Archive for the 'Benefits' Category

Mercer: Benefits Communication Foremost Solution in Turnover

Published by SAsmar on July 19, 2010 in Benefits, Economy, Solutions and for Employers. 0 Comments Tags: , , , .

Benefits communication used to engage and retain employees as economy improves

Mercer recently announced the results of their Attraction and Retention Survey, covering over 320 employers this year. These are their most valuable findings:

Better economy means higher employee turnover. As the economy and job market continue to improve, 62% of companies think employee turnover will increase as well. When employees have more options, they are less likely to be loyal unless their company puts effort into keeping them.

Companies are expanding again. The economy is picking up and so is hiring. Nearly all companies surveyed are hiring. In fact, only 3% are reducing their workforce. Nearly one-third (27%) of companies are expanding, up from 12% shown in the 2009 Unprecedented Times Survey. This is a clear sign of companies’ confidence in the economy.

Companies are concentrating on engagement to retain employees. Employee engagement has increased in 47% of companies in the last 12-18 months, likely thanks to companies’ specific efforts. Engaged employees are less likely to stray and have higher performance levels, according to a Mercer principal. Retention is as important as expansion, when other employers can lure good talent away.

Benefits communication is the highest contributor to increasing employee engagement. Organizations have increased non-cash rewards as a means of retaining and engaging employees in the past 18 months. The reward most often used was benefits communication, which companies have used 27% more. Even as the economy improves, non-cash rewards serve as an important means of curbing turnover. Non-cash rewards are a good way of communicating confidence and appreciation for employees. It is also much cheaper to implement rewards programs than to hire new replacement employees. If employees don’t understand, value, or even know about these rewards then they won’t merit much. That’s why benefits communication has become such a vital resource for companies to keep employees engaged and loyal.

Benefits Education for Optimal Benefits ROI

Published by SAsmar on June 23, 2010 in Benefits, Financial Education and for Employers. 0 Comments Tags: , , , .

A new study by UNUM demonstrates the power of effective benefits education.  Employers with highly rated benefits education had job satisfaction rates of 88% vs. 45% for those employers with fair or poor benefits education – a difference of 43 points!  Employers with effective benefits education programs enjoyed increased employee engagement, loyalty, morale and productivity – ultimately driving up the ROI of significant investments in the benefits themselves.

Benefits Education

Benefits education proven effective for increasing employee satisfaction

Here are some highlights from the study:

  • “What you say” is as important as “what you do.”When it comes to workplace satisfaction, the way that you communicate benefits may be just as important as the benefits themselves. In fact, those employers with poor quality benefits packages were able to improve workplace satisfaction ratings by 32 points with highly rated benefits education.
  • Benefits Changes on the Rise; Quality of Benefits Education on the Decline. Roughly half (45%) of employees surveyed reported that they had seen changes in their benefits packages in 2009. And yet, the quality of benefits education declined sharply as 29% of workers gave their benefits education positive ratings in 2009 vs. 39% in 2008.
  • Accommodate various learning styles. 70% of employees surveyed use web-based materials when available. Online videos and interactive tools are a great way to satisfy all three learning styles – visual, auditory and “hands on.”
  • Effective benefits education helps retain talented employees.  In fact, 77% of employees who believed their company had good benefits education said they would stay with their employer even if they were offered the same pay and benefits elsewhere. As the job market improves, employees feel more comfortable looking elsewhere, so communicating the value of benefits is important.

Investments in benefits education can be a low-cost, high-impact way to affect worker satisfaction.  Even when paired with a below par benefits package, effective benefits education can be a cheap means to dramatically improve job satisfaction, employee engagement, loyalty and productivity.  Unlock the value of your benefits package with benefits education.

Open Enrollment: How Will You Communicate Medical Care Cost Increases?

Published by JLarocque on June 17, 2010 in Benefits, Financial Education, Financial Wellness, GuideSpark and for Employers. 0 Comments Tags: , .

