A Social Marketing Approach to Promoting Employee Benefits

By Punam Anand Keller Mar 24, 2008

Most large employers are trying a variety of incentives to encourage workers to participate in corporate well-being (health and wealth) programs. There is no doubt employee participation in wellness programs reduces health care costs and improves productivity, and participation in retirement savings programs provides a sense of economic security and increased employee satisfaction. Overall, however, it must be said that these programs have been rather ineffective. For example, according to some figures, current employee participation rates in wellness programs typically are in the single digits. And the Retirement Confidence Survey (which covers a representative sample of U.S. workers) indicates that, excluding the value of any defined benefit plans and a primary home, 49 percent of all workers (and 68 percent of workers under age 35) had savings under $25,000. (A fuller look at savings data can be found in the paper I co-authored, New Ways to Make People Save: A Social Marketing Approach.)

HR's Role

At present, HR serves as the gatekeeper for employees to access to wellness and savings programs. Most other sources of influence are indirect and impersonal. Low employee participation rates are only marginally impacted by scientific evidence from the medical community on the importance of wellness. Similarly, media reports about the economy—in particular, the fragility of Social Security—have not moved employees to save adequately for their retirement. 

In the past, HR has not been held strictly accountable for employee participation in corporate well-being programs. Return on investment (ROI) on HR spending, however, is around the corner, as part of a wider trend toward more fiscal accountability in HR. For example, HR managers will have to prove that $1 million spent on a corporate nutrition program will result in an employee participation rate of x percent, an x percent decrease in blood pressure, an x percent increase in weight loss, an x percent decrease in absenteeism, an x percent increase in productivity and an x percent increase in ROI.

Based on weak past employee participation rates, several corporations are considering down-sizing the role of HR in the firm, and some are outsourcing their well-being initiatives. Yet this may present an opportunity for HR to rethink its mission and talent needs, with the aim of increasing understanding and use of these programs. 

It is left to HR to create, communicate and sustain value for employee wellness and wealth-creation programs. When such HR initiatives fail, it serves as a negative reflection on the employer.

Social Marketing

To this end, HR can benefit from adopting marketing principles to increase employee participation in corporate well-being programs. This involves applying the same processes corporations use to design products and services for customers. Essentially, it calls for understanding employee barriers to participation, and tailoring programs to overcome these barriers.

Social marketing techniques are designed to motivate and enable people to follow recommendations. Some techniques are effective for all demographic types. For example, the use of stories or pictures instead of population statistics can better motivate people to take steps to prevent skin cancer. People are more quickly convinced that they are vulnerable to skin cancer when they “hear” a true-life story in the words of someone who never thought they would be in trouble and see pictures of their skin. In contrast, people are unlikely to start wearing sunscreen when they are only told that x percent of the population got skin cancer. 

However, sometimes one size does not fit all. Different communication strategies may be necessary to motivate different demographics. For example, my health research indicates that women are more likely to take risks when they are sad, whereas men tend to discount sadness, typically by engaging in a physical activity. This leads to different communication messages to persuade men and women. 

A Case Study

Because there is a strong parallel between health and retirement behavior (e.g., the importance of deferred gratification), we can apply the same marketing tactics in promoting employee wellness to improving employee savings through 401(k) plans for businesses, 403(b) plans for educational institutions or other savings vehicles.

As an example, with a grant from the National Endowment for Financial Education and a stellar HR group at Dartmouth College headed by Traci Nordberg, economist Annamaria Lusardi and I embarked on a new retirement saving project using Dartmouth employees. Our findings highlight the importance of managing two stages: 1) providing motivation to plan for the future, and 2) providing tools to implement these plans.

Focus Group Questions

  1. What would you like to do after you retire?
  2. Do you think you should plan for the future (in general) or accept things as they happen?
  3. What kind of things should you plan for? Why?
  4. What kind of things are difficult to plan for? Why?
  5. Do you think you should plan for retirement saving or accept things as they happen?
  6. What obstacles prevent you from planning for retirement?
  7. What do you do if you don’t know how to plan for retirement?
  8. Having a plan does not mean one sticks to it. What type of things make you stick to the plan or not?
  9. Where do you get information to help you with retirement saving planning?
  10. Does knowledge about investing play a role in your retirement planning decision?
  11. How much control over retirement saving do you feel you have?
  12. When you think about your retirement savings, how do you feel?
  13. Do you think your savings will determine when you retire?
  14. Does anyone have a story about someone who did a good job in planning for their retirement? Or a story about a bad job?
  15. If you were interested in designing communications to help people to save for retirement, who else would you speak to?
  16. Are there any questions we should have asked but didn't?otivation to Plan for the Future

Saving barriers. Our focus group and survey results indicated that although there are some similarities across gender (e.g., the wish to be able to provide for one's family, and to avoid being dependent on one's children in retirement) men and women have different reasons for not saving for the future.

