The Value of Benefits

May 10, 2016

As an employer, have you ever added up the benefit package that you offer to employees? And on the flip side, as an employee – have you ever added up your benefit package? Go ahead and price it out…I’ll be waiting. 🙂

When you compute all the benefits that are offered, benefits can easily add up to 30% or even 40% of total compensation. I am going to assume that most employees have no clue that benefit packages are worth that much. But why? Why don’t employees see benefit packages as part of compensation? I have a few ideas…

As someone who has worked in HR since 2000, I believe the biggest challenge is getting employees to actually read and open up communications about benefits. As a PEO, we offer all different benefit packages to new employees upon hire (depending on the client). That seems like a simple task, but it’s not. They have 30 days to decide, and an inordinate amount of time is spent tracking down paperwork. What is an even bigger challenge is open enrollment. Sending communications about open enrollment for hundreds of employees is a daunting task – not to mention following up on communications and making sure that employees first: understand the benefit being offered, and second: the choice to enroll or waive that benefit. Sometimes employees have to check with a spouse or a parent before enrolling in a particular benefit. They also look at cost, especially when it comes to health care. Most employees associate the cost of health insurance with only what is deducted from their paychecks, when that is not the total cost of their insurance. Deductibles, co-insurance, stop-loss are all terms in which the employee might not comprehend up front but could financially impact their ability to pay for their responsibilities. When I first entered the workforce after college at 21, I had zero idea of what benefits meant. Having a HR consultant to work through these challenges and questions would have been a huge help.

Another uphill battle (which I somewhat touched on above) is that employees don’t understand the benefits offered or the value that they have. It’s not only a frustration for employees in understanding benefits, it can also be challenging for employers to offer a benefit that employees may not think is of much value. Take an EAP (Employee Assistance Plan) for example…Free counseling for the employee and their dependents. That type of benefit is only seen as a benefits to those that have previously used or needed that benefit or those that currently use the benefit. Employees that choose not to participate in that benefit don’t realize the importance or value of it. But it is a benefit offered and paid for by the employer which adds value to the benefit package.

So the question is: How can I effectively communicate our benefits package and help employees understand the value it holds? I would suggest a few of these options:

  • Tailor your conversations (or communications) to various age groups and/or life stage ages. Focus the 401k and/or retirement information for employees looking towards retirement. Employees who are beginning their career in their twenties are going to have different views on retirement planning than those who are nearing retirement age. And if they are offered, discuss: wellness, life insurance, short term/long term disability, accident, EAP, etc…
  • Offer communications through out the year, not just at open enrollment. Educate your employees quarterly or twice a year about the benefits offered and how employees can use them. Sometimes a reminder that they even have the benefit is helpful.
  • Using games and/or incentives to have employees turn in paperwork right away, and scheduling sessions for Q & A. If I received an incentive to turn in paperwork within 24 hours, I wouldn’t take my time twiddling my thumbs…

With all the effort and cost that goes into choosing the right benefit plans for your employees, employers need to put as much effort into communicating the value of what is offered. With benefits that employees use the most – the decision makers should focus their attention and money towards those plans. This might vary from employer to employer depending on demographics. As a PEO, we can take care of benefit offerings for you. It might seem so time consuming and difficult to navigate – so let us do that for you! Give us a call today to discuss our benefit packages that can be offered to you and your employees.