Surveys show workers greatly underestimate your cost of providing their benefits … and that there’s one “bennie” they won’t give up, whatever the cost to you or them.
Health insurance … life insurance … disability … vision care … dental … the list goes on. Did you ever wonder where the idea of having employers pay for all these benefits came from?
Surprisingly, it was from an effort to reduce total compensation.
Back in the 1950s and ’60s, companies found that constant pressure from workers for higher wages could be blunted by offering benefits instead. Health and other forms of insurance were cheap then, so organizations just piled them on.
Apparently, employees’ perceptions are that such benefits still are cheap. At least, that’s the surprising conclusion of a recent survey by the Charlton Consulting Group, a supplier of benefits communication programs. Done with research specialist Harris Interactive, the survey showed that workers estimate the cost of benefits pay to be 30 percent or less over and above pay. In fact, according to government statistics, the average cost of benefits is nearly half again that … 43 percent of pay.
“There continues to be a disconnect between what companies spend on benefits and how employees perceive that investment,” says David Janus, a principal at Charlton.
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To get the maximum value of benefits in recruitment and retention of the best employees, Janus explains, “employers need to clearly communicate the total compensation message in order to enhance their return on investment for the benefit dollars being spent.” His recommendation is using a personalized benefits statement, which his company, among others, supplies.
I’d rather cut my pay than …
While employees may underestimate the value of the total benefits package, another survey shows that there’s one benefit they’d be loathe to give up, even to the point of having to take a pay cut to keep it. That’s health insurance, says the National Business Group on Health (NBGH), as reported in Workforce Management.
NBGH recently conducted a survey of 1,619 workers at large companies, with these as some of the key results:
–75 percent said they would forgo a pay raise if it meant they had to buy health insurance on their own.
–60 percent would not trade a drop in health benefits for a better retirement plan.
–60 percent said they’ve had to pay more for their health plans over the last 3 years, but…
–70 percent felt that, even costing more, those plans did give them the healthcare access and services they needed.
–65 percent said they felt smokers should pay more for health coverage, but only 49 percent would favor increases for the obese.
Perhaps most telling about how much workers value their plans, 83 percent said that if employers had to reduce total comp costs, they’d rather have their pay or retirement plans cut than give up any of their health benefits.
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“Overall, no aspect of a job is more important to workers of large companies than having good benefits,” said NBGH President Helen Darling. “And our survey results clearly show that the benefit most important for most workers is the health plan.”
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I think employees are starting to have a better appreciation of the value of some of their benefits (even beyond health insurance).