Benefits Communication and Education Grow in Importance
Categories - From Our Newsletter
Employees who receive quality benefits education are more likely to feel valued by their employer and have a positive perception of their company. They also say they’d tend to stay with their current employer, even if offered a position with similar pay and benefits elsewhere. This testament to the importance of benefits communications comes from a survey commissioned by insurer Unum and conducted by Harris Interactive, and shows the connection between how well employees understand their benefits and how engaged and motivated they are at work.
In addition to the content and presentation of the communications materials themselves, the survey indicates that giving employees enough time to review communications, as well as using a variety of media, are keys to communications’ effectiveness. Employees who had more than three weeks to review benefits education materials were far more likely to say that they had enough time to make informed decisions. And, using at least three different forms of media-such as meetings, printed materials and Web site tools-enhances communication effectiveness because it recognizes different learning styles and helps ensure that the messages sought to be conveyed will be heard by all employees.
These themes from the Unum survey are particularly significant today, because employee benefits communications have taken on increased importance, for a number of reasons-
Employees must make more choices for their benefits today than ever before. In previous generations, employers that offered employee benefits typically provided a health plan, a pension plan, and some life and disability insurance. As health care costs exploded in the 1980s and 1990s, and increasingly shifted to employees, employers introduced multiple health plan options requiring employee choice. Simultaneously, in most workplaces, the company retirement plan morphed from a defined benefit pension plan to a 401(k) plan, requiring employees to choose whether to participate, how much to contribute, and what funds to invest in. Supplemental life and disability options became more available to most employees, along with an array of other voluntary benefits choices (group legal, long-term care, group auto/homeowners, etc.).
Given the array of benefits choices employees now face, education and communication efforts have taken on huge significance, since decision-making that is informed is most likely to result in appropriate choices. While the benefits choices available today do address employees’ individual needs, they also generally pass on to employees more responsibility. This trend first surfaced in the shift from defined benefit pension plans to defined contribution 401(k) plans, in which employees bear the investment risk. More recently, employers’ increasing adoption of consumer-directed health plans takes a similar path. Employees enrolled in these plans shoulder more of the financial responsibility for their ongoing health care costs, in exchange for a lower plan premium. For both 401(k) plans and consumer-directed health plans, education and communications supply the information that is critical to exercising the increased level of responsibility employees bear.
Getting the best value for one’s money is always important, but it’s even more so in a difficult economy. When money is tight-like it has been both for companies and employees lately-we want to make sure we spend our dollars wisely…and information is key to making good and appropriate purchases. Surveys indicate that most people spend much more time on other consumer purchases than they do on employee benefits enrollment-which, for many employees, is among their most significant purchases in any given year. Benefits communications can help employees make good spending decisions about their employee benefits.
- Today’s benefits plans are more complicated than ever before. Consumer-directed health plans, for example, work dramatically differently than plans employees were covered under only a few years ago. These plans offer tax advantages to employees, but this too adds a layer of complexity for employees to understand. Again, effective communications can make a difference in enabling employees to get the greatest benefit from these plans.
Communications Are Most Important Factor in Generating Satisfaction with Benefits
Categories - From Our Newsletter, News
Effective communications can have as much impact on employees’ satisfaction with their benefits as the actual benefits offered or the amount of money a company puts into a benefits plan. This finding, from a study by the Prudential Insurance Company, illustrates one way for companies to contribute toward positive employee morale, even when economic factors necessitate benefits cutbacks or restructuring.
The study looked at a number of variables that affected employees’ perceived value of their benefits. The effectiveness of communications topped the list, followed by a company paying all or most of the cost of benefits and then by a company offering a range of benefits. According to the study,
how employees perceive the value of their benefits directly influences how important benefits are to employees when selecting a job or when deciding whether to stay with a current employer.
This is because effective communications help employees to not only understand, but also appreciate, the benefits they have or those that are available to them. Thus, the study validates the positive connection between employee benefits and an employer’s recruitment and retention efforts.
A separate survey from Watson Wyatt Worldwide dramatically shows the impact of benefits communications: Companies with above average benefits but ineffective communications had a 25% employee satisfaction level, while those with below average benefits but effective communications had a 76% employee satisfaction level. Stated another way, it can be better for a company to provide fewer benefits but explain them well, than to provide an expansive-and costly-package of benefits that employees don’t really understand.
