Survey takes a post-recession snapshot of benefits trends

Written by: Lydell C. Bridgeford (Provided by Employee Benefits News)

The recession created some long-term trends that will continue in a post-recession economy, such as increased productivity and workers’ appreciation of employee benefits.

According to MetLife’s eighth annual “Employee Benefits Trends Study,” a weak economy also influenced how employers viewed their benefits programs.

When asked to list their three most important benefits objectives, 53% of employers reported controlling heath and welfare benefits costs, 47% said retaining employees, while 42% cited increasing employee productivity.

For the first time since 2006, controlling benefit costs edged out employee retention as the top concern facing employers. Using benefits to retain talent dropped, in part, because of a weak job market.

Against a background of shrinking profit margins and an ailing economy, companies had to realign their benefits objectives to reduce costs and increase productivity, says Bill Raczko, senior vice president of marketing of U.S. business at MetLife.

Benefits satisfaction increases

Companies, especially ones with more than 1,000 employees, give their best efforts to maintain their benefits package and were more likely to reduce salaries than benefits. For example, 18% of large employers reduced benefits and 19% reduced or suspended 401(k) matching contributions.

However, 75% of big employers scaled back on salaries or increased the length of time between raises, according to the survey.

“Employers kept an eye on their long-term objectives,” even though bottom-line pressures called for them to demand more from their benefit programs,” Raczko notes.

Still, employee satisfaction with their benefits increased during the recession. “Employees have increasingly come to value their benefits, and we have seen benefits satisfaction rise over the past few years,” he says. For example, 42% of employees currently note they are highly satisfied with their benefits, compared with 37% a year ago.

Employee benefits are becoming more of a financial safety net for workers. The 2009 economic challenges resulted in 68% of employees feeling a heightened sense of job insecurity, a leveling off in the quality of their work, an uptick in their work assignments, and more distractions at work because of financial concerns.

Yet, nearly 37% of employees admit that because of the benefits they receive at work, they worry less about unexpected health and financial issues, the MetLife report notes. The number jumps to 66% for those workers who report they are very satisfied with their employers’ benefits.

The results from the MetLife trend study represents 1,503 interviews with benefits decision-makers at companies with staff sizes of at least two employees. It was conducted during the fourth quarter of 2009. The employee portion of the survey involved 1,305 interviews with full-time employees.

Job satisfaction tied to benefits

Meanwhile, the relationship between benefits satisfaction and job satisfaction is paramount. For example, group A believes that their employer does an effective job of communicating their benefits, while group B believes that their employer does not do an effective job in communicating their benefits.

“What surprised us in the report were the overwhelming differences in the opinions between the two groups on their benefits satisfaction, job satisfaction and loyalty to their employers,” Raczko says.

Of employees who are highly satisfied with their benefits, 81% said they were satisfied with their jobs, while among workers who are not satisfied with their benefits, only 23% said they were satisfied with their jobs.

The data also show that job satisfaction is linked to benefits coverage. In cases where employers reduced benefits or matching contributions or shifted costs, workers reported lower satisfaction levels, compared to employees at companies where benefits stayed intact.

Communication

Employers can earn an immediate return on their benefit investment with increased attention to benefits communication. “We have complied compelling evidence that benefits value is created through benefits communications,” Raczko says.

There is this schism, however, on how employees and employers perceive the power of benefits in driving employee loyalty. The good news for employers is that employees value benefits more than employers realize. Employers routinely underestimate just how compelling their own benefits programs are.

“Benefits communication creates greater benefits awareness and greater benefits understanding level, which creates higher job satisfaction and loyalty – all the reasons why employers offer benefits in the first place,” Raczko asserts.

In the survey report, MetLife analysts observe that “employers face new or reprioritized challenges to control benefits costs, increase productivity and keep a watchful eye on retention.”

The report continues: “Their efforts to address these challenges must live in the context of employees’ higher expectations for benefits, as well as evidence of the continuing importance of benefits as a contributor to both job satisfaction and loyalty.”

Some employers have failed to invest in benefits communication because they were preoccupied with other benefits issues during the recession. They were focused on evaluating plan designs, making decisions around defined benefit plans, looking at some challenges workers face with retirement and trying to get their hands around health care reform.

In 2008, 52% of employers reported that their company was loyal to its employees, while 40% of workers felt the same. This gap widened in 2009, with 57% of employers citing the company is loyal to its workers, while 39% employees said the same.

“The message that carriers need to re-emphasize to plan sponsors is that your employees want to get the most out their benefits plans,” observes Raczko.

Employees want to make smart decisions to protect themselves and their families. Through benefits, employers can enable workers to do these things at basically a low cost. “That is the return on your benefits investment,” he adds.

Among other notable conclusions from the study:

* Nearly two-thirds (65%) of employees who assess their medical health as fair or poor say they live paycheck-to-paycheck, compared to 43% of people in good or better health.

* Over half (54%) of employees report that the economic events of the past 12 months have made them realize that they need to more actively manage saving for retirement.

* Forty-two percent of employees are interested in their employer providing access to retirement planning seminars, yet only 35% of employers currently offer these.

* More than one-third (34%) of employees who assess their medical health as fair or poor anticipate that their financial situation will deteriorate in the next six months, compared to only 12% of people in good or better health.

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