What Workers Want: Benefits Trends
by Kris FellIllustrations by Leslie Cober-Gentry
Today's tight job market puts the employee in the driver's seat as never before. More and more, the demographics of the work force mirror the demographics of society at large, and employers are going all out to meet the needs of this increasingly diverse pool of workers. Smart companies need to figure out creative ways to appeal to the employee who isn't the average Joe.
According to the New York Times, "Government data confirm that employers' costs to attract and retain employees at all levels rose in the year ended June 30 at the greatest rate since 1993." But even as employers are paying more to attract and retain, employees are jumping ship at record rates. In 1997, employers in all regions of the United States faced the highest attrition levels of the decade, according to a survey conducted by the Bureau of National Affairs Inc., a publisher of information services on business and economics.
"You can't always just throw money at the problem; you have to look at it from a variety of perspectives," explains Rick Wald, a specialist on flexible benefits and work-life consulting at William M. Mercer Inc., an international human-resources consulting firm. "We conducted several employee-attitude surveys, and found that employees in their first year and employees age 55 and older are often the happiest. It's the employees with two to 10 years of service who feel ignored by most organizations. Companies already have a heavy emphasis on the recruitment process, and people with longer service start to recognize the value of longer-term retirement plans and other benefit plans--vacation, for example--that reward longer-service employees. It's the 80 percent in the middle--that's where most of the turnover tends to occur."
So what are savvy employers doing to ensure that employees stay on board? The short answer is: taking a long, hard look at the whole package--compensation, corporate culture, and benefits.
Pay remains employees' primary concern. People need to know that their compensation, including bonus programs, is in line with the market price for comparable jobs. Increasingly, too, companies--especially in hot industries like information technology (IT)--are sweetening the pot with the instant gratification of sign-on bonuses and the romantic potential of stock options. George Model, who specializes in health and welfare at Towers Perrin, a global management-consulting company, reports that one of their recent surveys found that almost two-thirds of the firms interviewed offer sign-on bonuses to new IT workers.
"Corporate culture," the second part of the package, may seem too intangible for heavy-duty scrutiny, but experts agree employees are happiest when they feel that the business their company is engaged in is constructive; that their jobs are valued by the firm; that they are given the tools they need to complete their tasks; and that they are able to communicate well within the company. As Rick Wald reports: "We conducted a survey this past spring of employee benefits preferences. The top three benefits cited were pretty much what we expected: 401(k) scored highest, followed by medical and pension, which flipped with age, younger employees putting medical ahead of pension, and older employees putting pension ahead of medical. The fourth benefit was a surprise to us--'a clear sense of organizational purpose.' When we did some focus groups and peeled this back, we found that people really need to know, 'Who is this firm I'm working for, and what's my role in helping it achieve its mission?' And they want firms to walk the talk."
Given some difficulty in quickly articulating and altering corporate culture, companies are really focusing their efforts toward that third, murky, part of the equation--benefits--to cope with the immediate challenge of hiring and retaining employees. And with good reason. According to the Towers Perrin Monitor, a newsletter to employer-clients, "Benefit costs in the aggregate represent 30 percent to 45 percent of total payroll costs for the majority of companies." So companies are taking a good hard look at their human-resources departments, and often rethinking strategy. In a survey of 239 human-resources executives in global companies, sponsored by William M. Mercer's British affiliate, an astounding 64 percent indicated that their companies are engaged in "the re-creation or reinvention of the human resource function."
At the same time, however, employers are less willing to pay to keep their work force healthy. On the one hand, Amandio Correia, director of corporate services at Harvard Management Company, allows that HMC is proudly of the old school: "We want our employees to focus on their jobs and not worry about their benefits, so we pay 100 percent of the health-insurance cost for both single and family plans. And we offer Blue Cross/Blue Shield's Master Health Plus as one of the options, which is the Cadillac of health insurance plans." But as medical costs have soared in the last 10 years, fewer companies are willing to pony up the total cost of health insurance. As a result, according to a study sponsored by the health-education foundation Project HOPE, millions of Americans are rejecting health insurance available through their jobs or the jobs of family members, mostly because they do not feel they can afford their share of premiums. The majority of those rejecting coverage, 4.6 million, choose to remain uninsured.
