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 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.

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.

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.

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.

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?

And so what exactly are the folks in Washington trying to accomplish by dedicating an entire month to financial literacy?  Well, it’s quite simple actually.  See, the government recognizes that a key to restoring confidence in our financial system and maintaining America’s competitive advantage in the world is to provide financial education in our schools and workplaces.  And, while what we do in our schools is critical over the long-term, the best way to impact America’s reality today involves getting employers, or more specifically HR, to rally around the issue and help employees with their money.

Make the Most of Financial Literacy Month

In fact, those in Washington view the workplace as so critical to solving the financial literacy problem that recommendations have been made to extend tax incentives to employers that provide financial education (we’ll keep you updated on progress there).

You knew your job was tough, but seriously?  In addition to implementing that new talent management system, you have to restore confidence in America’s financial system?  Sounds like a lot of work.  Well, let’s take this one step at a time.  Here are some ideas for dipping your toe in the water and trying some things out come April:

• Hold a “Creative Savers” contest.  Have employees submit creative ways they personally employ toconsistently live within their means and save for the future. It will be great for those who are struggling in this area to learn practical, everyday financial ideas that are making a positive difference in their co-workers lives.  And likely, while these ideas and practices can be quite creative, they will also tend to be relatively minor spending and/or saving tweaks that can be replicated in most budgets.  Have the 401(k) committee select the top three ideas, award some cool prizes to the winners and let the rest of the workforce benefit from their money magic.
• Do a survey.  Financial Literacy month is a good time to take the money pulse of employees in your organization.  A well designed survey can help employees assess their financial situation and allow you to get a glimpse of the financial stress in your organization.  If you’re looking for a credible survey, I highly recommend the Personal Financial Wellness Scale which was built based on the research of Dr. E. ThomasGarman.  Uniquely, this scale allows employees (and HR) to compare results against national norms.
• Do some seminars. Financial literacy month offers a great reason to reach out to your vendors.  You may want to start by calling your 401(k) administrator for retirement and investing related topics.  But don’t stop there.  There are a number of organizations that provide onsite financial workshops.  Some of these organizations are fee only, while others have programs where fees may be waived altogether.  If you are considering a no cost seminar provider, be sure that you understand the goals and objectives of the vendor.
• Hold a fair.  Nothing like a little free food and drink to get the attention of your workforce.  These days, so many of your employees get the majority of their financial and health products from you.   Invite your vendors and have them come with thoughtful ideas about how to help employees improve their financial health – this may include topics such as saving for retirement, how to cut health care expenses or keys to a rock solid income protection plan.  In addition, make members of your benefits and compensation staff available for one-on-one discussions.

If you implement one or more of these ideas, you may be surprised at what you learn about your employees.  Employee financial distress is pervasive and you may decide that this April cause deserves a year round effort.

These results are not surprising based on our experience.  Financial issues are a productivity drain for corporations and is something we believe companies will begin to address in the coming years.  If you missed the webinar, please let us know and we’ll let you know when we have our next one.

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.

Defining that a successful health and wellness program, “…must demonstrate that they can improve the risk profile of employees as a whole, and, in particular, those employees at highest risk.”, the study found that J&J’s program has done just that.  Additionally, as I’m sure they had hoped, helping their workforce become healthier also helped J&J’s bottom line. Overall it was calculated that their Health & Wellness program saved J&J $38 million from 1995 – 1999.

When they detailed where the savings was realized, which approximated $224 per employee per year, over $70 of that figure was due a reduction in mental health visits.  Certainly, a significant portion of these mental health visits were stress related. A Yale University Study cited on the National Institute of Occupational Safety and Health(NIOSH) website found that 29% of employees “feel quite a bit or extremely stressed at work”.

Apparently the J&J health wellness program did a good job addressing stress related issues. And they probably picked up a bonus here as well. While more difficult to measure, it’s not hard to imagine that someone who is less stressed is also likely to be a more productive employee.

But there’s good reason to believe that health wellness programs alone are not dealing with the primary root causes of stress. According to a 2007 survey by the American Psychological Association 73% of the respondents cited money as a significant source of stress in their lives. And a recent WebMD article cited an AP-AOL study which revealed that “debt-related stress was 14% higher in 2008 than in 2004. Those who report high levels of debt stress suffer from a range of stress-related illnesses including ulcers, migraines, back pain, anxiety, depression, and heart attacks.”

When law enforcement officials are trying to track down criminal activity, their first step is often to “locate the money trail”.  Similarly, I’ve found that for employees, their personal money trail is the source for all kinds of self defeating, stressful behaviors. While the term “work-life balance” implies a healthy lifestyle, gaining a “money-life balance” provides a vital dimension in the process toward personal wholeness and health.

The right Financial Wellness program can help your workers achieve this vital balance, while complementing and driving enhanced returns for your existing Health Wellness initiatives.

Here’s what to look for as you consider this critical addition:

- Its best to select a provider that is not associated with a financial provider even though it may be tempting to default to your 401(k) vendor. Trusted information is paramount here.  If someone has something to gain by selling more mutual funds, there is reason to suspect the objectivity of the education.

- You’ll want a program that reaches employees in multiple ways including leveraging current web trends. New “Web 2.0” formats are being introduced to deliver financial education in engaging formats that deliver lots of information in just a few minutes.  Blended with onsite workshops and personalized, education-only money coaching, employees can interact with the information however they feel most comfortable.

- And finally, to get buy-in from other key decision makers, look for a financial wellness program that provides the methodology, metrics and reporting tools to document year over year financial health improvement. While some measures may not be as direct as the Johnson and Johnson study, measuring a reduction in personal financial stress is doable.  In fact, there is a well researched assessment tool called the “Personal Financial Wellness Score” which measures personal financial stress and compares an individual’s results to national averages.