While this likely won’t come as a shock to many reading this post, it appears

Benefits Communications

Benefits Communications for Delicate News

that medical care costs will once again rise at near double-digit rates in 2011.  According to PriceWaterhouseCoopers’ Health Research Institute, medical care costs are expected to increase by 9% in 2011, a slight deceleration from the 9.5% rise posted in 2010.

Cost sharing has become a critical tool to help keep medical care costs affordable for both employer and employee.  2011 will be no different.  Here are the key findings of the PwC report:

  • 42% of employers intend to increase employee contributions for health insurance coverage
  • 41% plan to increase medical cost-sharing, including higher-deductibles and co-pays
  • 26% expect to increase prescription drug cost-sharing
  • 67% of employers will most likely expand or improve wellness programs

In addition, many employers will add high-deductible health plans in the coming year to help ease the cost burden.

Those employers with a Fall Open Enrollment are heading into a critical time.  Important decisions will be made that will have a significant impact on the cost of benefits for employees and their families.  Careful thought, consideration and resources will go into making plan decisions and yet too little thought and preparation will go into communicating the changes.

With so much at stake, what is your plan for communicating this delicate information?  How will you deliver the news that your employees are once again being asked to shoulder a larger share of the cost burden?  How will you drive enrollment in that new and very complex high deductible health plan?

Rethink the lengthy and ineffective emails, brochures and web pages. You know that employees and family decision makers aren’t reading them – no matter how pretty they are.  And employees who operate in the absence of information are likely to come to the wrong conclusions about plan changes.  They are likely to avoid newer health plans in favor of the ones that feel familiar.

This Open Enrollment period, don’t let your communications strategy go by the wayside.  Demonstrating transparency and carefully communicating the difficult changes that are being made to benefits are nearly as important as the changes themselves.  Remember that introducing a high deductible health plan only saves the company money if you can convince an employee to adopt it (assuming they have alternatives).

For tips on communicating effectively, please see our March post:   Benefits Communications for Today’s Employee.

Gallup Study Highlights Financial Wellness as a Key Determinant of Overall Wellbeing

Published by JLarocque on June 1, 2010 in Benefits, Financial Education, Financial Wellness, GuideSpark and for Employers. 0 Comments Tags: , , , .

For many employers, the term “Wellness” is used to encapsulate a philosophy or an approach to employee benefits.  In other words, the goal of a benefits program is to improve the overall wellbeing of employees and their families.

Achieving Wellbeing

But what does that term wellness really mean?  What are the determinants?  How do you measure employee wellbeing and what sort of programs can you put in place to improve it?

These are not easy questions to answer but certainly relevant if the goal of your benefits program is ultimately employee wellness.

A recent study by Gallup, in partnership with leading economists, psychologists and other acclaimed scientists uncovered the common elements of wellbeing that transcend countries and cultures.  In Gallup’s initial research, they asked people what “the best possible future” for them would look like. They found that when evaluating their lives, people often give disproportionate weight to income and health: across the groups Gallup surveyed, “good health” and “wealth” were two of the most common responses.

After completing a broader study, Gallup’s research revealed the universal elements of wellbeing that differentiate a thriving life from one spent suffering. They represent five broad categories that are essential to most people:

  1. Career Wellbeing: how you occupy your time — or simply liking what you do every day
  2. Social Wellbeing: having strong relationships and love in your life
  3. Financial Wellbeing: effectively managing your economic life
  4. Physical Wellbeing: having good health and enough energy to get things done on a daily basis
  5. Community Wellbeing: the sense of engagement you have with the area where you live

The study goes on to point out that if we’re struggling in any one of these domains, as most of us are, it damages our wellbeing and wears on our daily life.  Unfortunately, only about 7% of people surveyed are thriving in all 5 areas.

