If anything has become clear to HR and business leaders in recent years, it’s the importance of having an attractive total compensation package. Not only are young people entering the workforce comparing benefits as a way to decide between offers, but Gallup data shows that 53% of working professionals cite employee compensation and benefits as the top reason for dissatisfaction with their current role, and 69% say it’s a driver for considering leaving their organization.
In an effort to attract and retain top talent, new data from MetLife indicates that 60% of employers have increased their employee benefits investments. While employers are undoubtedly trying to meet employees’ needs, it seems that the utilization gap just keeps widening. For example, a United Healthcare survey found that nearly 70% of employees don’t use wellness benefits when they’re offered.
In a business landscape where controlling costs has become a top concern, it may be time to consider a new strategy. For many organizations, the secret lies in pivoting away from simply lengthening the list of benefits to offering a comprehensive menu that employees will actually use.
When it comes to benefits, more isn’t always better, and here’s why focusing on depth vs. width can help you decrease turnover, increase engagement, and improve your benefits ROI.
The Benefits Utilization Gap: Why Expansion Doesn’t Equal ROI
Offering a lengthy menu of employee benefits may seem helpful on the surface, but things rarely play out that way. A wide array of benefits can have broad appeal across diverse demographic groups with varying priorities.
Additionally, offering more benefits than your competitors can make a stronger impression on candidates, making it easier to attract talent. There’s also the high appeal of bundled benefits packages that HR professionals often perceive as having a higher cost value.
However, just because you have a laundry list of benefits doesn’t mean you’re giving employees what they need. Benefits go unused when employees don’t need what you’re offering, which leads to frustration and a lack of ROI. Employees feel unsupported and eventually lose trust, and you don’t get the benefit of increased morale, higher engagement, and lower turnover.
Additionally, having access to a lot of benefits doesn’t mean that your employees can use them effectively. Some may not enroll because they aren’t aware of what they have. Research also indicates that many employees enroll in benefits without fully understanding how to use them. Without proper information and education, that long list of benefits isn’t as meaningful or effective as it should be.
3 Strategies to Create and Implement a Usable Benefits Menu
Creating a clear and effective benefits program poses a significant challenge for HR and business leaders. Here are several strategies to help you offer options that support your employees and your organization’s growth.
1. Audit and Track Data
In addition to surveying your employees about their needs surrounding employee compensation and benefits, make sure to pull usage reports from your current vendors to see if you can pinpoint benefits with the highest and lowest participation rates. Use survey data to determine which employee benefits you should get rid of and which ones your team truly values.
2. Offer Personalization and Flexibility
It’s important to maintain essential employee compensation and benefits pillars like health insurance and retirement plan matching. However, employees will appreciate having the ability to personalize their benefits menus when possible.
You may choose to accomplish this by providing employees with flexible funds or credits that can be allocated toward their unique lifestyle needs, such as childcare, wellness, or student loan repayment.
3. Improve Benefits Communication
It’s best to avoid the temptation to just rely on random, generic communication from the vendor to help your employees. Instead, consider sending information regularly from a singular source that your employees will grow familiar with.
Use your HRIS and other technology platforms to track your employee data on life stages, significant events, and health claims so you can send personalized, timely communication that speaks directly to their needs, thereby boosting engagement levels.
Better Benefits Drive Better Results for Everyone
While the temptation to offer a wide array of benefits is understandable, it often leads to wasted opportunity and resources. True value doesn’t come from the sheer number of options, but from how effective they are in meeting employees’ needs.
Fortunately, Benefits Advisory Group can help you improve your approach to creating a benefits package that improves employee well-being and performance. Contact us today to see how we can partner with you in curating your ideal benefits menu.