Employers Are Paying More for Benefits. But Do Employees Know?

Photo by pe-art/iStock / Getty Images
Photo by pe-art/iStock / Getty Images

A new study finds that the cost of employer-provided benefits increased 24% from 2001 to 2015.

The analysis conducted by WillisTowersWatson revealed not only an overall increase in the cost of employee benefits, but also a shift in how employer dollars are allocated - less for retirement benefits and more for health insurance.

The fact that the cost of employee benefits has increased to the extent that it has will not come as a surprise to employers. Employees, however, are a different story. For most employees the main concern of the past fifteen years or so is not the increase in their employers’ cost of benefits but rather the lack of wage growth experienced by many workers. Simply put, most employees are unaware of the value of their total compensation package.

While many employers strive to communicate a total rewards message to employees by providing them with total compensation statements, too many employers fail to make communicating this key information a priority. By failing to communicate, employers miss an opportunity to maximize the return on the significant investment being made in compensation and benefits.

Does your organization provide a total rewards statement to employees? Let us know in the comments. And, of course, feel free to reach out to discuss how we help you tell your organization’s total rewards story.

No Ping Pong Tables Required

A recent article in Harvard Business Review entitled "How 4 Retailers Became 'Best Places to Work'” takes a look at the philosophies and practices at four leading retailers that consistently get high marks as employers.

While each company takes a somewhat different approach, there are a few common themes:

Maintain high expectations - All four retailers demand a lot from employees, but those demands are evident throughout the enterprise - executives are held to them as much (if not more) than front-line employees.

Empower employees - Employees that are empowered to make decisions and take action enable those employees to meet demanding goals.

Encourage teamwork and team success - A demanding work environment not properly managed could lead to competition between individuals that ends up being detrimental to the company as a whole. By encouraging team spirit, individuals' competitive energies are channelled in productive ways.

Pay people well - Ever wonder why shopping at Costco feels a lot different than shopping at Target? There are lots of reasons, of course, but one important difference is that Costco employees are paid well. In the words of Costco's CEO: "good pay means good things for the business."

Ping-pong tables and other quirky perks are great but, at the end of the day, feeling empowered and fairly compensated are much more valuable.

Employees Not Recognizing Employer Efforts

A new survey indicates that while employers continue to offer health and wellness benefits to employees, workers don't appear to be giving employers much credit for doing so.

While over 80 percent of companies provide medical insurance, just over half report investing in health and wellness programs. And what's worse from an employer's perspective, only 25 percent of employees believe that the health and wellness programs that are available are actually effective.

 

How Much Does Salary Matter?

How much of a bump in salary would it take to get you to accept a new job?

While everyone’s number is different, it’s clear that salary matters. A recent article points out that lack of meaningful wage growth is one of the main reasons workers switch jobs.

But wages are only part of the story.

The same article notes that engaged employees are far less likely to jump ship for a job with higher pay. Recent research finds that among employees who are “fully engaged,” 37% would consider switching jobs for a raise of 20% or less – compared to 54% of employees who are “actively disengaged.”

Employers can take a few lessons from this and similar studies –

Pay matters – up to a point: Employees need to be paid competitively, but also need to feel connected to their work and the organization for reasons that go beyond the paycheck.

Benefits matter – and not just traditional benefits: As with cash compensation, employees expect a certain baseline when it comes to benefits, but beyond the basics such as health insurance and retirement benefits, employers should be looking at other benefits – such as financial wellness and opportunities for education and professional development -  that employees consistently say that they value.

Communicate: Make sure that employees are fully aware of the total rewards package the organization provides. Total compensation statements are an excellent tool to use to increase employee awareness and appreciation of the breadth and depth of an organization’s rewards programs. 

Hiring is Surging. How Will You Keep Your Best Employees?

Last Friday's employment report was the strongest one of 2015. In addition to recording the lowest unemployment rate since April 2008, wages were up 2.5% from the previous year. According to The Wall Street Journal, "the economy is gaining traction and the steady pace of hiring is finally translating to long-awaited wage growth."

Great news for workers, the economy and the country. But for employers, there is also a challenge - how to hold on to the best workers.

Without question, employee retention is a complicated topic - there are all sorts of reasons why employees move on, and there are many tools and strategies employers can use to minimize turnover. But one important tactic that is sometimes overlooked is communications - specifically, total rewards communications.

While HR professionals are rightly concerned about making sure their organizations provide competitive pay and benefits, it's very important to keep in mind that how total rewards are communicated can have as much impact as what makes up a total rewards package. There are countless organizations that provide excellent total compensation to employees but, because these organizations do a poor job of telling their total rewards story, the investments being poured into total rewards are not having the desired impact.

If your organization could use help with total compensation statements or other types of total rewards communications, contact us and let's talk.

 

Employee Retention, Engagement are Top Concerns for Employers

The New York Times reports on two new studies that find employers are increasingly worried about how to hold on to their best people.

So what are employers doing to make sure that key employees don't head for the exits?

According to the article, one area that organizations are focusing on is culture - making sure that workers find meaning and value in their work. Another strategy employers are turning to is making sure that benefits - in particular healthcare and retirement benefits - are competitive.

But sometimes it's not what employers provide but rather how they communicate about what they already provide.