As an employer, you probably offer programs in a number of these areas.  For instance, you likely have a talent management system that helps employees manage their career growth and job satisfaction.  As a part of your benefits offering, you may provide wellness programs dedicated to improving employee physical and mental health.  You may even have initiatives that promote community involvement.

But what are you doing to address employee financial wellbeing?  What programs do you have in place that help employees truly solve their financial issues and improve their financial health?  Given the economic volatility that has plagued the last few years, shouldn’t this be an area of focus?  Interestingly, the financial wellbeing component, while arguably one of the more important aspects, has been largely underserved by employers.

Financial Wellness is the logical next phase when it comes to ensuring the wellbeing of employees.  In fact, research and evidence suggests that it is employer investments here that will ultimately be the most productive.

Snoopy Weighs in on Financial Wellness

Published by JLarocque on April 14, 2010 in Benefits, Financial Education, Financial Wellness and for Employers. 0 Comments Tags: , , .

MetLife released its 8th installment of its Annual Study of Benefits Trends on Monday.  In comparison to prior

Financial Wellness

Employee financial issues a central theme in this year's survey

years, the themes of employee financial security and benefits communications played a more prominent role than ever before.  This was a natural emphasis given the backdrop of economic volatility and a renewed employer focus on benefits cost control.

We wanted to highlight and provide my perspective on three key points that came out of this year’s study:

There is a Health-Wealth Connection.  MetLife’s survey work, which is consistent with other studies we’ve seen, revealed a connection between an employee’s physical and financial health.  Put simply, those employees who assessed their medical health as “fair to poor,” were much more likely to report financial concerns.  MetLife therefore concluded that an employee’s health status impacts an employee’s financial situation.  Our conclusion would be a different one.  Given our experience with employee financial stress and the studies that have been done in this area, we believe strongly that it is an employee’s money issues that leads to poor health and NOT the other way around.  Stress has long been referred to as America’s #1 health problem and virtually every study you read points to money issues as the leading cause of stress (and it’s not close).

Benefits Communications Effectiveness on the Decline.  Each year, MetLife surveys employers and employees on their perception of benefits communication effectiveness.  This is one of those areas of true disconnect.  Over the past three years, employers believe they have made slight improvements to their benefits communications.  Employees, on the other hand, rate benefits communications as less effective than the year before.  In fact, this year only a third of employees rated their benefits communications as effective vs. 40% in 2007.  Just in the last three years, there have been such dramatic changes in the way that employees access information and learn.  And yet, too many employers have stuck to dated and ineffective forms of communications that have been in place for decades.

Personal Financial Distractions Drain Productivity.  In the past 12 months, 12% of employees surveyed took unexpected time off to deal with a financial issue and 17% reported that they spend more time at work on personal financial issues than they think they should.  Personal financial distractions are and have been an expensive problem for some time now.  What is encouraging, is that almost two-thirds of employers have now recognized personal financial issues as a drain on productivity and 45% acknowledge financial education as an effective solution.

Key takeaways:

  • The financial health of employees may be one of the largest determinants of their medical health.  Your health wellness strategy should include a financial wellness component.
  • You can improve employee understanding of benefits but you need a modern approach to the way that you communicate them.  This does not need to be an expensive undertaking – improving benefits communications will cost you a tiny fraction of the benefits themselves.
  • Employee money issues cost your company each day.  Providing your employees with programs that help them help themselves will increase productivity and employee loyalty.

Financial Wellness. Why Employees Turn to their Employers.

Published by JLarocque on March 29, 2010 in Benefits, Financial Education, Financial Tools, Financial Wellness and for Employers. 0 Comments Tags: .

In 2007, for the first time since MetLife began running their Annual MetLife Study of Employee Benefits Trends, more than half of employees surveyed indicated that they receive a majority of their financial products from their employer.

For most HR professionals this may seem somewhat intuitive.  Prior to 2008, many employers had built out their benefits, retirement and equity programs to compete in what was considered an all out war for talent.  So, it may not be surprising that the large investments that employers have made to offer a compelling total compensation package have made employers the number one source of financial products for their employees.