Meanwhile, because employees are switching jobs more frequently, portable, employee-managed, tax-deferred savings plans like 401(k)s and 403(b)s are becoming the norm, rapidly outpacing old-style "paternalistic" retirement schemes. According to a recent Merrill Lynch survey, one-fourth of all women and 36 percent of men now put a part of each paycheck into retirement savings. Good employers match employees' 401(k) contributions. Hewlett-Packard, for instance, offers employees a dollar-for-dollar match on the first 3 percent of pay that is contributed, and 50 cents per dollar on the next 2 percent.
"The typical employee used to feel that, from cradle to grave, I'm going to work for this company and have them do what's best for me," George Model of Towers Perrin explains. "That way of thinking is now changing, as people are more aggressively managing their careers. There is an increasing focus on the 'now' kinds of benefits, like training and development, rather than the future benefits which really dovetail with longer-career employees."
And adequate explanation of benefits is often an issue. Maureen Ratigan, a principal in retirement practice at Towers Perrin's Boston office, notes, "It's really interesting that oftentimes a lot of a company's benefits money is put toward the retirement program, and the employee isn't even aware that he has a retirement program. Or, if he is, he has very little sense of the value of the program." Smart companies provide monthly benefits statements and conduct meetings to explain changes. Larger companies are finding telephone and networked "intranet" solutions helpful to communicate benefits to employees.
Companies that rely on gimmicky benefits--dry cleaning services, massages, discounted tickets to theater and sporting events, use of the company travel agent to book personal vacations--are providing merely fleeting happiness. "Work/life" benefits--telecommuting, flexible and nonstandard work-time arrangements, employer support for child care and elder care, and domestic partner coverage--appeal directly to disenfranchised employees of varied backgrounds, ages, and family composition. Control over your time is crucial to anyone attempting to build a life outside of work, which makes these types of benefits so attractive.
Rick Wald reports that his firm has identified a number of items that employees consider great benefits that employers often consider work policies--job sharing, for example. "We had employees in focus groups tell us 'I'd love to be able to work every other week or three days this week and share my job, share the pay, with somebody else.' We'd have the employer tell us, 'Yeah, we do some of that, but that's not really a benefit, that's a work policy.' Well, when you talk to the individuals who share those jobs, frankly they're willing to do them for less money just to have that flexibility. So this whole notion of flexibility at the worksite is starting to become a much bigger issue for employers. And those who are on Fortune's or Working Mother's or Business Week's top 50 companies to work for are the ones who are doing some of these things. Ironically, a lot of the things don't cost the employer anything to do."
Often, working fewer hours is not an affordable option for single parents and many working couples; however, varying standard work times can make it easier to juggle job and personal concerns with less stress and more productivity. Wherever possible, good employers offer work-at-home plans, flexible starting and quitting times, compressed work weeks, and more paid leaves. You're more likely to partake of one of these customized work arrangements (CWAs) in a large company. Hewitt Associates--a worldwide consulting firm specializing in human resources--surveyed 1,020 mostly large U.S. employers in 1997 and found that 69 percent offered flexible time. But they also found that even when paid leaves for worthy personal situations--like adoption, paternity, or elder care--are benefits options, employees often do not use them, for fear that they will be perceived as less productive.
Companies providing domestic partner benefits--which usually extend health, life insurance, and/or disability coverage to a non-spouse live-in partner--are still the exception to the rule. George Model, from Towers Perrin, sees reasons for companies to take another look: "What we've found is that those are actually pretty low-cost benefits, because the partner is often young, and frequently there are no children involved. And typically, the election rate isn't that high, because if you have a couple living together, each partner may already have benefits in his or her own right, and the tax treatment for domestic benefits isn't that favorable."
Rick Wald offers this blanket advice: "The message that we're giving employers is that a traditional benefit plan reaches 70 percent of your employees, and you need to be aware that there are clusters of employees with different needs and issues. You need to identify who they are and what's important to them, and you need to help them."
It feels like work, but it's worth it to take a long, hard look at your benefits plan. Keep in mind your age, your health-care needs and those of your family, your financial situation and retirement goals, and immediate quality-of-life concerns. Also, be honest with yourself--how long do you intend to stay with your company?
Evaluating Your Health Care
Create a table outlining costs for each of the following, for each plan you're considering: annual deductible, monthly co-payments, doctor visits, prescriptions, hospital visits.
Also note the maximum spending limits for medical procedures, and the annual and lifetime limits the plan will pay.
Decide which of the following options are important to you and your family. Does your plan adequately cover preventive care, vision care, dental care, psychotherapy, pregnancy expenses, coverage while out of town on business or vacation, catastrophic illnesses and injuries?
