Periodically reviewing your employee benefits program makes sense on multiple fronts. It provides the opportunity to revisit your carrier’s rates and make sure they are still competitive. Input from employees can be taken into consideration and implemented if feasible. And finally, you want to make sure that your program measures up well against others in your industry.
“Because benefits plans are such a hot topic,” says Phil Graybill, vice-president of benefits, sales and consulting for Sander A. Kessler & Associates, “I, as an employer, would want to either meet or exceed what my competitors are offering.”
Smart Business spoke with Graybill about the importance of analyzing employee benefits programs, what constitutes a good benefits plan and what steps should be taken if the program could be improved.
How important is it for companies to periodically analyze their employee benefits programs?
In terms of importance, it is very high. Employee benefits plans are a chief operating expense and are usually one of the two or three highest expenses that a company has. Also, employees are taking a much closer look at employee benefits nowadays. The media coverage that has been given to the cost of health care and the nation’s health care system has been phenomenal. Everyone is very concerned about the rising costs of health care which makes employees take a very hard look at the types of benefits that an employer offers.
What factors should companies consider when analyzing their employee benefits program?
You want to analyze the network provider’s accessibility on a managed care level and what its discounts are. Determining which carrier can provide the best costs and matching up coverage options to what the company’s employees are looking for are also important factors.
When possible, benchmarking data should be used to compare your program with direct competitors. You want to review coverage options and contributions strategies that your competitors are deploying.
What are some elements that constitute a good benefits plan?
It needs to meet the coverage guidelines that will be appreciated by employees and it needs to meet the affordability of the employer.
If, for instance, you as an employer were to offer only a ‘Cadillac’ plan but you weren’t contributing the lion’s share, that might be a detriment to the employee who won’t be utilizing the plan all of the time and will face a high deduction out of his or her paycheck. The same holds true vice-versa as well.
The bottom line is that the plan needs to either meet or exceed what the employer’s competition is offering.
If upon inspection, the program could be improved, what steps should be taken?
Timelines should be constructed and adhered to by the employer, its broker and the insurance carrier based on what changes are going into place and what timeframe the changes will be going into effect. Far too many times, decisions are made very quickly and then there is a disconnect between the insurance carrier and the employer.
Secondly, properly communicating with employees is critical. They should be told as early as possible about any changes with a positive spin. It’s a good idea to provide information about the reality of health care costs. A way to convey the overall value that employees are still receiving is to create total benefits statements that include salary, benefits, workers’ compensation costs, vacation, etc.
How should a company seek input from its employees to ensure that the benefits program meets their needs?
If you have one location and 100 to 200 employees, it’s certainly feasible to pull your employees in from time to time and have a meeting about the benefits program. I’ve seen larger companies use insurance focus groups, which provide a representative sample of employees’ needs. Surveys provide a low-cost option of measuring employee satisfaction. Many options are available on the Internet.
How important a role does having a strong benefits package play in attracting and retaining key employees?
Employees know that having strong health care and benefits is the key for them and their families to stay above water. A small-percentage difference in salary in what a person wishes they could make and what the employer offers is becoming secondary to what type of health care coverage is available.
PHIL GRAYBILL is vice-president of benefits, sales and consulting for Sander A. Kessler & Associates. Reach him at (310) 309-2221 or firstname.lastname@example.org.