Employers need to recognize that great pay, benefits and other perks are necessary, but they're not always sufficient. The missing link is communications and education - making sure that employees know about and appreciate what the employer makes available.

While there are many ways to get the message out, total compensation statements are an important tool that employers can use to inform and educate employees about their total rewards.

The first quarter is an excellent time to distribute total compensation statements - and our firm would love to help your organization design, create and distribute these communications. Contact us for more information.

Give Yourself a Raise During Open Enrollment

As open enrollment season approaches, employees should keep in mind that, while the annual rite of making changes to employee benefits can be a bit of a chore, it's also an opportunity to boost your total compensation.

Benefits often make up at least one-third of most employees’ total compensation packages, so making sure to take full advantage of the benefits that are available is critical.

One of the easiest places to find “free money” is to contribute to your 401(k) or other workplace savings plan at least enough to get the full employer match. Contributing less means that you’re leaving money on the table – money that can be used to build a nest egg for the future.

Of course, there are other areas to pay attention to – checking carefully to make sure you are choosing the optimum level of health insurance, taking advantage of opportunities to purchase life and disability insurance, etc. The key is remembering that benefits are a significant part of what makes up your total rewards package – and in order to maximize those rewards, be sure to choose wisely during open enrollment.

Health Benefits Not Going Away Anytime Soon

A recent article in Bloomberg Business notes that, despite predictions of their demise at the hand of ObamaCare, health-care benefits are not going away anytime soon. 

One interesting nugget from the article: according to a recent survey conducted by SHRM, 33 percent of the HR professionals surveyed said that they used their organization's benefits program to retain employees, compared with 18 percent who said that they used benefits as a means of retention in 2012. 

In the current era of stagnant wages, employers increasingly view their benefits offerings as a key component of recruitment and retention efforts. And while there are certainly worries about the looming Cadillac tax along with the ever-present concerns about the rise in health-care costs, employers don't appear to be rushing to exit the health benefits business.

Expanding the Definition of Total Rewards

Anisha Archary, the Human Resources Director of Old Mutual Emerging Markets, published an excellent blog post over the weekend that describes her organization's view of total rewards. It's an expansive, comprehensive view that other employers should take note of.

In her post, she outlines a broad idea of how to define total compensation. Total compensation should be, in her words:

a multi-dimensional employee value proposition, which includes culture, leadership development, talent management, community work and an opportunity to develop a career. For us, benefits are more than monetary reward. We know that money is important to employees, but also understand that people work for more than money. 

In other words, cash compensation and traditional benefits are of course extremely important, but there are many other aspects of the overall workplace experience that are critical for employee engagement and retention. 

5 Reasons You Need a Total Compensation Statement

Moving into Q4, organizations are thinking ahead to 2016. For many organizations, total compensation statements are high on the to-do list.

Why should your organization be thinking about producing a total compensation statement? There are many reasons, of course, but here are our top five:

  1. Employees don't value what they don't know -- Multiple studies and surveys over the years have found that employees consistently undervalue their total rewards package. A total compensation statement clearly shows employees the true level of investment being made by an employer.
  2. Increase the ROI of compensation and benefits -- By laying out the full details of each employee's total rewards package, a total compensation statement increases the odds that the benefits and compensation you provide to employees will be effective in driving employee satisfaction and engagement.
  3. Increase employee retention -- Employee turnover is expensive. According to one recent survey, almost half of workers agreed that a well communicated total compensation program would make them less likely to leave their current employer.
  4. Reinforce the employee value proposition -- Employees - particularly high performing employees - have choices and options. Total compensation statements are an extremely cost effective way to make sure that employees understand the many advantages of committing to your organization.
  5. Build your employer brand - Total rewards communications help reinforce other communications and initiatives that, taken together, increase the brand value of the organization as an employer. 

5 Tips for Effective Total Compensation Statements

Whether you refer to them as total rewards statements, benefit statements, or total compensation statements, effectively communicating the true value of pay and benefits is critical to an employer’s efforts to inform, motivate and retain employees across the enterprise.

Here are five tips for making sure that your organization’s total compensation statements have the impact that they should:

1. Tell a story

When you think about your organization’s total rewards program, don’t think in terms of a list of benefit and compensation plans or a list of dollar amounts. Not only do leading employers think strategically about benefits and compensation, they also see the composition of their total rewards programs as a reflection of the organization’s mission, vision and values. Use your total compensation statement to tell your organization’s unique total rewards story.

2. Think like a marketer

Think about a total compensation statement as a marketing communication. Look at it as an opportunity to “sell” the organization to your current employees, and make sure that it contributes in a positive way to helping an employee explain what is unique about the organization and why it’s a great place to work. Think about how the statement will contribute to building up your brand as an employer of choice.

3. Consider benefits to highlight

While your total compensation statement will no doubt include the basics, give some thought to how best to include and position such benefits as your corporate wellness program, training and career development, and work/life programs.

4. Choose the optimal distribution method

Consider your employee population and think through how best to attract and hold employees’ attention. For some organizations, the Web makes the most sense while, for others, print statements will be more effective.

5. Send statements at the right time

Although there is never a bad time to put the total rewards message in front of employees, they may be more receptive at particular times of year. Whenever you choose to distribute statements, make sure they complement other employee communications.