEC reported in the 2018 Employee Benefit Plans in Hawaii Survey that Hawaii employers spent 38.5% of payroll—or thirty-nine cents on the dollar—on employee benefits.
The amount of money spent on benefits reflects employers’ understanding that a benefits package is a key factor in many employees’ decision-making processes about staying at or leaving their current jobs as well as a potential hire’s decision to accept or pass on a job offer. According to the 2018 Aflac Workforces Report Employer Overview, “Quality benefit packages don’t just entice new hires. They’re the strongest influence on overall well-being and job satisfaction of those who join the team, according to 81 percent of employers who offer benefits. And a majority of employers (96 percent) believe that happy and healthy employees are more productive at work.” The 2018 Aflac Report further found:
- Job Satisfaction: Of employees surveyed, a strong majority (70% or more) report that benefits packages are highly important to their well-being, financial health and job satisfaction.
- Retention: While wage increases are the biggest incentive for retention, improving the benefits package ranks second overall with 34% of employees saying this would help keep them in their job.
- Turnover/Recruiting: Just as a robust benefits package can be an incentive to stay, less-than-desirable benefits can also influence an employee’s decision to leave or turn down a job in the first place. Of employees surveyed, 26% report having left a job or rejecting a job offer due to the benefits offered. This appears to be a growing trend (up from 16% in 2016 and 21% in 2017).
- Hiring: 55% of employees surveyed say they would be at least somewhat likely to accept a job with lower compensation but a more robust benefits package.
Despite all of this, many employers overlook the importance of having a strategy to effectively manage this important recruitment and retention tool. This article offers suggestions and tips on how you can create an effective benefits strategy that incorporates your organization’s goals and provides the greatest value for your benefits budget.
What Should Your Strategy Include?
- Voice of Your Employees – Employers can provide greater value by better matching their benefits offerings to employees’ priorities and concerns. Knowing what employees want is an important step in evaluating the value of a benefits package. Conduct a benefits or total rewards survey to learn what types of benefits your employees value most. However, be sure to clearly communicate the intent of your survey and what employees can expect. You do not want to set expectations you cannot meet. Let HEC help you develop and execute a custom survey.
- Benchmark Data – In addition to your survey data, combine benchmark data from reliable sources including Hawaii Employers Council, S. Bureau of Labor Statistics, Society for Human Resource Management, Kaiser Family Foundation, and International Foundation for Employee Benefits. A benefits broker can also help you with this (see #5 below for more on benefits brokers). In this tight labor market, you want to ensure that your organization stays competitive to retain and attract top talent.
- Alignment With Organizational Strategies and Goals – Facilitate a discussion with the CEO, CFO, and HR to articulate how your employee benefits package will support short and long term goals of the organization. This is also an excellent time to receive commitment from your C-Suite to create an organizational culture that promotes employee well-being. This is an ongoing process; you should be constantly reassessing what is best for your organization.
- Communicate, Communicate, Communicate – According to the 2018 Aflac Report, “[j]ust over 40 percent of employees surveyed would rather be subjected to some form of discomfort, like doing three hours of hot yoga or cleaning up dog poop, than research their insurance benefits during open enrollment.” The Report also found that “[n]early 1 in 5 (19%) did not feel confident they understood everything they signed up for after their most recent benefits enrollment.”
What can you do to make this process more understandable and bearable? Communicate, communicate, communicate! Read more on how you can more effectively communicate with employees.
- Consider a Benefits Broker – According to the 2018 Aflac Report, “60 percent of employers who offer benefits say they seek the help of a broker or benefits consultant to understand their options.” Employee benefits brokers can provide invaluable assistance in creating the best benefits program for your company at the best cost. While this may be an added expense, good brokers can pay for themselves in the money you save from better prices, better products, higher retention, and lower turnover.
Read more to find out how a benefits broker can help your organization and questions you should ask to help you decide on the right benefits broker for your company.
If you have any questions about benefits, please contact Derek Kanehira, VP & Director of HR Services.
- HOT TOPIC Webinar: Shifting Today, Shaping Tomorrow - Cracking the code of engagement by designing health benefits from the inside out
- This webinar will include:
- Structuring an innovative well-being program to maximize impact on your resources and budget,
- Looking beyond cost - shifting for solutions that benefit everyone, and
- Trends shaping the health benefit environment today
- When: June 6, 9:00 – 10:00 a.m.
- Speakers: Ed Bray (Sr. Director of Benefits, Ross Stores, Inc.) and Lance Migita (Principal and Office Business Leader of the Honolulu Mercer office)
- Cost: Free for HEC Members! $20 for Non-Members
- For more information and to register, click here
- This webinar will include:
- HEC 2018 Employee Benefit Plans in Hawaii (November 2018)
- The Employer Costs for Employee Compensation (ECEC) December 2018
- Webinar on best practices to drive engagement during open enrollment: How to Capture Attention, Educate, and Drive Behavior During Open Enrollment with Vlad Gyster (Airbo)