But there are some important implications of this shift.  Virtually all critical aspects of an employee’s financial plan are now available through their employer.  This includes core products that protect wealth – including disability, life insurance and many other types of insurance.  And it includes products that build wealth including retirement, college savings plans, equity compensation and many others.  The fact is, employees consider their workplace plans to be the foundation of their financial security.

When it comes to personal finance, it may be surprising to learn that many employees don’t turn to one of those name brand financial services firms when they need something, they turn to their employers.  Over the past two years, it’s amazing how many HR professionals we’ve met with have told us that their benefits call center was being inundated with financial planning questions that they were not permitted to answer (e.g. “Should I refinance my mortgage?”).  Employers have become the face of so many financial products and yet a majority of these employers are not equipped to help employees understand them, use them and benefit from them.

Two things here are certain:

  1. Over half of your employees receive a majority of their financial products from you, their employer
  2. As the face of so many important financial products, employees are likely turning to you for answers and assistance in securing their (and their family’s) financial futures

The question is…will you answer the call?  You’ve offered your employees a compelling set of benefits and compensation programs…will you make the investments that help employees use them and solve their financial issues?

Benefits Communications for Today’s Employee

Published by JLarocque on March 15, 2010 in Benefits. 0 Comments Tags: , .
Benefits Communications

Traditional Benefits Communications Not Reaching Today's Employee

We used to make this distinction about certain people being “web savvy” but these days it seems we’re all pretty web savvy – perhaps there is just different degrees.  One of my colleagues always uses the example of his 85 year old grandfather forwarding him YouTube clips to illustrate this point.

At GuideSpark we spend much of our time talking to employers about taking a modern approach to benefits communications.  When we meet with an HR professional for the first time to discuss their specific issues, many of them seem to have this sense that the world of communications has somehow passed them by.

Naturally, we start by helping HR professionals think through their current approach.  I’m not sure it has ever taken us more than a couple of minutes to convince someone that thick handbooks, brochures and text heavy Web pages are not getting the job done.  The fact is, if this HR professional didn’t believe this to be true, they wouldn’t have met with us in the first place.

And then, we walk through how to really create a Benefits Communications strategy that aligns with how employees are learning today.  Here are 3 guiding principles that we offer:

  • Utilize web-based multimedia.  According to comScore, U.S. Internet users watched an average of 187 videos per viewer in December 2009.  Employees are conditioned to expect rich media formats when accessing information and they want it available on demand.
  • Leverage communities and shared learning.  Blogs have become a legitimate corporate training ground and in February 2009, social media usage exceeded that of email for the first time.  While not all subjects are appropriate for a shared learning environment, when making decisions, employees often just want to know what others are doing.  Build a community around your benefits and allow them to share information through polls and message boards.
  • Accommodate short attention spans.  Competing for just a few minutes of a busy employee’s time has never been more challenging.  Attention spans are shrinking each day.  A great example of this phenomenon is Twitter.  Twitter limits communications to just 145 characters.  To be effective in communicating to this crowd, you must work to make your benefits communications modular, concise and meaty.

Start with these and we promise you that your Benefits Communications will begin to have the impact that you desire.

Contrasting your FSA Employee Benefit and the Child and Dependent Care Tax Credit

Published by JLarocque on January 12, 2010 in Benefits, Financial Education and Financial Wellness. 0 Comments Tags: , , , .

A mainstay of employer Benefits Communications is to preach the virtues of Flexible Spending Accounts.  But is there perhaps a better tax opportunity out there for your dependent care related expenses?

Tax is an important area of focus when it comes to attaining a productive benefits education.  Before digging into the details of this particular tax opportunity, it’s important that you understand the difference between a tax deduction and a tax credit.  Tax deductions are taken “off the top” and ultimately reduce your taxable income, and, of course your taxable income is what ultimately drives the amount of taxes owed.  A tax credit on the other hand, is a dollar-for-dollar reduction subtracted from your tax liability.  If you had a $50 tax credit, it’s sort of like the government saying that they are giving you credit for having already paid them $50 in tax.

