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Tight Salary Budgets? Benefits Can Be a Major Retention Tool
 

By Joseph B. McGhee, PHR  7/8/2011
 

One strategy to attract and retain employees when salary budgets are tight is to offer an array of benefits that are "above-market"— that is, viewed by employees as superior to what direct competitors are providing.

As reported by SHRM Online in May 2011, a Buck Consultants survey revealed that salary increase budgets will be, on average, just 3 percent for 2011. This is an improvement over the rampant salary freezes implemented during the depths of the recession, but still a full percentage point lower than the historical average. Therefore, it's quite probable that a competitor may not be able to lure your best employees away by base salary and promise of a bonus alone.

In this environment, savvy job seekers will dust off their current benefits overview and compare insurance carriers, payroll contributions and even plan design down to deductibles and co-pays. Having a pulse on what competitors are doing and ensuring that your benefits mix is superior can help make employees with a wandering eye take a fresh look at your company and realize how good their benefits package really is.

Big vs. Small Carriers

Look closely at plan design, not just the logo printed on your health insurance cards. While a big-name insurer may be attractive to prospective hires looking at several companies’ benefit offerings simultaneously, you'll want your employees to be satisfied users of the benefit six and 12 months down the line. A smaller carrier or third-party administrator may offer more personalized service and customer support to employees and to HR. All else being equal (i.e., claims and administrative cost) look at the labor market you're pulling from and competing with when selecting a benefit carrier.

Integrate with the Company Culture

Some companies put together a benefits communication plan only at open enrollment, or perhaps when it's flu shot season. These companies are wasting opportunities to highlight to their employees just what a tremendous investment they are making on their employees' behalf. After all, for the average worker, noncash compensation makes up about 38 percent of an employee's total compensation; as reported in the SHRM 2011 Employee Benefits survey report.

Benefits marketing and communication should be natural and woven into the fabric of the employee's everyday experience at the company. Benefits professionals at larger companies are becoming experts at marketing, with their own unique branding aimed at their internal customers. But you don't have to wait until you've developed a benefits campaign with mass appeal before revamping communication efforts. Start by using some of the "canned" resources already created by your benefit vendors or broker. These can be topic-specific communications that are posted and refreshed periodically on your company intranet. Be sure to direct employees to their login with the carrier, and take advantage of any cost-comparison tools available.

Above all, make thorough, interactive educational tools available to participants so they can make the best possible benefit choices for themselves and their families. This will create a more satisfied consumer and stave off a lot of "buyer's remorse" once they start incurring out-of-pocket expenses.

Appreciation Is the Key

Whenever possible, subtly refer to the full cost of core benefits vs. what the employee contributes. The vast majority of employees, hopefully, will seek out medical, dental and vision coverage either through their organization or a family member's. Those benefits are the foundation of a solid benefits program, but what really gets an employee's attention are the unique benefits that help fill some other niche in their lives: Pet insurance, prepaid legal, even voluntary life are easy to administer and usually cost-neutral to the employer.

In addition, allow employees to be satisfied customers of your business by offering them discounts, or even products and services at cost. Besides, what looks better to potential customers than a legion of employees who are customers and clients of the business? This point should be raised when presenting an employee discount program to company leaders.

Market company benefits to the employees so they get a sense that they are valued as individuals. What you don't want is to offer a supposedly "great" (which often means "expensive") benefit program, only to have employees perceive that the company is doing it out of obligation. It doesn't matter whether they sense the obligation is due to government mandates at the extreme end, or the need to compete with peer companies, or to keep up with the employees' own expectations. The messages must convey a genuine concern and commitment to employees and their families.

A “B-rated” benefits plan with the right motive could very well take a company farther than an “A+” plan that employees perceive to be there for obligatory motives. You would hate for participants to realize what a great benefit program you offer only after they've moved on to another employer.

Joseph B. McGhee, PHR, is a benefits manager in Richmond, Va., and has worked in HR for over 11 years.

Related Articles:

Employee Benefits 2011: Fewer Guarantees for Employees, SHRM Online Benefits Discipline, June 2011

For 2011, Median Pay Increase Budgets Are 3%, SHRM Online Compensation Discipline, May 2011

Employees Value Benefits, Don’t Understand Costs, SHRM Online Compensation Discipline, April 2011

Benefits Statements Can Spotlight Hidden Value, SHRM Online Compensation Discipline, April 2011

Benefits Can Boost Employee Loyalty, SHRM Online Compensation Discipline, April 2011

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