Low-Cost but Popular: Good Combination for Employee Benefits

Ann All spoke with Marcia Rhodes, head of public relations for WorldatWork, an association of human resource professionals from Fortune 500 and other leading organizations worldwide focused on attracting, motivating and retaining employees. WorldatWork recently released a survey titled, "Attraction and Retention: The Impact and Prevalence of Work-Life and Benefit Programs."

All: You recently surveyed U.S. companies to find out which employee benefits/incentives were perceived as being important to a company's ability to attract and retain employees. I believe you asked folks to rate 41 benefits/incentives. Can you tell us which five received the highest scores/rankings from respondents? Were there any surprises here?
Rhodes: A couple of months ago (in September 2007), WorldatWork conducted a survey not only to identify which benefit programs are perceived to impact a company's ability to attract and retain employees, but also to identify the prevalence of such programs. The study focused specifically on benefit and work-life programs and deliberately excluded compensation programs.

The top five benefit programs for attraction are: 1) medical plans, 2) paid vacation, 3) defined contribution plans, 4) flex-time, 5) on-site child care. The top five for retention are: 1) flex-time, 2) paid vacation, 3) defined benefit plan, 4) medical plan, 5) defined contribution plan.

As a retention program, flex-time rises to the top, above paid vacation and medical plans. Flex-time means working hours that are not the usual 8 to 5. A defined benefit plan is any retirement plan that provides for future income and is not an individual account plan. It is sometimes referred to as a fully funded pension plan. A defined contribution plan, on the other hand, is a plan that provides for future income from an individual account for each participant. Some examples of defined contribution plans include 401(k) plans, 403(b) plans, employee stock ownership plans and profit sharing plans.

All: Did you find that the majority of companies offered the benefits/incentives perceived as being most important?
Rhodes: Yes they did, with a few exceptions. For example, 99 percent of participating companies offer medical plans and a full 100 percent have a paid vacation program in place. The same goes for defined contribution plans (97 percent) and flex-time (82 percent). One notable exception is on-site child care - only 25 percent of companies offer it even though 78 percent report it has a moderate to high impact on attraction.

Interestingly, about half of the companies surveyed say they offer wellness programs such as health screenings, smoking cessation assistance and weight management programs, yet they report that these programs have only a minor effect, if any, on attracting and retaining talent.

All: Were there any benefits/incentives that appeared to be showing strong growth?
Rhodes: We are seeing strong growth in programs that are low-cost but highly valued by employees. Programs like telework or telecommuting, flex-time, part-time schedules, compressed work week and phased retirement are so popular that many large corporations are creating new roles within HR focused specifically on managing such arrangements. These HR practitioners often have the words "Work-Life" in their title. This is why WorldatWork recently began offering professional certification in the field of work-life.

We expect telework programs to grow with the mass availability and affordability of mobile devices coupled with a marked shift in employers' attitudes - many are beginning to accept that to attract the best talent, they may have to look beyond their borders to other states and even countries. Some of your best workers are going to be virtual workers, there's just no two ways about that! If you want more information on telework, including a free copy of our study, "Telework Trendlines," visit www.workingfromanywhere.org.

All: Is the increasingly competitive HR environment making it more likely for companies to consider offering their employees more benefits/incentives? Are there any other market forces that may be contributing to this trend?
Rhodes: First, let me say that the HR profession has experienced dramatic changes in the workplace. The changes I'm talking about include tighter labor markets; increased scrutiny from the legislature; rising health care costs; ever-changing SEC rules; and global, mobile as well as aging workforces. The list goes on and on. HR professionals - particularly those specializing in compensation and benefits - are challenged to do more with less. They are expected to hire highly skilled workers while containing overhead costs. They are increasingly challenged to tie pay to performance. And all this at a time when workers are demanding more work-life balance.

As everyone is painfully aware, the cost of benefits, especially medical and health-related benefits, continues to rise. While employers are having to compete for the best talent, business requirements demand that they contain costs, which sometimes means fewer employee-wide benefit programs. More employers are rewarding workers using performance-based pay. That means no more across-the-board increases - you actually have to perform to get a merit increase and showing up every day is no longer enough. And now we are starting to see benefits tied to performance. This means that the A players, those who consistently add value and work well with others, will receive the best benefits, such as the ability to telecommute or work flex hours.

All: What about areas that showed fairly large disconnects between the perceptions of employers and employees? I believe, for instance, that you found that only half of employers offer stress management programs to employees despite employees ranking stress as one of the top reasons they leave an employer.
Rhodes: Your question actually covers two different surveys that both touched on stress from different perspectives. We conducted a survey on strategic rewards with Watson Wyatt earlier this year, in which we found that stress is a top reason employees leave an organization. In our survey on benefit programs, we found that only half of businesses offer stress management programs. Having data from both studies helped us conclude that stress is a huge factor, but employers are not addressing it adequately. There certainly seems to be a disconnect with regards to stress, but companies shouldn't just start offering yoga classes and free massages. Such programs may help and if you can afford them, that's great, but more importantly, employers would be wise to actually delve into the company's work processes and culture to figure out potential causes of pressure such as lack of supervisor and co-worker support, inadequate feedback, workload or scheduling issues.

In our benefits survey, we found that certain programs that may help mitigate stress in the workplace - for example, emergency back-up dependent care services, on-site child care and sabbaticals - are offered by less than a third of companies.

All: How can employers make sure that they are offering the kinds of benefits/incentives that are most effective for employee recruitment/retention?
Rhodes: It's simple: Ask and listen. Your employees are the true measure of the value of your benefits and the success of your total rewards strategy. As my dad used to say, you'll arrive at the solution just by asking the right question. Employers should regularly survey employees to make sure the benefits offered are still relevant and valued. You might be surprised to find that while you offer dependent care flexible spending accounts, the majority of your employees don't much care if you do or not. On the other hand, employee ownership is a big driver of employee satisfaction and retention, and yet very few companies (less than 10,000, in fact) offer employee stock ownership plans.

In today's market, benefit programs can be the differentiator that gives an organization a leg up on the competition. Employers would be smart to periodically evaluate their benefit programs to ensure they are pulling all the right levers.