Employers Saying More About Benefits, Study Finds

By Stephen Miller Feb 26, 2008
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More U.S. companies put in place internal communication programs in 2007, especially those that aim to increase employee participation in benefits programs, according to research by consulting firm Watson Wyatt.

The consultancy's 2007/2008 Communication ROI Study, with responses from 264 large companies representing more than 6.2 million employees around the world, found that:

  • 53 percent of employers used printed materials, special mailings and employee meetings to increase enrollment in benefits programs in 2007.
  • This figure has more than doubled over the past four years, from 25 percent in 2003.

“As more companies take steps to rein in health care costs and update their benefit offerings, the need for better communication is becoming clear,” said Kathryn Yates, global director of communication consulting for Watson Wyatt. “Companies expect employees to assume more responsibility for their financial and personal health, so it’s important to provide them with the resources to make informed decisions.”

Steps Forward—and Some Back

Watson Wyatt found that employers are increasing their communication efforts in some areas, but lessening their focus in others. For example, the number of employers offering personalized total reward statements increased by 13 percentage points since 2003, but the share of companies offering educational material to ease the financial transition of workers nearing retirement has decreased by 11 percentage points.

Additionally, the number of employers that regularly measure employee behavior change to verify that communication initiatives are working has increased by 24 percentage points. Today, more than half (57 percent) of surveyed companies are using corporate communication scorecards to measure effectiveness in areas such as employee retention and manager performance.

More than half use corporate communication scorecards
to measure effectiveness in areas such as
employee retention and manager performance.


However, the portion that allows employee input on decisions that affect the company has decreased by 5 percentage points.

Top Five Positive Trends in Communication


Organizations Doing This in 2003

Organizations Doing This in 2007

Take action to increase employee enrollment in benefits programs.



Regularly measure employee behavioral change



Provide employees with online access to training/development tools.



Collect information on the perceived value of employee benefit programs.



Involve internal communications in organizational change.



Source: Watson Wyatt


Top Five Negative Trends in Communication



Doing This in 2003


Doing This in 2007

Offer personalized education materials on income needs in retirement.



Implement a new communication initiative to support change.



Give employees the chance to provide input on how work gets done.



Provide a systematic orientation for new hires.



Explain the reason behind major decisions.



Source: Watson Wyatt

While companies don’t always explain the reasons behind management decisions, they do tie employee performance to the prosperity of the organization as a whole. The number of companies that communicate the connection between pay and business strategy has risen from 70 percent in 2003 to 80 percent in 2007, Watson Wyatt found.

“Good communication connects employee performance to the bottom line,” said Yates. “Companies that expect workers to perform at peak levels are explaining why they make certain management decisions. They gather employee input and feedback to build workers’ understanding—an exercise that has been shown to increase their productivity and improve financial results.”

Benefit Communications ROI

Effective employee communications is a leading indicator of financial performance, the study found. For example, in terms of employers' return on investment (ROI):

  • Companies with the most effective employee communication programs provided a 91 percent total return to shareholders from 2002 to 2006, compared with 62 percent for firms that communicated least effectively. Moreover, a significant improvement in communication effectiveness is associated with a 15.7 percent increase in market value.
  • Firms that communicate effectively are four times as likely to report high levels of employee engagement as firms that communicate less effectively.

Among other study findings of note:

  • The percentage of companies that are measuring employee behavioral change has increased almost 25 percent since 2003.
  • Participating companies in Asia-Pacific are better than companies elsewhere at being open with employees about matters that affect them.

Stephen Miller is manager of SHRM Online’s Compensation & Benefits Focus Area.

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