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Benefits Column

Trends in Employee-Benefits Design

The benefits offered to new employees now pale in comparison to what was standard in the past. But, as HR leaders balance rising costs against the need to attract and retain employees, some are beginning to think about meeting employee desires for a broader array of benefits that may help workers simplify their lives.

Monday, April 9, 2012
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Editor's note: Leading up to HRE's 25th anniversary in May, each of our online columnists were asked to address the changes they've seen affecting their areas of expertise over the past 25 years and what those changes might mean to HR leaders going forward.

I've been following the evolution of employee benefits almost as long as Human Resource Executive® magazine has been in existence.

As a newly minted employee, my first employer -- a New Jersey-based medical center -- presented me with a benefits basket filled with delights, including 30 days of annual paid-time off, which I accumulated at a rate of four hours per week.

I also benefited from an extended PTO bank, (accrued at the rate of 0.6 hours each week) that my employer designed to supplement the state's temporary-disability-insurance program payout.

The organization allowed me to "cash-in" up to eight days of PTO every six months. Many employees used this to pay for summer vacations and holiday gifts, but the practice also limited the number of employees who "called out" and prevented massive carryover of PTO from year-to-year.

In fact, because of this policy, the company never had to impose carryover limits for the program.

My employer also provided me with both a defined-benefit plan and a defined-contribution plan -- although there was no employer match for my 403(b) contributions.

And while I had to wait three months before I had access to medical, dental, vision and life-insurance benefits, the company paid 100 percent of the premiums once I enrolled.

I was offered one voluntary benefit -- a disability-insurance policy with a low, locked-in premium and generous plan provisions, including an "own-job" definition of disability. I still carry that policy today.

Employees with children received special pricing at an onsite childcare center that was open 12 hours a day and also provided summer camps for older children.

My company embraced wellness and prevention. I had access to free annual physicals and a wide array of discounted exercise, smoking-cessation and nutritional-counseling services.

The director of my division created a flexible-work environment. My co-workers and I developed our work schedule as a team. Sometimes I worked four-day weeks. Other times, I worked a few 12-hour days coupled with half-days or a more traditional five-day week. We fit our schedules to meet the goals of our division as well as the needs of our clients, our lives and our co-workers' lives.

To round out the employee experience, I could take advantage of discounted movie tickets, car-maintenance services, onsite dry-cleaning pick-up and delivery and local-merchant discounts.

Oh, and one more thing. Although I worked much longer hours because I loved my job, I was scheduled to work 35 hours each week.

Given my education level, my salary was painfully low but it didn't matter significantly to me. I was accustomed to the poverty that often accompanies graduate school.

More importantly, I felt valued, had opportunities for promotion and career growth, believed I was making a difference in the community and people's lives, had autonomy and flexibility, and was encouraged to innovate new programs and services.  

Even at a very young age, I knew this was the best job I'd ever hold. And, considering the work I do now in the employee-benefits arena, my first job provided me with a wonderful learning lab about how to create a meaningful benefits package and supportive culture.

The year HRE was founded ? 1987 -- was a time of optimism, says my friend and colleague, Ron Leopold, the national medical director at MetLife, Inc.

The United States was rapidly rebounding from a stock-market crash, the dot-com era was taking off and, Leopold says, the nation was still harboring the post-World War II belief that we were the greatest country in the world for economic power and opportunity. We presumed that this state of the nation would be eternal.

Little changed during my time at my first employer -- with two exceptions. One hundred percent coverage of medical tests and procedures became available only if we used the medical center's facilities. And we moved to a 40-hour workweek, with no change in compensation.

The benefits landscape has changed dramatically since then.

And this has left HR executives trying to balance the competing demands of rising benefits expenditures -- mainly fueled by healthcare utilization and costs -- against the need to attract and retain productive and talented employees.

Paid-time-off is now less generous, comes with carryover restrictions and is often non-negotiable in terms of the amount granted to new employees.

Cost sharing is de rigueur and is reflected in employee contributions toward healthcare and benefits premiums as well as in co-pays and deductibles.

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Flexible-work arrangements, telecommuting and shared-job arrangements -- while highly desired by many employees -- still haven't gained a firm foothold.

As we look to the future, there are several trends emerging.

The shift to defined-contribution plans in retirement -- as well as the healthcare-reform law and its creation of healthcare exchanges beginning in 2014 (assuming, of course, the law is found constitutional) -- are leading many HR executives to consider an overall defined-contribution approach to benefits.

Some employers, Leopold says, are providing more choice and flexibility with benefits, and some may eventually develop a virtual company store where employees select the benefits they desire using a combination of personal and employer-provided funds.

In that same vein, voluntary benefits -- such as employers providing access to discounted long-term care, cancer and critical illness insurance, as well as auto, homeowner's/renter's and pet insurance -- are also gaining traction.

Some employers such as Mercedes-Benz USA provide free 24-hour personal concierge services to all employees, including the rank-and-file. The extension of services such as these, and others that were previously limited to upper-level employees, reflects the strong desire workers have to receive more broad-based help with their lives -- especially as companies increasingly place 24/7 demands upon them.

Ultimately, I think, employee-benefits design is heading toward a customized approach, where workers can tailor their benefits to their individual needs. Such a trend may allow employees to feel as good about their benefits packages and their employers as I did at my first job.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.

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