  • Men typically believe they will need less when they retire compared to women. They do not think they will have to retire for health reasons.
  • Men also are more likely to believe their parents did not save and they did OK, so it's possible to retire without planning.
  • Women are more likely to believe that all their savings should go into a house; that their debt is too expensive; or that family expenses prevent them from saving.

Emotions. Another key finding is that, unlike men, women typically expressed two main worries:

  • They'll have to work longer before retiring to retain their lifestyle and pay for medical expenses.
  • They could lose their home and become dependent on family.

Interestingly, the first concern is associated with more savings, while the second is associated with lower savings. As the second worry is more influential, we designed messages for women that emphasized the negative consequences of not saving. (The power of such "loss framing" is also consistent with effective health messages.)

Retirement plan features. Men and women also tend to react differently to the features of retirement saving plans, especially the terms of the contract (e.g., saving withdrawal, minimum deposit) and guidance (e.g., how to invest or asset allocation).

Men’s contributions to savings plans were typically not influenced by these two features. In sharp contrast, women’s contributions were positively associated with contract terms and negatively associated with guidance.

We found that even though women are bigger savers than men:

  • Women are less likely to contribute when they do not have guidance on how to invest. And they appreciate structure (same amount/same time), flexibility (to withdraw) and ease of implementation (scheduled payments).
  • Women who rely on professional advice were more likely to contribute to their savings plans, while those who rely on relatives as sources of saving and investment decisions are less likely to contribute to a retirement plan.

The implications are that female employees will benefit more from retirement seminars if they are encouraged to attend—for instance, by designing the seminar exclusively to serve women’s needs. This finding is consistent with the stories we heard in our focus groups on the influence of family and parent history on retirement saving patterns.

These findings were used to develop four short motivational videos on the importance of planning for retirement. Based on our findings, we asked two women with varying income levels to discuss their thoughts about retirement, how they save for retirement, and why they think it’s important to plan for retirement.

The videos are now shown by HR at Dartmouth during employee orientation. In addition, we are putting them online at the Dartmouth HR web site.

Keep It Simple

The next step to enhance employee participation was to provide them with the tools to implement their well-being goals. Often, we motivate people by telling them why something is important, but then assume they will know how to do it.

We developed a simple seven-step planning tool to help employees actually open a voluntary retirement account (see box, below). For example, we asked them to set aside a specific amount of time in their schedule and listed the steps they need to take to complete the election.

We have seen a huge jump in the number of employee contributions—from 7 percent to over 21 percent of new employees. And this is a voluntary retirement saving program with no matching contribution from employers!

Seven-Step Planning Tool

My Retirement Savings Account

Most people plan on filling out their supplemental retirement form, but feel they don’t have the time or information right now. We have outlined seven simple steps to help you complete the application. It will takebetween 15 and 30 minutes. It will take less time for you to start to insure your future than it takes you to unload your dishwasher.

We have outlined seven simple steps to help you complete the application:

  1. Select a 30-minute time slot right now to complete the online contribution to your Supplemental Retirement Account (SRA) during the next week. Write down the reserved time slot in your date book or monthly planner.
  2. Three minutes.Check to see if you have the following materials: a) worksheet in your benefits packet _√_, and b) the name and Social Security number of a beneficiary _√_.
  3. Select the amount you want to invest for 2008 (minimum: $16/month, maximum: $1,666.67/month), even if you don’t know your take-home pay in your first month. The minimum investment is low (price of one dinner out per month) and within the reach of most employees. If you want, you can change this amount at a later date. This voluntary contribution is tax-deferred; you will not pay taxes on it until you withdraw the funds.
  4. Five minutes.Select a carrier. You have three options: TIAA-CREF, Fidelity and Calvert. All three offer a varietyof funds (stocks, bonds, short-term investments); if you are interested you can get more information on their websites. FYI, if you do not select a carrier, the employer will invest the non-voluntary portion of your funds in a Fidelity Freedom Fund, a fund that changes asset allocation automatically as people age.
  5. Five minutes. Now you are ready to complete your worksheet. Select an uncluttered place with few distractions like the dining table at home or your desk at work. Complete the worksheet even though you may be unsure of some options. You can change the options in the future.
  6. Take your completed worksheet to a computer that is availablefor 20 minutes. If you like, you can use the one in the Human Resources office (address: XXX).
  7. 15-20 minutes.Log on to Flex Online and complete your online SRA registration within the 20 assigned minutes. Be sure to click on the investment company (TIAA-CREF, Fidelity or Calvert) to complete the application. You need to set up your account—otherwise your savings will not reach the carrier.

Don’t give up! Contact the Benefits Office (tel: XXX) if for any reason you could not complete the online application.

Punam Anand Keller is the Charles Henry Jones Third Century Professor of Management, Tuck School of Business at Dartmouth. In additional to her research and teaching, she has won awards for designing effective health-related communications (National Cancer Institute and Marketing Science Institute) and for designing effective retirement savings communications (National Endowment for Financial Education). She is president-elect of the Association for Consumer Research, and serves on the editorial boards of the Journal of Consumer Psychology, Journal of Consumer Research and Journal of Marketing Research.


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