Assess the plan's ease of use. Can you see your regular doctors? How quickly can you get an appointment? Do you need to receive advance permission before receiving care? How quickly can you get referred to a specialist? What is the procedure for arranging laboratory tests and/or hospitalization? Is filing claims easy and quick? Can you appeal coverage decisions? If you leave your company, how portable is your plan?
Evaluating Your Retirement Benefits
Ask yourself the following: When do contributions begin toward my retirement plan? How much does my employer contribute each year? How much can I contribute each year? When do I become fully vested? Is my plan indexed for inflation? Can I borrow against my retirement fund? Is my retirement fund invested? Are the investments high- or low-risk? Can I choose the investments?
How often can I change my investment preferences? Is information about my plan's valuation available by telephone or Internet? At what age can I claim full retirement benefits? Partial or early retirement benefits? Can I receive my pension in a lump sum, or in gradual payments? If I leave, is my retirement plan portable?
Those Other Benefits
Whether you're expecting to take a new job or feeling the need to evaluate a plan you've had for years, don't forget to take into account all of your perks. In addition to salary advances and bonuses, depending on your situation, you'll also want to assess the real worth to you of the following: disability, life insurance, child/elder care, flexible working schedule, leaves of absence, profit sharing, stock purchase, credit union, severance, training and development, travel or cultural activities discounts, health and fitness programs, overtime, counseling, domestic-partner benefits, scholarships, transportation subsidies or allowances, personal use of frequent flyer miles, relocation allowance, housing allowance, and any others offered to you.
Health care financing administration (HCFA) is the federal agency that administers the Medicare, Medicaid, and Child Health Insurance Programs. Check out their website at "www.hcfa.gov".
Involved in eldercare? The Guide To Long-term Care Alternatives in Massachusetts 1998-1999 is a 230-page book published by the Women's Educational and Industrial Union and the Massachusetts Extended Care Federation covering home- and community-based services; legal, financial, and supportive housing help; services for people with special needs; and national resources. It details options, payment schemes, sources of assistance, and referrals. It's $40, including shipping. Call (617) 536-5651, Christine Kavanah, extension 140.
The National Partnership for Women and Families has undertaken a family-leave initiative to expand coverage of the federal Family and Medical Leave Act (FMLA) to more working people who need time off to care for newborns, newly adopted children, and seriously ill family members, or to deal with their own illness and recovery, without losing their jobs or health insurance. The Partnership is working to develop insurance and other ways of making FMLA benefits affordable. A three-page summary of the partnership's initiative and its Guide to the FMLA are free. Write National Partnership for Women and Families, 1875 Connecticut Ave. NW, Suite 710, Washington D.C. 20009, or phone (202) 986-2600.
Benefits Link is a free, nationwide Internet link to information and services for employers sponsoring employee benefit plans, companies providing products and services for plans, and participating employees. Visit their website, "www.benefitslink.com".
If you're interested in finding out how your benefits compare globally, check out William M. Mercer Company's Twenty-first International Benefit Guidelines at "www.mercer.com", which outlines current economic, social security, and benefit practices in 60 countries.
If you feel that your company has chosen a 401(k) plan that charges you excessive fees either for setup, record-keeping, or trustee costs, you may have legal recourse. To assess your 401(k) fees and expenses, order A Look at 401(k) Plan Fees and A Study of 401(k) Fees and Expenses from the U.S. Department of Labor's website, "www.dol.gov". The site is a wealth of information on laws and regulations, statistics and data, and programs and services. And HR Investment Consultants in Baltimore has guides to help you to search for a best-fit 401(k) and determine exactly how your plan costs compare to the rest of the industry. Visit their website, "www.401ksearch.com".
If you are a low- or middle-income older person having problems with your pension plan, contact The Pension Project, a confidential, no-fee, counseling and assistance service of the Gerontology Institute at the University of Massachusetts-Boston, (617) 287-7300.
The National Senior Citizens Law Center also provides research, strategic advice, and litigation assistance in connection with retirees' claims for benefits from private pension plans, retiree health benefits, and COBRA health-care continuation benefits. For $50, they offer Employer Sponsored Pension and Health Benefits, a 52-page guide to ensuring that clients receive all the benefits to which they are entitled through their employer-sponsored plans. Visit "www.nsclc.org".
To find out if your HMO is accredited by the National Committee for Quality Assurance, call NCQA at (888) 275-7585 or visit its website, "www.ncqa.org".
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