Past Two Decades Saw Big Shifts in Employee Benefits

A strategic benefits package is essential in the current talent marketplace

By Stephen Miller, CEBS Jun 20, 2016
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​Twenty years ago, people may have been dancing the Macarena but few were telecommuting. More employers have adopted a telecommuting benefit since 1996 than any other benefit offering, according to the Society for Human Resource Management’s (SHRM’s) 20th anniversary edition of its annual benefits report.

Released June 20 at the SHRM 2016 Annual Conference & Exposition in Washington, D.C., 2016 Employee Benefits shows that telecommuting benefits have seen a threefold increase since 1996, when just 20 percent of survey respondents worked at organizations that offered telecommuting. Today, 60 percent do.

“Flexible work arrangements should be considered a means of attracting and retaining workers,” said SHRM’s Tanya Mulvey, project lead for the 2016 report. “These benefits have proven to be highly valued among two sizable demographic groups: Millennials and 55-and-older employees.”

Millennials have shown a strong preference for having greater control over their own schedules, while workers 55 and older “often need flexibility in scheduling, whether to care for family members or to begin a phased retirement,” Mulvey said.

While telecommuting is becoming the new norm, job sharing—in which two or more employees divide the responsibilities and compensation for one full-time job—has seen a steep decline in popularity. Just 10 percent of respondents’ organizations now offer job sharing vs. 24 percent in 1996.

More employers now offer legal assistance services (25 percent, up from 13 percent two decades prior), but fewer are willing to pay temporary relocation benefits (falling from 39 percent to 24 percent), according to the report.

Health and Wellness Benefits

Preferred-provider organization plans (available at 84 percent of respondents’ workplaces) continue to be the most common type of health care coverage offered. The number of employers providing health savings accounts (HSAs) increased from 2012 and 2015, as did employer contributions to HSAs compared with 2012.

Several new benefits were added to the survey this year:

• Telemedicine services such as diagnosis, treatment or prescriptions provided by phone or video (offered at 23 percent of survey respondents’ workplaces).

• Smoking surcharge for health care plans (20 percent).

• High-deductible health plan not linked to an HSA or a health reimbursement arrangement (17 percent).

• Genetic testing coverage for diseases such as cancer (12 percent).

Compared with 20 years ago, many more organizations are providing wellness resources and information (72 percent this year, up from 54 percent), according to the report. Other common wellness benefits in 2016, provided by more than one-half of respondents’ organizations, include worksite wellness programs and onsite seasonal flu vaccinations. Twenty percent of respondents levy a smoking surcharge in their health care plans.

Still, wellness-related benefits such as onsite flu shots, 24-hour nurse hot lines, health coaching and insurance-premium discounts for weight loss all have declined over the past year, the study found. As employers begin to analyze return-on-investment and participation data, they “may be taking a step back,” Evren Esen, director of survey programs at SHRM, told the Wall Street Journal.

As the report itself states, “Although it may seem like organizations are decreasing wellness benefits overall, it is possible that they are being more strategic. Programs with low employee participation or those proving to be relatively ineffective may be dropped or replaced with other programs.”

Retirement Benefits

A traditional 401(k) or similar defined contribution retirement savings plan is the most common retirement benefit (offered by 90 percent of respondents’ organizations), and three-quarters of organizations provide an employer match for this plan.

Compared with 2012, there has been a large increase in the number of organizations offering a Roth 401(k) or similar plan—51 percent this year, up from 34 percent—and more organizations are permitting conversion of funds from a traditional 401(k) account into a Roth 401(k). Roth 401(k) plans first became available in 2006.

Fewer organizations are allowing employees to take loans from their defined contribution plans than did five years ago (44 percent this year, down from 66 percent). And while formal phased retirement programs are still being offered at only 5 percent of respondents’ workplaces, the same as in 2012, employers offering informal phased retirement programs rose from 5 percent to 11 percent during this period, the report found.

Financial Benefits

Compared with 20 years ago, far fewer organizations are offering credit union membership (falling 47 percentage points, from 70 percent to 23 percent). The report also showed notable decreases in the offering of employee stock purchase plans, parking subsidies, loans for emergency/disaster assistance and matching employee charitable contributions, among other things.

But the past five years have seen increases in monetary bonus benefits, including employee referral bonuses, spot/bonus awards, sign-on bonuses for executives and nonexecutives, and retention bonuses for nonexecutives.

Leave Benefits

The report found that a vast majority of organizations (97 percent) offer paid vacation leave or a paid-time-off plan, which combines vacation, sick and personal leave. In addition:

• Paid holidays are also offered by 97 percent of organizations, whereas fewer (81 percent) provide bereavement leave.

• Slightly more than one-quarter of organizations (26 percent) offer paid maternity leave other than what is covered by short-term disability or state law, and 21 percent offer paid paternity leave.

• Among those offering maternity and paternity leave, 63 percent reported that female employees typically had taken all of their available paid leave to care for a new child compared with 39 percent that said male employees had done the same.

“A strategic compensation and benefits package is essential in the current talent marketplace, with more than two-thirds of organizations reporting difficulty filling full-time positions,” Mulvey said. “Especially when organizations may not be able to match competitor salaries, using a variety of benefits strategies to supplement salary can help organizations attract the talent they need.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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