Communicating the benefits of benefits

Ben Colvin is Vice President of Marketing for MetLife’s Institutional Business. In this role, Colvin serves on the Institutional Business management team that directs key strategic issues for the company’s employee benefits business. He also heads up the Institutional Marketing group that supports the continued growth of the business. This is achieved by leveraging the traditional marketing mix of branding, thought leadership, customer communications, industry events, mass media and industry advertising, database marketing and market research to develop integrated marketing strategies that support the products, service centers and distribution channels for the company’s employee benefits business.

HRM. How many years has MetLife been conducting its annual Benefits Benchmarking Report? And how do this year’s results compare with previous years?
BC. We’ve been conducting the report since 2000, and we base the results on the data from our annual Employee Benefits Trend Study. The findings have been consistent with previous years, and I don’t think you’ll be too surprised to find that employers have told us that their most important employee benefit objective is controlling benefit costs. We anticipate that being the trend for the foreseeable future.

Besides controlling costs, some of the other benefits objectives include retaining employees and increasing productivity. As the talent war starts to heat up and the economy continues to recover, I think you’re going to see retention of employees increasing in importance, and as medical costs stabilize it will probably surpass cost control as the number one objective.

HRM. What were the most surprising or compelling findings from an employer perspective?
BC. I think the most compelling findings were those that ran contrary to stereotypes. We’re really starting to see many small business owners catch up and outpace their larger peers when it comes to the quality and diversity of the benefits they provide. For instance, 34 percent of workers at small businesses (50 employees or less) are satisfied with the benefits they receive through their employer, which is on par with the satisfaction levels at the largest US companies (between 10,000-24,999 employees).

Small businesses (SMBs) also figure well when it comes to benefits strategy: overall, 40 percent of employers cite improving work-life balance as the main reason for providing benefits to their workers, compared to 50 percent of SMBs with 2-9 employees. I think smaller companies tend to be more flexible and more paternalistic. Employer loyalty rates tend to be highest in the small business sector: nearly 70 percent of small employers describe themselves as loyal to their workers, as opposed to 56 percent of employers overall. There are great strides being made by the SMBs.

HRM. And how about from an employee perspective?
BC. The message relates to the way in which employees want to receive information about their benefits; regardless of the company size, they all want to receive the information in some sort of a package, whether it’s at work or at home. After that, differences begin to appear. In larger companies, employees prefer to enroll through the internet, whereas in smaller companies they prefer paper-based forms. And in companies with less than 10,000 workers, most employees want to talk to someone about their benefits.

Also, interest in voluntary benefits (those benefits that employees choose and pay for themselves) is really increasing. The survey suggests that nearly half of the employers at smaller companies (50-99 employees) were interested in having their employers provide a wider array of voluntary benefits.

HRM. And what does the report suggest about the level of employee satisfaction with their benefits?
BC. The headline here is that employers aren’t being given credit for their investments in benefits – in fact, we have seen satisfaction levels drop over the last several years, something we attribute to the ongoing struggle to communicate the real costs of benefits programs. For instance, 28 percent of workers overall believe that their employers spend less than US$1000 per employee annually on medical insurance; nearly half believe their company spends less than US$2000. However, the reality is that companies spend an average of US$3100 for single coverage and US$7300 for family coverage.

Companies need to do more to better communicate the costs of these benefits to their workers, and have employees view that as part of their total compensation.

HRM. Why do employees value paid vacations more than benefits that can protect them and their families?
BC. This was both surprising and alarming. The study showed that employees were concerned about having enough money to cover periods when they weren’t working, but 54 percent believed that, after medical insurance, paid vacation was the most important benefit. I think this can be directly attributed to our ‘immediate gratification’ culture, but the challenge for employers is to continually communicate the importance of the benefits so that we can all overcome the inertia we see with so many employees.

HRM. You mentioned that far too many employees are unprepared for retirement. Do you think future generations of employees run the risk of running out of money in retirement?
BC. No question. The burden of saving for retirement has been steadily shifting to the individual; for many workers today, 401(k) is the only significant program for long-term retirement savings plan – especially considering fewer employers are offering pensions plans. In fact, research by the Pension Benefit Guaranty Corporation suggests that the number of defined benefits plans has halved since 1977, and that an increasing number of employees have never worked for a company that even offers a pension plan. Our study shows that in spite of all those warnings, nearly half of young workers (aged 21-30) haven’t begun planning or saving for retirement – but the good news is that 25 percent of those same employees look towards their employer for financial services, retirement planning and other insurance advice, so there’s both hope and a real opportunity there. The key thing is to change the emphasis from talking about retirement savings, to talking about planning for income in retirement.

HRM. Is this typical? Where do employees turn for information before they make decisions that will impact their finances?
BC. That’s a really great question. For me, this is an area of great concern. Only 40 percent of full-time employees understand which benefits options best meet their needs; 27 percent of workers rely on friends and relatives for financial advice; and 46 percent don’t consult with anyone. It’s one of the most frightening statistics in the study. Half of all employees would like their employer to provide them with access to a financial planner to help them make decisions on, for example, how to invest their 401(k) money – and while we’re seeing a slight increase (from six percent to eight percent) in the number of people who view a financial plan as their most important employee benefit, the figure is still too low.

However, I think we’ll see this figure rise in the coming years, especially as the younger Baby Boomers and Gen-Xers see older Boomers retiring without adequate retirement savings.

HRM. With increases in longevity, do you think employers are taking the necessary steps to accommodate an aging workforce?
BC. I think we’re beginning to enter the age of awareness regarding the aging workforce issue, but haven’t yet moved into the action phase. One-third of all employers (and 51 percent of the largest companies) believe that the aging population will have a big impact on their organization; unfortunately, however, many of them have been so consumed with short-term priorities such as rising healthcare costs that they haven’t had time to do anything about it yet. Over the next few years, we’ll certainly begin to see employers implement new policies such as flexible work arrangements, ergonomic workstations, job-sharing and reengineered jobs in order to move into that action phase.

HRM. Are there solutions that can help employers attract and retain top talent?
BC. Attracting and retaining high-performing workforces will be a matter of offering a mix of traditional employer-paid benefits, supplemented by a range of voluntary benefits for which employees pay most or all of the costs. By offering this combination of traditional and voluntary benefits, employers are going to be able to enhance their companies’ benefits programs without really incurring additional expense or administrative burden, while at the same time meeting the needs of an increasingly diverse workforce.

Finally, I think employers should consult more with their brokers and plan providers about the range of new options available to them; these could include benefits plans combined with more education, or plans that are more flexible or convenient than the predecessor products out there. We’re also beginning to see more portable employee benefits, which workers can take with them and manage once they move on to a new job.