In economically challenging times, business owners naturally look for ways to protect their bottom-line. Some employers offering employee benefits consider cutting back or, terminating them altogether. Employers who do not offer benefits see them only as added costs. Since employee benefits are a significant business expense, these may seem like logical responses in controlling costs. Based on a recent study however, this may be a “penny wise but pound foolish” position. MetLife Insurance Co. recently released its sixth “Study of Employee Benefits Trends” report and the findings are quite interesting.
MetLife’s report indicates that companies that offer employee benefits are making a commitment to their own future as well. This is a direct result of businesses fearing a labor shortage of desirable, skilled employees. 88% of employers surveyed expect that competition for quality employees will increase over the next 18 months. Retaining and recruiting quality employees may not be a question of success but one of survival itself in the marketplace.
Employer’s attitudes towards benefits are changing. For the first time that MetLife has done this study, retention of employees is cited as the primary objective for offering benefits. This denotes a shift away from cost concerns to an employee focused return-on-investment attitude. The challenge to employers then is clear: how to best use benefits as a retention / recruitment tool, while at the same time keeping the costs of providing benefits at a reasonable level within the company budget.
The answer is not a simple one. With our changing employee population, one size does not fit all. Employee ages, family make-up, marital status, gender and individual needs all combine to define what benefits will serve our employee’s interests. All of these factors should be taken into account when designing a benefit program.
Understanding the varying interests between your employee’s and the company’s concerns help an employer to provide benefits their employees will find attractive but not break the bank. Providing benefits that address these interests can provide a real competitive advantage over the competition.
MetLife found that employees continue to look to their employers as an important source of financial security beyond a paycheck. Certain benefits are expected from an employer. Basic among them are health insurance and a modest life insurance policy. Dental, Disability, Enhanced Life coverage, Long Term Care plans are also on the wish list.
How does an employer make the most of these findings and still remain within the budget? The first step is to assess your employee population, demographically. If you have a predominately young, single workforce then high-end medical plans will go unappreciated and, most likely under-utilized. That is an unwise use of company money. If you have a workforce made up predominately of employees with families, then medical, dental and life insurance will be important to them. Older employees will focus on Medical, Life and increasingly Long-Term Care benefits.
Employers can provide the right mix of benefits without funding them entirely or even a portion of them. Employers today must get creative. The new generation of “Consumer Directed” health plans provide a great deal of latitude for creativity. Linked with Federal tax-free / tax-deferred funding mechanisms, these plans can go a long way towards enhancing a company’s benefit portfolio. Tiered benefits and tiered contributions can also help in offsetting benefit costs. Voluntary plans are another option to enhance the benefit portfolio with little to no cost to the employer.
So, to recap please keep in mind, in today’s competitive environment, benefits should not be viewed as a cost center to be minimized. The growing challenge of retaining and recruiting quality, desirable, skilled employees puts benefits in a strategic role in making your company more attractive and successful in the marketplace.