For benefits professionals, one of the most encouraging pieces of news may be that the economy is serving as a catalyst for employees to take stock of their personal financial safety net. MetLife's 7th annual Employee Benefits Trends Study found that six out of 10 employees were motivated by the economy to review their retirement income needs, and the economic downturn has also prompted many employees to determine their household's needs for life insurance (44%), disability insurance (38%) and long-term care insurance (35%). This increasing awareness by employees of their financial vulnerability seems to have translated into a greater appreciation of the value of their workplace benefits.
More than half (56%) of employees, according to the MetLife study, report that due to the state of the economy, they value their workplace benefits more than ever before. In addition, 46% of working Americans say that because of recent economic events, they are taking a greater interest in understanding the employee benefits they receive through the workplace. With employees paying more attention to their workplace benefits and valuing them more than ever before, employers have a great opportunity to leverage benefits as a tool for enhancing employee loyalty and retention. In fact, for the majority of employers, employee retention still narrowly surpasses cost control as the top benefits objective.
For many years, benefits cost control has been among the top concerns for many employers. Now, with more limited resources, maximizing the ROI on benefits spend is more critical than ever. This is not only key for employers who are looking to keep costs in check while still offering competitive benefits programs, but also important for employees — many of whom are worried about their financial security.
While current economic conditions makes the need for benefits optimization for all stakeholders an urgent priority, the need to reframe the business value of benefits for long-term sustainability has long been supported by evolving workplace trends, such as changing workplace demographics and the ongoing demand for appropriate talent. More benefits professionals will need to carefully analyze business metrics in worker productivity, employee engagement and workforce tenure in order to justify benefits expenditures. Benefits strategies may require fundamentally different thinking if they are to successfully help employers achieve business goals and meet workforce needs for today and tomorrow.
The key point behind the rethinking is that competitive benefits programs need to be considered an "investment" rather than an "expense."
For example, a well-designed benefits program can be a strategic investment in meeting employee needs (security, fulfillment, relevance) while achieving key business goals (employee attraction, retention, productivity). That investment, however, requires a sufficiently broad vision of what a benefits program can be, with careful consideration of how benefits resources — including time, people and money — are distributed across a framework of four key areas:
1. Cultivate health and well-being.
Health insurance is a very important benefit and certainly takes the lion's share of an employer's benefits dollars and mind share. However, health insurance is not necessarily health assurance. A workplace can go significantly beyond offering health coverage and basic wellness programs in its commitment to helping employees be as healthy as possible for as long as possible.
Employers can take steps to help employees be healthy while encouraging individual responsibility by focusing on the positive — education, employee engagement and motivation — and making it easier for employees to be healthy while at work by offering healthy snack options in vending machines, discounts on flu shots, and gym memberships and walking programs.
2. Foster financial security.
Employers should consider creating a workplace culture that actively promotes and supports a shift in employees' mindset from passive recipients of financial benefits to taking personal responsibility and control of their financial futures. Employees participating in the MetLife study indicate they are interested in having their employers provide more access to financial and benefits advice.
For example, more than half (51%) of employees say they are very interested in having their employers provide access to financial planners for help in making retirement decisions, such as investing in a 401(k), up from 38% in 2006.Through their resources, employers can provide employees with access to financial guidance, educational tools and resources, and may sponsor a range of products and services to help employees build income protection and retirement security.
In return, employers may see increased employee satisfaction and loyalty. Notably, a recent MetLife study found that 41% of workers overall, and more than half (52%) of those at larger employers (with 2,500 or more employees), strongly consider their workplace benefits to be the foundation of their financial safety net.
3. Promote life balance.
As workforce demographics continue to change, and employees find themselves facing more responsibility at work and at home, balancing work-life issues is essential for employees to be productive and fully present at work.
Now more than ever, employees are bringing work home and bringing home to work. Even beyond traditional work-life benefits such as child care assistance and employee assistance programs, the new benefits framework encourages employers to understand that what people desire is a fulfilling life. Finding ways to maximize the work experience can contribute positively to fulfilling employees' life goals.
It is critical to recognize that the definition of a "fulfilling" life will vary by generation and by individual. For some employees, it will be flexible work hours or telecommuting to meet family commitments; for others, it will be tuition assistance, and others will enjoy the opportunities to have company matches to their charitable contributions. An employer that creates a work environment that recognizes and responds to diverse employee needs with relevant programs and services will likely benefit from improved employee satisfaction and productivity.
4. Craft an unparalleled employee experience.
Simply offering benefits does not mean that employees will be aware of them and take advantage of them, which might decrease the potential ROI. As part of the benefit offering, it is also important to create employee awareness and provide education to help with their decision-making and benefits utilization. This user experience is important in other consumer environments and is equally as important for employees as the end users of benefits programs.
How employees receive their benefits information (push communications) is just as important as having information in likely places that they will reach out to get the information themselves (pull communications). If it is easy for employees to educate themselves on benefits choices appropriate for their personal situations and easy to enroll, participation rates are likely to increase. Employees who are participating are more likely to recognize the value of working for an employer who provides them with an array of benefits options. Employers who make an effort to enhance the employee experience are more likely to achieve a higher return from benefits dollars already invested.
Perhaps the most powerful step in this new framework is in the recommendation that employers take a few steps back to view their benefits investment in its entirety. Are they reasonably diversified in each of the four areas described in order to maximize stakeholder ROI? An employer that is heavily invested in, say, health and wellness at the expense of employee experience may ultimately be under-optimizing returns on the benefits dollars. Reframing the benefits landscape by this new framework may be the most important step of all.
Ronald S. Leopold, MD, MBA, MPH, is VP and national medical director of MetLife Institutional Business. He is the author of "The Benefits Edge: Honing the Competitive Value of Employee Benefits," a book to help benefits professionals develop programs to give their companies a sustainable edge for the future. Leopold can be reached at rleopold@metlife.com.
