Is Your Employee Benefits Package Working as an Incentive?
The amount of money employers spend on employee benefits is gradually rising. But the million-dollar question is, do employees really appreciate what they’re getting—does it affect their decisions to take and stay with a job? Do they really see the value?
A business owner wonders …. Among other benefits, she offers her 30+ employees a 401(k) retirement program with a generous employee match. Many of her younger employees don’t participate in this optional program. And the employees that do contribute don’t ever mention it. It’s a hefty expense if it’s not valued ….
Turns out, the biggest correlation between worker satisfaction/engagement and benefits isn’t necessarily what benefits are being offered, but rather an employee’s understanding of the benefits being offered. How well employers support and educate employees when it comes to making benefits choices makes a huge difference in perception of value.
Health care, retirement, flexible work options, paid time off, wellness programs and tuition reimbursement top the list of benefits offered by many businesses—and of those that reportedly rank most important to employees. As a percentage of total compensation, benefit costs in 2015 were 31.3 percent, according to the U.S. Bureau of Labor Statistics. The Employee Benefit Research Institute (EBRI) showed that figure to be 28.2 percent in 1991.
To give you a little more cost detail: The annual price tag for one benefit category, employer-sponsored family health coverage, averaged $17,545 in 2015, according to the Kaiser Family Foundation/Health Research & Education Trust. (Workers on average pay $4,955 of this premium.)
The EBRI conducts “value of benefits” surveys to keep tabs on the self-reported importance of various benefits to employees—how they affect job choices and job changes. Here are a few findings:
- 74% – 82% of workers rank health insurance first or second in importance. This figure has stayed constant between 1999 and 2015.
- Retirement savings plan importance fell dramatically from 2001 – 2013, although it’s still second in importance
- 77% of survey respondents report that benefits packages are either extremely important or very important in making the decision to accept a job
- Workers’ self-assessment of job satisfaction was strongly correlated with their satisfaction with benefits, i.e., 54 percent of the people who said they were extremely satisfied with their benefits also said they were extremely satisfied with their current job; only 10% of those who report being somewhat satisfied with their benefits say they are extremely satisfied with their job
But the tricky part of creating this value is educating workers about benefit details and helping them make decisions on how to participate. EBRI research found that 3 in 10 employees were confused about some of their health-care benefits. Enrollment was an unassisted online process. They didn’t know if they had home health insurance, accident insurance, long-term care insurance, cancer insurance, etc. They didn’t know how much they had spent on employee benefits. They didn’t contribute to retirement programs, because they used this money to pay for health insurance … and didn’t know if they could afford to do it another way.
Companies obviously want employees to understand their benefits. After all, they spend enormous amounts on them. But educating and keeping workers updated is the best way to help them really understand what you’re providing.
NST is developing a one-hour Webinar giving you detailed advice for how best to educate employees about benefits. It is scheduled for late June.