Putting a good benefit plan in place is one thing but making sure your employees understand the plan is another.
In a recent study from Unum, there is a strong connection between the quality of the benefits education employees receive and their perception of their employers. The study showed that employees really appreciate companies who provide more education on benefits and financial education.
The great thing about education is it can be one of the most cost effective ways of showing employees you care. Effective benefits education can be a low-cost, high-impact way to increase worker satisfaction.
Even if employees don't have a particularly good benefits package, those who say they have a strong understanding of their benefits coverage are dramatically more likely to consider their employer a very good place to work.”
Take education a step further
When it comes to benefits and financial education, there are different levels of education.
The most basic form of education is the benefits handbook or brochure. The employer gives a copy to the employee and that’s it for education. This is probably the least effective way to educate employees on their benefits.
The base level is what I call product and plan education. This is the foundation but unfortunately is hit or miss. Most companies go to the carrier to provide this education. For example, if you have a plan with SunLife, then the SunLife rep would come in and educate employees on what the plan has to offer. The success in this strategy really lies in the communication skills of the representative and sometimes it goes over well and sometimes it does not.
The next level of education is moving from plan and product education to true financial education. It’s about teaching employees about all aspects of money, finance and investing and not just the plan. This kind of education can go along way and is the most cost effective way of enhancing the merits of the benefit plan itself.
Other forms of communication and education include online tools, face to face personalize meetings, newsletters, books and other print material. Learning can also happen in different mediums like Video, Webinars, Audio, Books, and seminars. The Unum study also highlighted the fact that the right tools are a critical part of the benefits education process.
According to Unum, access to education has decreased and not increased:
- The percentage of employees who received printed information or brochures dropping from 70 percent in 2008 to 51 percent in 2009.
- The percentage of employees who were offered a chance to attend a group meeting about benefits where they could ask questions dropped from 52 percent to 36 percent.
- The percentage who had access to a one-on-one meeting with a benefits adviser fell from 38 percent to 22 percent.
As the benefits landscape is shifting, it is more important than ever to give employees the right tools to understand their benefits choices and to communicate what's available to them. Given these statistics there is more opportunity than every for employers to stand out.
Two ways for employer to deal with the rising cost of employee benefits
When times are tough, employers are often looking for a way to cut expenses as opposed to add to them. When it comes to benefits, it’s often tough to take away something that employees have without affecting morale or loyalty. This has become increasingly challenging given that health benefit premiums have been increasing as a result of rising health care costs at a rate of 10% to 15%.
Here are a couple of ways to help combat the rising cost of health benefits:
1. More voluntary benefits.
Recently, Benefits Canada reported that “Voluntary benefits could be tomorrow’s trend.” Voluntary benefits are typically paid 100% by the employee but more cost effective because of the buying power of a group.
Most plans already include some voluntary components, such as optional coverage for life insurance, accidental death and dismemberment, critical illness, even certain retirement products.
The article in Benefits Canada stats that the newer generation of workers (Gen Y) might actually prefer more voluntary benefits because they tend to be more discerning in terms of what benefits their potential employers are offering them.
As we move forward, it’s clear that benefits are changing and economies are changing. More and more people will see benefits as a privilege, not a right.
2. Group retirement savings
If the issues is solely about the rising cost of health care costs, one of the benefits that has a more controlled inflation rate is group retirement savings. This might include a Group RRSP or a Defined Contribution plan. In both cases, the future cost of these benefits are not affected by the rising cost of health care. Instead retirement savings is driven by wage inflation which is generally lower and more consistent. The benefit is calculated based on base salary and you are not seeing base salary increasing by 10% to 15%.
Other than wages, the cost of a group savings plan can be influenced by the employer. For example bonuses can be put into a Group RRSP plan but the employer controls the amount of the bonus.
Other than a matching program, there is very little cost to the employer in implementing a group RRSP or event a Defined Contribution pension.
Times may be tough but there are still things employers can do to reward employees without breaking the bank.