You may or may not be aware of the Child and Dependent Care Tax Credit available for work-related dependent care expenses.  This tax credit is calculated by applying a percentage to your total work-related dependent care expenses.  This percentage can be as high as 35% or as low as 20% depending on your adjusted gross income.  Now, there are a couple of rules to be aware of:

  • The work related dependent care expenses that are applied may not exceed $3,000 for one qualifying dependent and $6,000 for two or more
  • AND importantly, you can’t claim expenses for the purposes of the Child and Dependent Care Tax Credit that you’ve directed into your dependent care FSA

This raises an important question to ask yourself.   Should you apply eligible expenses towards the Dependent Care FSA or Dependent Care Tax Credit?  Well, this of course, will depend on your personal situation.

A good first step is to review the worksheet that the IRS has put together on the Child and Dependent Care Tax Credit.  You’ll want to understand eligibility requirements and the amount of the credit, based on your adjusted gross income.  Now, apply that percentage to your projected work-related dependent care expenses for the year (keeping in mind the IRS limits) to come up with your potential tax credit.  You’ll likely want to work with a tax advisor to compare this Tax Credit with what the tax benefits of the Dependent Care FSA Tax Deduction.

It may be the case that you have work related dependent care expenses that exceed the IRS limits for both the Child and Dependent Care Tax Credit and Dependent Care FSA.  In this case, it may be possible to leverage both of these opportunities.  Because tax laws are complex and evolving, it’s important that you consult your tax advisor to understand how these two opportunities apply to your particular situation.

Financial Wellness in 2010 – Open Enrollment Tips

Published by JLarocque on October 25, 2009 in Benefits, Financial Education, Financial Tools, Financial Wellness and for Employers. 0 Comments Tags: , , , .

As November fast approaches, you are likely beginning to receive important communications about Open Enrollment. If you’re like many employees, you may have already decided to just stick with your current elections – after all, they seem to have worked out well enough. This year, more than others in the past, taking a passive approach to Open Enrollment may be an expensive decision.

A confluence of events, including substantial increases in the cost of health care and tough economic times have likely resulted in significant changes to many of your benefits. It is of supreme importance that you understand these changes, how they impact your checkbook and ways to optimize your benefits. Keep in mind that without a qualified change of status, you will be locked into your elections until next year’s Open Enrollment period, so the time to focus on your benefits is NOW. Don’t be surprised by the cost provision changes after they take effect and it is too late to do something about them.

Here are 4 tips for making the most of your Open Enrollment period and cutting your health care related expenses:

