VideoIf you want to offer employees an inexpensive benefit that will foster loyalty and boost productivity, consider a navigation system. No, not a GPS, but a tool that will guide them in making a host of decisions about everything from tuition-reimbursement programs to 401(k) strategies to consumer-directed health plans. By offering more and better education around benefits, companies not only help employees make the most of their perquisites, but also gain from increased retention, higher productivity, and related forms of goodwill.
"Benefits are probably the largest untapped potential retention tool that organizations have," says Steve Miranda, chief of human resources at the Society for Human Resource Management in Alexandria, Virginia. But all too often, he says, "they turn into nonperforming assets because they aren't being used to create 'stickiness.'" In other words, to tap the full benefit of benefits, companies should package them with more-useful instructions. "People are clamoring for more communication," says Miranda.
This won't come as news to most companies, of course. Ever since 401(k) plans began to replace traditional pension plans more than 25 years ago, companies have found themselves in the uncomfortable role of trying to educate workers about how (and how much) to save for their retirements. Entire industries have grown up around this single mission, yet few companies would say they handle this task well. Some pass out brochures touting the wonders of compounding and expect employees to take it from there. Most, however, err in the opposite direction. "More and more, we find that companies back up a truckload of information and everyone's eyes immediately glaze over," says Nenette Kress, senior vice president and national practice leader for communications at The Segal Co., an HR consultancy. "There's so much information that they can't take it in. They are overwhelmed."
Inertia is a problem even under the best of circumstances; information overload only makes it worse. And if maximizing their participation in 401(k) plans seems daunting, imagine what may be at stake in the emerging realm of consumer-directed health plans. CDHPs offer lower premiums but higher deductibles and require employees to make a series of critical decisions about their own health care. HMO or PPO? Brand-name pharmaceuticals or generics? Does an aching back merit a doctor's visit, or a hot bath? "Benefits now require employees to make very important decisions that are fraught with long-term implications," says Kress. "They need help understanding it all." With so much at stake, the self-service approach to benefits, which has dominated for a decade, is now giving way to a desire on the part of companies to extend a helping hand.
Retention Junkies
Why should employers — most of whom have shaken free from any previous pretensions of paternalism — take on the extra tutoring duties? Simple: because both current and potential workers put a premium on their benefits packages. Last year the Emerging Workforce Study, a survey commissioned by recruiting giant Spherion Corp. and conducted by Harris Interactive, found that benefits actually outranked compensation as the key factor in employees staying put. Out of 3,152 employees, 78 percent named benefits (including health care) as a critical retention tool, slightly ahead of compensation (cited by 75 percent). Moreover, workers see plenty of room for improvement in their plans; only 34 percent expressed satisfaction with their health benefits.
This data arrives just as employers seem to be all ears in the matter of retention. Recent surveys have found that employee retention is a top — sometimes the top — corporate priority, and an overwhelming majority of companies expect competition for the best workers to remain just as strong or even intensify in 2009.
Even companies that provide exemplary benefits keep reminding their employees what a good deal they've got. At software giant SAS Institute, where the lavish benefits are hard to miss — there's a 66,000-square-foot fitness center, plus athletic fields and multiple child-care centers — management still makes sure that employees remember to appreciate it all. "Our whole benefits package is about giving our employees a place where they can excel. If people are less stressed and happier, they'll work harder for you," says Don Parker, CFO of the $2 billion company.
SAS also uses its intranet, newsletters, RSS feeds, internal blogs, posters, and benefits fairs to "make sure employees are aware of the full range of offerings," as Parker puts it. And the company relies on an annual survey to ensure that its benefits match employee needs and wishes, allowing Parker to say with confidence, "We know what matters to them."
Communicating with employees strategically — soliciting their questions and concerns and addressing them directly — requires creative thinking and more than a touch of corporate self-awareness (for more, see "Telling Details" at the end of this article). Before they offer help to employees on how to maximize benefits, companies often find it useful to let employees know exactly what they are getting in terms of benefits. Personalized statements that aggregate the hidden value of an employee's noncash benefits, from paid vacation to company-sponsored life insurance, are useful for boosting morale and cultivating loyalty. Yet a recent survey by Aon Consulting found that fewer than half of companies believe that it is important to communicate such total compensation data to employees.
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