Employers Beef Up Benefits to Keep Talent

As unemployment rates fall, employers are enhancing employee benefits to recruit and retain top talent, even as they balance costs against the potential value to the organization, according to the Society for Human Resource Management's (SHRM's) 2018 Employee Benefits survey, the results of which were released at the SHRM 2018 Annual Conference & Exposition.

SHRM polled a random sample of its members during February and March for the annual report, released on June 17. Over 3,500 responses were received.

Overall, more than one-third of organizations (34 percent) increased benefits offerings in the last 12 months, the researchers found.

"With the unemployment rate a historical low and 14 states setting record lows for unemployment in the last 12 months, organizations seem to be leveraging their benefits to recruit and retain talent," said Trent Burner, vice president of research at SHRM. "Between 2017 and 2018, the prevalence of over 60 surveyed benefits increased, compared with just 20 between 2016 and 2017," he noted, signaling that "organizations are taking a closer look at their benefits programs to ensure they stay competitive."

HR Professionals' Biggest Benefit Challenges

Note: Multiple responses allowed.
Source: 2018 Employee Benefits (SHRM).

According to survey project leader Karen Wessels, SHRM senior research specialist, organizations that increased benefits expanded offerings in the following areas:

• Health-related benefits (up among 51 percent of respondents).
  

• Wellness (44 percent).
  

• Employee programs and services (39 percent).
  

• Professional and career development benefits (32 percent).
  

• Leave, family-friendly and flexible working benefits (each 28 percent).
  

The top reasons cited for increasing benefits were to retain employees (cited by 72 percent), to attract new talent (58 percent) and to respond to employee feedback (54 percent).

Just 5 percent of organizations decreased their overall benefits offerings in the last 12 months. "Most organizations that reduced benefits indicated that they did so, at least in part, to help manage costs," Wessels said.

(Click on graphics to view in a separate window.)

Health Care Benefits

Almost all surveyed organizations (98 percent) offered at least one health care plan to full-time employees in 2018, and over two-thirds (69 percent) of employers offered multiple plan choices.

Eighty-three percent of employers share the cost of health care with their full-time and other employees while 16 percent offer health care to full-time employees fully paid by the organization.

Less than 0.5 percent of employers opt to have full-time employee cover all of their health care costs but employers are more likely to require employees to pay all health care costs for spouses (18 percent), opposite- and same-sex domestic partners (23 percent and 24 percent), dependent children (18 percent) and nondependent children (29 percent).

Health care coverage for spouses and domestic partners, after rising sharply from 2014 to 2016, has leveled off.

Coverage Restrictions

Overall, approximately 20 percent of organizations have health coverage restrictions or other cost-saving measures in place for spouses and domestic partners, 6 percent apply restrictions to dependent children and 9 percent restrict coverage of nondependent children.

The most common restriction, imposed by 10 percent of organizations, is making spouses ineligible for health plan enrollment if they are covered by another organization, such as their own employer. Alternatively, 9 percent of employers apply a surcharge on spouses offered coverage by another entity.

Among other coverage restrictions, 18 percent of organizations charge a higher premium for smokers.

Consumer-Directed Health Care

The share of employers providing health savings accounts (HSAs) increased to 56 percent this year, up from 45 percent in 2014, although the rate of increase has leveled off. The share of organizations offering health reimbursement arrangements (HRAs) has held relatively steady at around 20 percent while flexible spending accounts (FSAs) declined to 63 percent from 68 percent.

Wellness Benefits

Of organizations that increased benefits offerings in the last 12 months, 44 percent increased their wellness benefits. Those offering a general wellness program rose to 62 percent from 59 percent in 2017. Substantial increases were seen in:

• Company-organized fitness competitions/challenges (38 percent, up from 28 percent last year).
  

• CPR/first aid training (54 percent, up from 47 percent).
  

• Standing desks (53 percent, up from 44 percent).
  

One sign that employers are targeting their benefit spending for maximum effectiveness: Since 2014, the share of organizations offering offsite fitness center memberships fell to 29 percent from 34 percent, while those that provide a subsidy/reimbursement for offsite fitness classes rose to 16 percent from 12 percent. Too often, people will join a gym but rarely go, employers found, while those who sign up for classes are likely to use them.

Health Screenings

Fewer organizations offered onsite health screening programs, falling to 30 percent this year from 47 percent in 2014, and fewer offered a health care premium discount for participating in a weight loss program (5 percent versus 9 percent in 2014), possibly due to unresolved compliance issues regarding health screenings with financial incentives and disability nondiscrimination rules.

[SHRM members-only toolkit: Designing and Managing Flexible Benefits (Cafeteria) Plans]

Parental Leave

The availability of paid parental leave increased significantly from 2016 (questions on this benefit were updated that year and aren't comparable with earlier survey responses).

Paid maternity leave, which includes coverage by family or parental leave policies but excludes leave covered by short-term disability or state law, rose to 35 percent of organizations, up from 30 percent in 2017 and 26 percent in 2016.

Paid time off also has become more generous for other kinds of parental leave, including:

• Paternity leave (29 percent, up from 24 percent last year).
  

• Adoption leave (28 percent, up from 23 percent).
  

• Foster child leave (21 percent, up from 15 percent).
  

• Surrogacy leave (12 percent, up from 8 percent).
  

"Although employees are protected by the federal Family and Medical Leave Act for 12 weeks during any 12-month period to care for a new child, paid parental leave may enable eligible employees to take full advantage of this job-protected leave," Wessels explained.

Retirement Savings and Advice

Traditional 401(k)s or similar defined contribution retirement savings plans were offered by 93 percent of respondents, up from 89 percent in 2014. In addition, compared to 2014:

• More organizations are offering a Roth 401(k) account option, rising to 59 percent from 41 percent. Participants contribute to Roth 401(k)s using after-tax dollars, and withdrawals during retirement are tax free, whereas contributions to traditional 401(k)s are made with pretax dolars and withdrawals are taxed as income.
  
  The benefits of tax-free compounding with tax-free withdrawal increase the longer money is invested, making Roth accounts attractive to younger employees.
  

• The decline of traditional defined benefit pension plans continued, with 20 percent of organizations offering a traditional pension open to all employees, down from 24 percent in 2017.
  

• Retirement plan investment advice offered one-on-one increased to 55 percent from 48 percent last year, up from 41 percent in 2014.
  

• Financial advice generally, addressing money matters such such as household budgeting and personal financial planning, was provided by 48 percent of organizations, up from 28 percent in 2014. Advice was offered online (35 percent), one-on-one (34 percent) and in group/classroom settings (29 percent).
  

• Informal phased retirement programs, which provide a reduced schedule and/or reduced responsibilities prior to full retirement, rose to 14 percent from 9 percent in 2014.
  

Student Loan Repayment

Company-provided student loan repayment was offered by 4 percent of organizations, a figure unchanged since 2016 (SHRM first began surveying members about the issue in 2015). Employers appear cautious about adding a new and potentially expensive financial benefit, even if it is highly valued by job candidates carrying student debt.

Communication Matters

How benefits are communicated to talent may be the difference in whether a program is successful in affecting recruitment and retention, has no effect or is even detrimental, SHRM's Burner said. "As the economic climate continues to improve, organizations must frequently assess and communicate their benefits to effectively leverage their programs to recruit and retain top talent," he noted.

Related SHRM Infographic:

Benefits 2018: What's Hot and What's Not

Related SHRM Article:

How Total Rewards Can Drive Performance Management Success, SHRM Online Benefits, May 2018