Keep the following considerations in mind when assessing your benefits communications-
- Written communications should be in simple and understandable, yet engaging, language. Employees will respond best to communications that they can directly relate to, so use specific examples or modeling tools to help employees select benefits and understand how the benefits can work for them.
- Recognizing that different individuals learn in different ways, use various media at your disposal for your communications. Go beyond written communications to also include emails, meetings/seminars, announcements, posters that highlight images and graphics, interactive web tools, and video conferencing.
- Communicate throughout the year, not only during open enrollment. Use non-enrollment periods to highlight particular features of your benefit plans, perhaps focusing on one each month. This enables you to hone in on benefits or plan features that are particularly useful or unique, and that perhaps get overlooked during the frantic activity of annual enrollment. Such features might include wellness features in the company health plan, modeling tools available through the 401(k) plan, the advantages of pre-tax employee contributions, changing benefits during the year in response to a family status change, etc.
- Help employees understand how the company’s benefits offerings are particularly relevant to them. For example, if your company offers voluntary benefits, employees are likely to have broad choices that go well beyond the one-size-fits-all approach to employee benefits. Highlighting the convenience, access and cost-savings features of workplace voluntary benefits can help employees see how advantageous such offerings can be to them.
- Communicate the full value of your benefit’s program by providing regular benefit statements. Reminding employees of their total compensation is a great way improve your employees’ perception of existing benefit programs.
If the prospect of embarking on a benefits communications campaign seems daunting, give us a call. We can help you provide ideas and strategies along with actual communications materials to enrich your employees’ understanding of their benefits.
Don’t underestimate the value of communications and education as a way to strengthen your company’s benefits package. As the research above indicates, dollars spent on communication and education can be as valuable an investment as dollars spent on the benefits themselves.
Be sure to take a look at a few of our sample benefit communications pieces online or give us a call today.
Use Communications to Involve Employees in Health Plan Spending Control
Categories - From Our Newsletter, News
Implementing cost-sharing increases or cutting benefits in an effort to bring health plan costs under control can be unpleasant tasks for employers, with concerns about how the news will impact employee productivity and morale. The better employees understand the reasons such plan changes are necessary, however, the lesser the chance that the changes will have a negative impact.
Employee communication materials like total compensation statements, total reward or benefit statements are great tools to help explain and communicate changes to programs.
According to the 2009 UBA Employer Benefit Pers
- Make sure employees are aware of the reality of health care costs. Research and publicize to employees national health care cost data and cost trends. Be specific: for example, contrast the average cost of a hospital stay or doctor’s office visit today with that of five or 10 years ago. Do the same for the average cost of coverage under various types of health plans.
- Share specific cost data from your company’s health plans. Employees frequently think of the cost of the health plan only in terms of what they pay in premiums, and overlook the employer’s contribution. This narrow view hides the true cost of health care coverage, as well as what the employer pays toward the cost of coverage (which, ideally, employees should see as part of their total compensation package).
- Use concrete examples to illustrate how health plan spending can cut into the ability of the company to make outlays in other areas. For example, determine the approximate dollar amount increase in the company’s health plan contribution one year to the next, and compare it to some other company expense. Is the amount of the increase equal to an employee salary? Stated differently, has health plan spending growth prevented a needed hiring? Use this process to show how health plan cost increases can eliminate raises and bonuses, result in the cancellation of company events, delay the purchase of new equipment, and the like.
- Help employees see that when they use their health benefits astutely, they not only save themselves money, but also keep plan costs down as well. For example, when employees use preferred providers, they receive the highest plan benefit, and the plan pays the lower, negotiated preferred provider rate. If employees have begun to understand the point above-how health plan spending can impact salary increases, staffing, investment in equipment, etc.-this can motivate them to use the plan more wisely.
- Use statistical data to show employees how, generally, unhealthy people use more health care, resulting in higher plan costs. If employees accept this, they’re more likely to try to follow recommended preventive care schedules, attempt to change unhealthy behaviors, and overall aim to become more physically fit.
Employers want employees to be active participants in controlling rising health care costs. To-the-point communications can bring employees on board in this effort, resulting in more manageable costs for employer and employee alike.
Contact us to discuss how we can help you to communicate with your employees.
January 31, 2010
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