The Value of Voluntary Benefits

This is part of a special advertising section on the Outlook for 2012.

Sunday, October 2, 2011
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Despite the current economic climate, employers can no longer focus solely on managing benefits costs, while ignoring employee job satisfaction and engagement. In 2012, HR professionals must offer a competitive benefits package if they are to successfully retain and rejuvenate existing employees, in addition to recruiting quality candidates.

During a recent Society for Human Resource Management webinar hosted by Purchasing Power, we polled participants and found that managing benefits costs (41 percent) was the top HR concern, followed by retaining top-performing employees (21.4 percent), improving employee engagement (19.6 percent) and recruiting quality employees (9.9 percent). These were also the three most important HR issues stated by large companies in the 2011 Aflac WorkForces Report, in which 57 percent of large companies nominated "offering robust benefits while staying within budget/cost constraints" as their top benefits challenge.

The year 2011 saw the job market begin to rally as more companies started to rehire. Even if yours was one of the few companies able to maintain employee healthcare-plan premiums or provide salary increases, you may still be susceptible to losing top talent to competitors. MetLife's ninth annual Study of Employee Benefit Trends revealed that "for companies of all sizes, one in three employees may become a flight risk" and that "loyalty has now reached a three-year low."

In response to these findings and restrictive benefits-plan budgets, savvy HR professionals should begin to research non-traditional voluntary benefits that will augment core benefits and have broad appeal to a diverse range of employees, with little or no additional cost to the employer and minimum administration needed. This will help keep the employees you want as well as recruit new talent.

Ultimately, benefits matter greatly to employees. The MetLife study revealed that employees value voluntary benefits, with 57 percent of Gen Y, 64 percent of Gen X, 59 percent of younger boomers and 61 percent of older boomers more likely to choose benefits that meet their personal needs. The MetLife study also revealed that providing flexibility and a choice in benefits will also increase loyalty to the employer, especially with younger workers: 41 percent of Gen Y and 40 percent of Gen X employees said "choice of benefits that meet their needs is extremely important for creating loyalty," along with 30 percent of younger boomers and 31 percent of older boomers.

Many voluntary benefits provide employees with immediate tangible benefits, which further increase their appeal as they can be used year-round to obtain something that an employee needs, rather than many core benefits that employees only appreciate when they are sick or injured. For example, offering college-tuition assistance or the ability to obtain a computer through an employee purchase program demonstrates support for your employees' education while the company obtains a more highly educated staff.

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In addition to improving employee morale and loyalty, voluntary benefits can support a company's HR objectives. Offering health-club memberships and access to purchase treadmills or other home-workout equipment will encourage employee health and wellness. Healthier employees will also contribute to lower health-insurance premiums. Giving employee access to multimedia products that enhance their family time will help employees on "staycations" get more from their paid time off. According to a 2011 report by the Entertainment Software Association, 57 percent of American parents believe video games encourage their family to spend time together, with 45 percent of parents playing computer and video games with their children at least weekly.

Voluntary benefits often provide employees with products and services that they could not receive from another source or at rates lower than if they bought them on their own, which can incentivize people to stay with the company. However, your employees won't know this unless you inform them.

Once you have compiled a competitive benefits plan, work with your broker to devise a plan to effectively communicate the value of each benefit, thus increasing enrollment. According to a 2011 study by Eastbridge Consulting Group Inc., the average voluntary-benefits participation rate for face-to-face enrollments is 46 percent higher than the participation rate for a self-enrollment.

Though many of the business challenges employers will face in 2012 look similar to those faced in recent years, HR professionals can provide solutions with low-cost, innovative voluntary benefits that help recruit, retain and rejuvenate their company's employees.

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