By Karin Colucci, Vice President of Human Resources and Benefits, IdilusHR
Creating an effective employee retention strategy is far from easy. In fact, in a recent poll by Human Resource Executive Online, respondents ranked employee retention as one of the top three HR challenges employers face today.
Fostering employee loyalty—while increasing the company’s profitability and mitigating risk—is critical to the success and long-term growth of nearly any organization. Furthermore, should employers fail to develop a strategy to keep their staff engaged and motivated in the workplace, there is a high price to pay: Replacing an entry-level employee alone can cost 30-50 percent of the position’s annual salary. The significant cost of both time and energy associated with finding the right talent can place a heavy burden on already strained businesses.
One way to encourage employee retention is to offer workers a comprehensive benefits package at a relatively low cost. Respondents ranked benefits as one of the top three most important elements of job satisfaction in the Society for Human Resource Management’s (SHRM) 2015 employee survey. However, not even a third of the respondents were satisfied with their current benefits package.
Below are three ways to ensure an organization’s benefits package meets the needs of its workforce and positively contributes to a comprehensive employee retention strategy:
Make a fair contribution
The cost of benefits has increased dramatically in the last five years, particularly for employees. The average family plan cost $18,142 in 2016, up 3.4 percent from last year, according to the Kaiser Family Foundation. In addition, more than half of U.S. workers with single coverage health insurance plans pay a deductible of $1,000 or more, up from just 31 percent of workers in 2011.
Furthermore, patient responsibility for healthcare costs has also increased: A survey by the Medical Group Management Association (MGMA) found that nearly 25 percent of the money physician practices collect comes directly from patients themselves.
With the cost of healthcare rising, workers value employers who make a significant contribution to a comprehensive healthcare plan. This can be a real financial gain for employees—especially those who have a spouse and/or family to support. Under the Affordable Care Act, employers are required to pay a minimum of 50 percent of employees’ health insurance premiums to claim a tax credit. However, the average employer contribution is even more—about 75 percent of premiums, according to Kaiser Family Foundation. While this may vary among organizations depending on the size of their workforce, geographic location and industry, employers should determine the typical contribution for similar businesses and aim to either match or exceed that number to attract top talent.
Develop a customizable package
A common mistake employers make is approaching benefits with a “one-size-fits-all” mentality. It should come as no surprise that the healthcare needs of a recent college graduate are most likely different than those of a 40-year-old with a spouse and two young children at home. Depending on the demographic breakdown of their workforce, employers today will probably need to offer multiple benefit plan options to ensure employees feel satisfied and taken care of, no matter their family situation or health status.
With that being said, employers should offer multiple, customizable plans for employees to choose from. For example, younger employees may value a cheaper plan with the option of earning wellness points by demonstrating a healthy diet or routine exercise to further lower costs. Employees with dependents will most likely value a more comprehensive plan with minimal limits on the providers they can see. Employees are more likely to stay at a company offering a benefits package that directly meets their needs.
Guide employees in their selection
Employers should not only offer the appropriate health plans for their workforce’s needs, but they should help current employees and new hires determine which plan is right for them. HR managers or other new hire coordinators should be well-versed in the company’s plans and what different types of needs they address.
Once familiar with the available plans, the HR department or outsourced vendor should develop a clear process to help individuals navigate the often complex and confusing world of benefits. This can include developing pamphlets, flyers or emails to detail the cost and services provided by each plan, along with having in-depth conversations with employees about how to best meet their health needs. This will ensure employees feel they—and potentially their family—are supported and secure in their decision.
To learn more about developing benefit plans to retain top-performing employees, please contact IdilusHR.