Offering solid benefits can cement your
company's relationship with its current employees,
but there's an unseen payoff as well. Benefits can
also attract potential employees, offering HR a
larger and more motivated candidate pool when it
comes time to fill positions.
Today's sluggish economy
has created a dilemma for businesses: some are scrutinizing
every benefit they offer, while others are taking
the opportunity to try new incentives to differentiate
themselves from their competitors. As a strategic
partner, HR must find ways to use the power of their
benefits program as a recruiting tool while ensuring
that this tool doesn't detract from the company's
bottom line.
Reviewing Your Plan
Kathy Solomon, associate director of HR at Neurogen
Corporation in Branford, Conn., says that she
reviews her company's benefits program at least
annually. "There's really a continual review, though,
since employees will also come to us with requests,
like a recent one concerning Section 529 college
savings plans." Solomon says that HR researches
these kinds of requests and then takes appropriate
action on them.
Von Madsen, assistant vice president at ARUP
Laboratories in Salt Lake City, Utah, says that
his company also reviews its total benefits package
each year to determine where it may need to beef
up benefits or perhaps eliminate them. "Even in
the present economy, we've made some recent additions,
such as an improved Paid Time Off policy this
year," he explains.
The trick during a poor
economy, says Solomon, is to find the right balance.
"Your benefits package does have a significant impact
on recruiting. We benchmark ourselves against others
to make sure we're competitive," she says. "We still
have to maintain a level of benefits that allows
us to hire and retain the best scientists and researchers."
Knowing what candidates want will provide a solid
base to your benefits program. According to the
most recent Value
of Benefits Survey conducted by the Employee
Benefit Research Institute (EBRI) and Mathew
Greenwald & Associates (conducted after September
11, 2001 and released in March 2002), U.S. workers'
preferences for employee benefits have changed very
little from a survey conducted two years previously.
Health insurance ranks as the most important benefit,
with retirement savings plans (such as 401(k) plans)
the next most important benefit. Benefits such as
stock options rank very low.
Even when particular
benefit elements are generally seen as desirable
or almost universally offered, employers can still
differentiate their programs from their competitors'.
"Employees have come to expect certain benefits,
like health insurance," says Madsen, "so this particular
aspect of our benefits package isn't really thought
of as a 'benefit'. However, our employees do see
as a benefit the fact that we pay the majority of
the premium."
Another important benefit for employees
is the company's health clinic, says Madsen. "This
is a family practice/urgent care clinic that is
free and on-premise. We saw around 6,000 individuals
last year; they can walk in or get appointments
within two days."
Even if your company isn't able to offer such generous
programs, HR can still tweak a basic benefit like
health insurance to reflect employee interests.
The SHRM/SHRM
Foundation 2003 Benefits Survey found that
companies have shifted from HMOs (65% in 1999 to
54% in 2003) in favor of PPOs (81% in 1999 to 87%
in 2003) and alternative medicine, reflecting consumer
preferences and interests.
Of course, many companies are evaluating their benefits
plans with an eye to cutting costs. Fortunately,
such action doesn't always have to be painful: HR
can look at usage data to see if there are "perks"
that most employees don't draw on, or that would
have minimal impact if dropped. For instance, the
SHRM/SHRM Foundation 2003 Benefits Survey cites
belt-tightening measures like dropping cell phones
and pagers for employees' personal use, or matching
charitable contributions, as the type of "nice to
have" benefit that survey participants find they
can eliminate without a lot of agonizing.
Focus On Employees
A good benefits program doesn't consist
wholly of health care, 401(k) matches and other
costly elements. Flexible scheduling, payroll deduction
and bill paying services, merchandise discounts,
and free parking are all benefits that make your
company an attractive place to work. If money is
especially tight, concentrate on low-cost benefits
that still show your concern for employees and set
you apart from competitors:
- voluntary benefits
like child-care accounts, home and/or auto insurance,
or pet insurance which are paid for by employees
but administered by the company;
- nap rooms or lactation rooms;
- professional memberships;
- unpaid time off for volunteer work;
- casual dress;
- eldercare
referral services;
- compressed workweek or telecommuting; or
- any services or discounts which are less costly
to employees if negotiated by a large employer.
"For the past ten years, our guiding philosophy has
been 'what is the right thing to do for the employees?'
says Madsen. "We ask ourselves how we want to attract
and retain people, and we believe the way to do it
is with respect, fairness, and making this a nice
place to work."
Madsen says that this philosophy may
sound like common sense, but "some employers don't
get it. They may think 'if we have fluffy benefits,
people will want to stay with us.' But chemists can
easily move from employer to employerand they won't
stay with a bad one," Madsen says. "Companies must
first create a fundamental atmosphere of respect."
With their foundation in place, ARUP Laboratories
conducted a survey nine months ago, Madsen continues.
"We wanted to discover the impact our benefits package
had in making employees want to come to the company,
and then want to stay." He was pleased with the results:
for 56 percent of employees, the company's benefits
package had a high impact on their decision to apply
and want to work for the company. "And for 83 percent
of employees, our benefits have a major role in the
decision to stay."
Use The Power Of Benefits
Though the 2001 EBRI/MGA Value of Benefits Survey found that
77 percent of workers reported that the benefits a
prospective employer offers are very important in
their decision to accept or reject a job, not all
benefits are equally important to every candidate.
"Obviously candidates are focused on relocation and
assistance in transitioning to their new community,
but otherwise, benefits are highly individual," says
Solomon. "Health care may be very important to someone
who is single or the sole breadwinner, whereas a married
candidate under a spouse's plan might not care as
much about medical benefits.
"For recruiting, I ask
candidates what is important to them," Solomon continues.
"Then I can speak about how my company will meet those
needs."
It's important for HR to understand what benefits
will attract candidates so that they can implement
the right package, say experts. Benchmarking against
peers can be especially valuable, whether they be
small companies, start-ups, or well-established companies,
says Solomon. "You need to determine what you have
or don't have compared to your competition."
Because
there's such a close link between benefits that retain
employees and benefits that attract them, HR can often
use surveys of current employees to understand what
will be attractive to future ones. Demographic and
sociological studies will also spot trends HR may
want to address. "We don't have any requests yet,"
says Solomon, "But I think that with changing demographics,
long-term care insurance may be something employees
will wantwe would certainly research this in the
future."
"We are looking at child care," says Madsen.
"We have 1,600 employees who have an average age of
39we're thinking there's a demand. We're doing a
needs assessment on this issue."
Keeping a benefits
program vibrant will both attract and retain employees.
"Ten years ago, we had 21 percent turnover (which
was an industry average), and we had been at that
level for the prior 15 years," says Madsen. "We also
hired a lot of people every year: we might have 350
people leave, and we'd hire 400. We were growing,
to be sure, but we also wanted to cut turnover."
The
company focused on retention, says Madsen, and looked
at improving benefits as a means to improve the bottom
line. "We currently have a turnover of 15 percent,
which is in the bottom quartile of our industry."
Madsen says that their efforts have been equally successful
in recruiting. "Eight years ago, we struggled to get
one or two candidates for some of our key positions.
Last year we had over 14,000 applications for 325
jobs. We believe that improving our benefits contributed
greatly to that larger pool of candidates."
That greater
pool of applicants has positive implications for the
quality of hire, as well. Madsen says, "If you have
only one candidate, you have to ask yourself: did
I get the best person for the job?"
Carla Joinson is a Stafford, Va.-based writer
specializing in human resources and management topics.