  1. Get reacquainted with your health care plan options. This may be the most important and likely the most daunting task of all. While employers have largely absorbed the skyrocketing cost of health care (which again will see a double-digit year over year cost increase) you are also likely shouldering some of the burden. Understand the changes that are being introduced and how they will ultimately impact your wallet. Taking the time to dig into the cost provisions associated with your medical plan options will not only help to determine whether you’ve made the right selection, it will also help you to understand how to minimize your out-of-pocket expenses throughout the year. Many employers are introducing low premium/high deductible plans which can be a very cost-effective option for you, particularly if you are not a heavy user of your health care plan. Lastly, if your spouse or domestic partner also has a plan, you will want to incorporate his/her options into the evaluation process.
  2. Use flexible spending accounts. So, you knew this one was coming. Any respectable list of tips for Open Enrollment *MUST* have this in their top 4 and despite this widely held opinion, only about one-third of you actually take advantage of them. Using pre-tax dollars to pay for qualifying health care (including medical, dental and vision) expenses can save you significant dollars. For example, assume a married employee with an adjusted gross income of $100,000 who files jointly and accumulates $4,000 in medical expenses for the family. This employee would save just over $1,300 in Federal taxes for the year by using a Health Care Flexible Spending Account. An added and understated benefit of an FSA is that it actually helps you to plan and save for your health care expenses through convenient payroll deductions.
  3. Optimize your prescription drug benefits. This tip has more to do with saving throughout the year, rather than a decision that you’ll need to make for Open Enrollment. I mention it because it’s a great way to save money and could potentially impact your health care FSA contribution. Generic drugs are copies of brand-name drugs that have exactly the same intended use, effects, side effects, risks, safety, strength… in other words, their pharmacological effects are exactly the same as those of their brand-name counterparts. Taking a proactive approach and requesting a generic substitution for your prescription medication can cut down your copayment significantly. Use of generic drugs may also allow you to waive your deductible and avoid costs that are incurred when you use a brand name drug when a generic is available. Additionally, you may also be able to cut down on prescription copays by utilizing the mail order prescription drug benefit for maintenance medications.
  4. Take advantage of Health Wellness programs. Wellness incentives have become hugely popular. In fact, almost two out of three U.S. companies offer programs to keep employees healthy, and 66 percent of those offering programs use incentives. These incentives come in a number of forms, for instance, a credit toward your health care premiums. It may be the case that your employer is introducing a similar program in 2010, so be sure to understand wellness program features, incentives and consider participation.

Rethinking the 401(k) Pitch

Published by JS Wolff on September 14, 2009 in Benefits, Economy, Financial Wellness and Investment. 0 Comments Tags: , , , .

For nearly 30 years, employees have been coached that the best way to save for retirement is to take advantage of tax deferred investing, most prominently through their 401(k) plans. This strategy has always been anchored in the hope that lower tax brackets await us during our retirement years. But current economic realities are causing many in the financial community to question whether tax deferred saving remains a healthy long term strategy for employees.

When 401(k) plans were first rolled out in 1981, the income tax rates and bracket structure were very different than today.    The top federal tax rate was nearly 70% and there were 15 different income tax brackets separated by just a few thousand dollars of income (See Tax History).  Given those conditions 401(k) contributions presented a great opportunity to both avoid high current rates and reduce W-2 income in the contribution year just enough to move into a lower bracket.  So it seemed like a double win, lower taxes in the contribution year and in the future, when the Plan was accessed during retirement.

Since 1981 the sustained effects of “Reaganomics” led to a steady decline of both tax rates (highest federal bracket from 70% to 35%) and the number of brackets (from 15 to 6). During this period, with few exceptions, the US economy experienced robust economic growth.  401(k) Plans got even better as a result. To attract and retain employees, employers with healthy bottom lines began to offer generous matching incentives linked to 401(k) participation.

But the length and depth of the current recession is now changing the outlook for today’s 401(k) savers in two significant ways. First and most importantly, the government funded stimulus packages and propensity to grow overall government spending must be paid for at some point. This future “balance due” can only offset by higher taxes or a devaluing of the dollar (inflation).  The second effect of the current recession is that many companies have cut back or eliminated matching 401(k) contributions.

So the question for the employee now becomes, “if I no longer receive any company matching, and I may have to pay higher taxes on withdrawals in the future, is the 401(k) still the right way to save?”

Enter sound savings principles and the Roth 401(k) to the rescue.  Match or no match, automation and consistency are two key factors in any saving’s strategy.  401(k) plans are still great because the money is automatically deducted from every paycheck before it can get spent.  The recently introduced Roth 401(k) addresses the more daunting issue of higher taxes in the future by allowing after tax contributions now and tax free retirement withdrawals in retirement.

So rather focusing on the now suspect virtues of tax deferral, maybe it’s time to pitch the 401(k) as primarily a great way to save, period.  Wise portfolio allocations and a balanced approach between the Traditional 401(k) and the Roth 401(k) will address the constant winds of change that remain outside of the investor’s control.