In today’s competitive war for talent, employers are using substantial benefits packages to give them an edge when recruiting and retaining talent, according a Society for Human Resource Management (SHRM) survey report.
The report, which surveyed 738 randomly selected HR professionals, showed that 95 percent rated healthcare as one of the three most important benefits to employees; 71 percent say retirement savings and planning are top-rated employee benefits and 50 percent say leave is an important benefit.
And while 19 percent of respondents in all industries say they had altered their benefits programs to aid in employee retention over the last 12 month, that number increases to 25 percent when focused exclusively on the IT industry, according to the report.
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“Healthcare, retirement and leave benefits are all highly valued by employees, so bolstering these benefits could go a long way in recruiting new employees and retaining existing ones. These benefits often are rated on par or of even greater importance than compensation,” says Evren Esen, director of data analytics, SHRM.
That could be because of the relative scarcity of raises; employees are looking at modest increases year-over-year, and might prefer a beefed-up benefits package instead, says Brian Kropp, HR practice leader at CEB.
“Many employees in the U.S. are expecting raises of 1 percent or 1.5 percent this year, which doesn’t make much of a difference in terms of performance or retention. So, companies are doing two things: first, rethinking compensation structures like doing away with annual raises, introducing spot bonuses or even allowing workers to make choices about how they’re compensated; whether through stock options or a bonus. Second, they are exploring different benefits packages. Many are increasing parental leave, for example, or adding more flexible work arrangements. The belief is that these benefits will have a bigger impact than small raises,” Kropp says.
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Benefits are an area in which employers make significant investments; often the value of a benefits package can add about 30 percent more value to an employee’s compensation, Esen says. But that’s something many workers don’t understand as well as they should, and it’s up to HR pros to help them understand the value of these offerings, she says.
“As the war for talent wages on, employers will need not only to ensure that they are strategically utilizing benefits to secure talent, but that employees understand the value of their benefits package,” Esen says. According to the research, just 14 percent of HR professionals indicated that employees are “very knowledgeable” about employer-sponsored benefits; about two-thirds (69 percent) said employees are “somewhat knowledgeable.” And just 27 percent of respondents indicated their focus was ensuring employees understood the value of their benefits package.
Healthcare is still one of the most common and popular offerings, but the rising cost of healthcare adds complexity for companies and for employees, says Esen. About three-quarters (74 percent) of companies have not considered providing subsidies to purchase health care insurance through a private exchange, according to the research. And 73 percent of organizations anticipated an increase in their company’s total health care costs between the 2015 and 2016 plan years; one-third anticipated an increase of over 10 percent.
“Even with the affordable care act and the options for companies to shift responsibility to the private exchange or other areas, we didn’t see a major push from companies to stop offering healthcare. These are really popular with employees, and it’s also a way for companies to say, ‘We care about our talent and we want to enhance your life and wellness and make sure you’re healthy,'” she says.
Companies also are offering comprehensive wellness plans to help lower healthcare costs and improve engagement, according to the research. About three-fourths (74 percent) of organizations that had wellness initiatives in place say they were “somewhat” or “very effective” in improving overall engagement of employees, and almost half (48 percent) of respondents say their wellness initiatives decreased health care costs. Respondents also say the initiatives decreased unplanned absences (42 percent) and increased productivity (30 percent).
Flexible work is another standard benefit; according to the survey, 56 percent of employers offer the option to use flexible work arrangements and in technology that number rises to 76 percent of organizations who offer flexible work arrangements.
“The benefit that actually delivers the highest return in terms of improving employee engagement is giving employees the gift of time. For today’s workforce, the most important thing is creating the most flexible working environment that you can in order to improve the work-life balance of employees. Focusing on this aspect will deliver a higher return than most other benefits offerings,” says Kropp.
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Where should organizations focus in 2017? It’s less about offering specific benefits over and above the classics — like healthcare, flexible work, retirement savings and planning and paid leave — and more about tailoring your benefits plan to meet the unique needs of your workforce, says Laura Kerekes, chief knowledge officer at ThinkHR.
“You don’t want it to become an arms race, but you do want to include interesting and voluntary benefits so that you are appealing to every aspect of your workforce. When you’re thinking about this, look at the demographics of your workforce. We are seeing all kinds of thing like critical care and long-term care insurance for Boomers, identity theft insurance, pet insurance and student loan repayment benefits for millennials — these make employees feel valued, and like the company cares about their overall well-being,” says Kerekes.
Another major area of focus should be around professional and career development, says SHRM’s Esen. When asked what’s most important in terms of benefits over the next three to five years, survey respondents say career development will be a critical part of any comprehensive benefits strategy going forward.
“Companies are telling us these development programs are going to be just as important as leave benefits and flexible work arrangements. Employers realize they have to upskill and train their workforce to keep them engaged and motivated, and employees value these programs, too,” she says.
When it comes to attracting and retaining talent, the available components of your benefits packages make a huge difference, says Kropp. It’s well worth your while to make sure you have a robust set of benefits that will support your most valuable asset — your people.