The U.S. unemployment rate is low, which means companies everywhere are in a battle to recruit and hire talented employees. In an economy where workers have the upper hand, the first response of employers is often to raise salaries and wages. However, research shows that a competitive benefits plan can play an increasingly vital role in attracting and retaining skilled workers.
What is a competitive benefits plan?
A competitive benefits plan can offer a wide range of benefits. According to employees, the most desired benefits are:
- Retirement savings and planning
- Paid time off
- Paid parental leave
- Flexible work schedule
- Professional and career development
Of these, healthcare is consistently rated as the most important. For example, a recent survey reported that more than half (56%) of U.S. adults participating in employer-sponsored health benefits cited satisfaction with their health coverage as a key factor when deciding to stay at their current job.
Benefits coverage, cost, and choice
For employees to consider health benefits “competitive,” their plans must do more than provide basic benefits. Surprisingly, cost is not the primary consideration for many employees. According to the Society of Human Resources Management (SHRM), the top three drivers of employee satisfaction with their healthcare benefits are (in order) coverage, cost and choice. Today’s workers value comprehensive coverage above all else, followed by affordable coverage and choice of providers. The ability to save money through health and wellness programs, as well as Health Savings Accounts (HSAs) and other tax-advantaged financial tools, are also becoming more important to healthcare consumers.
Although healthcare benefits are the top priority for employees, companies should not overlook retirement planning, paid time off and other types of benefits. When evaluating the value of a benefits plan, today’s employees want a well-rounded benefits plan that meets their needs.
The advantages of a competitive benefits plan
A top-tier benefits plan is essential for becoming an employer of choice. It gives companies an advantage when recruiting top talent, and it motivates skilled employees to stay with the employer longer. Plus, reducing turnover lowers the time and cost of processing departing employees and hiring new ones. It also:
- Improves morale and employee engagement
- Boosts productivity
- Enables more consistent delivery of your product or service
- Provides a better experience for your customers
- Leads to a healthier bottom line
Benefit plans offer a powerful tool for keeping employees engaged with your company. However, they only work to the extent that they meet the needs of your workforce. Therein lies the challenge for most employers. Because people are working longer than ever, today’s employment landscape contains five different generations of workers:
- Traditionalists – born before 1946
- Baby boomers – born between 1946 and 1964
- Gen X – born between 1965 and 1980
- Gen Y (Millennials) – born between 1981 and 1995
- Gen Z – Born after 1996
When it comes to employee benefits, each generation has a different set of values and priorities. For example, traditionalists and Baby Boomers value salary level, health insurance and a retirement plan above all else. Gen Xers balance the desire for salary levels and 401K plans with the desire for job security, career advancement opportunities and work-life balance. Millennials, who grew up in a world of rapid change, seek paid time off, the ability to work remotely, control over their schedules, and a high level of flexibility.
According to a recent Met Life Report, even the need for health insurance varies by generation. Ninety percent of Baby Boomers between the ages of 51 and 64 make healthcare their top priority. Once they reach age 65 and become eligible for Medicare, the percentage declines. Millennials consider health insurance less desirable than other generations, but 70% still want the option to sign up for it.
Millennials also tend to choose the lowest-cost options, with nearly half opting for high-deductible health plans (HDHPs). Workers over age 50 tend to use tax-advantaged tools such as HSAs and Flexible Spending Accounts (FSAs) more than their younger colleagues. Baby Boomers also place a higher priority on dental and vision insurance than younger generations, while wanting the flexibility to drop maternity services and prenatal care from their health insurance package.
Getting the most bang for your benefits buck
If there’s one thing all five generations agree on, it’s the need for customized benefit plans that allow workers to select the benefits they need and opt out of the ones they don’t. The more diverse your workforce, the more research you will need to conduct to make sure the benefits you offer are aligned with the varying needs of your employees. This research should include:
- Conducting benefits focus groups. Regularly ask your employees for feedback on a variety of benefits topics from healthcare to retirement, paid leave and wellness programs.
- Using employee surveys. Have employees rank their satisfaction with your current benefits plan and what could make it better. For example, what would they like to have that isn’t available and what benefits could be dropped from the plan.
- Tracking plan usage. Which plan features are most widely used? Which have the smallest enrollments?
- Constantly communicating the value of your benefits plan. Educate employees so they understand the benefits and how to use them. Assist them in making the right benefits choices for their needs. (Many health plan providers will offer advisors to work with your employees.)
- Making plan usage as simple as possible. Have efficient, easy-to-use processes for enrolling in programs, filing claims and receiving payment. Make it easy for employees to get problems resolved in a timely manner. If possible, work with a third party administrator who specializes in this field and provides first-class service.
Providing a flexible, competitive benefits plan sends a powerful message to employees that you care about their quality of life as well as their contributions to your company. It makes for a more loyal, engaged workforce and reduces employee turnover. Most important from a recruiting standpoint, it positions you as a leader in your industry and the kind of business where people want to work.