A new approach to an old benefits question
As recently as five years ago, one challenge employers faced around the topic of benefits involved answering a simple question:
“Do my employees fully appreciate the true cost of the pension plans, health insurance and other benefits provided to them?”
The answer, of course, directly affected workforce moral, an organization’s ability to retain the best talent and its chance of maintaining a competitive edge.
Today, that old question does not go far enough. Why? For one, the outlook for benefits such as health care and retirement is volatile at best. Secondly (and just as important) the role of the employee has dramatically changed. Employees no longer are passive recipients of benefits _ they’ve become benefit consumers. As such they are required to make important long-term decisions about 401(k) investing as well as navigate complex health insurance options.
So perhaps the better question is: “how benefit literate are my employees?”
The answer might be the difference between a workforce that’s distracted by confusion and angst and one that is galvanized, energized and informed.
Confusion is the Norm
The Institute of Medicine’s report “Health Literacy: A Prescription to End Confusion,” estimates that close to half of the population has difficulty understanding and using health information. There are similar stats on employees’ limited understanding of retirement planning and 401(k) investing. And yet the decisions employees are forced to make every day impact their long term health and retirement.
Telling employees that information about these complex topics is “on the website” no longer is acceptable, according to Michael Merriman, Managing Director of the Rochester-based Waterford Group, which provides retirement planning and asset management for businesses. Today’s more savvy employers are pushing benefit education by mandating workers to attend 401(k) meetings, for example. These employers are prepared to pay for the time employees spend meeting with enrollment advisors. The objective, Merriman said, is to develop a workforce that understands the options and is prepared to deal with change. Conveying benefits accurately is equally essential for showing evidence of compliance.
There are many options today for employers to communicate effectively. Because people respond differently to how information is delivered, employers should consider using a variety of venues.
Here are some suggestions:
- Group meetings and one-on-one meetings with HR representatives continue to be one preferred approach, particularly during open enrollment.
- Digital tools. Reinforce face-to-face meetings with podcasts, web-based videos and online chats. The explosive growth of social networking sites such as Facebook and Twitter have made it easier to communicate and have opened up a number of new ways employers can communicate with their employees. HRIS and intranet sites can be used to help employees break down potentially confusing and overwhelming amounts of benefit information.
- Benefits-at-a-glance statements. These single-page overviews describe a company’s benefit offerings, details about eligibility, and cost to the employee.
- Employee handbooks. A comprehensive handbook enables employers to comply with federal and state statutes, including the New York State law requiring written communication of working hours and certain benefit programs. A handbook tailored to the employer also can serve as a long-term resource for communicating company policies, benefits and other important information to new and current employees.
- Personalized employee benefit statements. These important communication tools are now available to employees year round through on-line HR technology. Each employee receives a dollars-and-cents breakdown of all the benefits the employer provides, in a manner that helps an employee feel informed and valued. Often, until an employee sees these described in detail, precisely as they apply to him or her, he or she underestimates how much the company is contributing toward his or her well-being.
- Employee newsletters. Regular communication, presented in an upbeat and informational format, is especially effective for conveying news, providing a refresher and strengthening the bond between employee and employer. If sent to the employee’s home, his or her spouse and family members also feel included in the company “family.”
It’s important to remember that all written material should be easy to read. The U.S. Department of Health and Human Services also suggests involving staff—including persons with limited health literacy—in the design and testing of benefits communications.
A Reality Check
Corporate America spends billions of dollars on employee benefits each year. Taken together, perks such as paid time off, medical and dental plans, disability and life insurance, flexible spending accounts, social security and 401(k) plans can easily add more than 30 -40 percent to an employee’s annual cash compensation. Today, perhaps more than ever, it’s important for both employers and employees not only to recognize but to understand the value of this “hidden paycheck."
