News
Misreading the tea leaves: Benefits misfire for companies and workers
By Leah Carlson Shepherd, Employee Benefit News
Employee benefits are coming up short for employers and workers, a recent survey from Towers Perrin shows. About 75% of senior managers think their benefits package is not effective at meeting cost control objectives, while 58% indicate their program is not helpful at recruiting workers.
“Ultimately, it may be time to revisit certain assumptions about benefit design and delivery because this survey shows that current approaches are not working as well they should for employers or employees,” says Dave Guilmette, managing director of Towers Perrin’s health and welfare practice.
Many employers find benefit design and delivery a challenge because they need to strike a balance between staying globally competitive (i.e., shifting some cost and risk to workers) and offering attractive benefits to recruit and retain employees, Towers Perrin notes. This can sometimes lead to reading the tea leaves wrong about benefit programs.
Workers “haven’t gotten involved enough in looking at what they need to do in the programs to be successful,” says Ginny Olson, a principal at Towers Perrin, which polled 140 HR and benefit managers and 2,380 employees.
Dealing with a change
At least 42% of employees say recent changes in their benefit plans negatively affected their trust in management. Nearly one-quarter say the change might spur them to leave their job, and another quarter say they feel less motivation to do a good job at work, Towers Perrin reports. By contrast, almost all (96%) employers thought their recent benefit tweaks had either a neutral or a positive impact on worker engagement, the survey finds.
“Some employers might be tempted to dismiss employees’ views because of a still surprisingly common belief that employees don’t really understand or appreciate their benefits anyway,” Guilmette remarks. “But our survey data say otherwise. In fact, benefits serve as a powerful symbol of the organization’s commitment to employees and to management’s level of concern and interest in their well-being.”
More division looms, however. Nearly 57% of workers think their employer would not alter their retirement plan over the next two years, but over 60% of employers intend to make changes to retirement plans, while 90% will modify their health benefits, Towers Perrin reports.
Ninety-four percent of workers recognize they are mainly responsible for their retirement savings, but only 48% feel the same about health coverage, mainly because “employers retain responsibility for the design” of health plans, Olson suggests. “The benefit changes shift more risk to employees. Employers aren’t quite understanding that employees accept that responsibility.”
Don’t assume, though, that employees have no understanding of the employer’s viewpoint. “They clearly know the cost pressures on the employer. They know the effects of globalization,” Olson says.
Tips for companies
With the right approach, employers can minimize resentment and turnover resulting from benefit changes. Olson recommends these strategies for improving the outcome:
- Understand how workers perceive the company before modifying benefits.
- Communicate changes to benefits early, candidly and without sugarcoating.
- Tell employees how the change impacts them and what they should do about it.
- Tailor messages to different groups, perhaps based on pay and demographics.
- Provide adequate tools and decision supports around benefits.
- Regularly measure employee engagement.
Leadership and company culture play a large role here. “You get better results when the employee feels the employer cares,” Olson explains. In addition, when measuring success after a change, companies should look at factors like productivity, absenteeism, error rates and customer service ratings - not just the turnover and costs.
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