Employee Benefits: Which Ones Are Surviving the Weak Economy?
Sixty-three percent of HR professionals say the economic recession negatively affected their organization’s employee benefit offerings “to some extent,” over the past year, according to a new Society for Human Resource Management report.
About a third (28 percent) said the recession didn’t have any effect on their employee benefit packages, with only nine percent reporting it had a “large” effect on what they were able to keep providing to their employees. The findings are detailed in the SHRM 2010 Employee Benefits Research Report.
The percentage of payroll spent on benefits holds steady in 2010 when compared with 2009. On average 19 percent of an employee’s annual salary was spent on mandatory benefits, 18 percent on voluntary, and 11 percent on pay for time-not-worked benefits. In 2009, HR professionals reported that 20 percent of payroll costs were spent on mandatory benefits, 19 percent for voluntary benefits, and 11 percent for paid leave benefits.
Mandatory benefits typically include unemployment and worker’s compensation coverage and Social Security. Voluntary benefits include medical, dental and vision plans; prescription coverage; flexible spending accounts and survivor benefits.
“Although the recession has presented challenges in the continued support of some employee benefits, some organizations are finding creative ways to replace the more costly benefits with alternative, less costly, family-friendly benefits,” says Mark Schmit, director of research at SHRM. “These progressive companies will likely fare better in retaining key talent as employment opportunities increase post-recession.”
Key findings from the survey include:
• Cuts to retirement savings and financial planning benefits changed little from 2009 to 2010 but did so significantly over five years. Among the 15 different types of benefits in this category, the number of organizations offering “individual investment advice” dropped from 48 percent in 2006 to 40 percent in 2010. Even more dropped “retirement planning services”—52 percent in 2006 to 39 percent in 2010. The “traditional defined benefit pension plan” is also offered by fewer employers with 48 percent offering it in 2006 compared with 27 percent in 2010.
• Opposite-sex domestic partners continue to be included in family-friendly benefit plans. Family-friendly benefits for domestic partners —same-sex and opposite-sex—are offered by 13 percent of organizations in the 2010 survey. SHRM began tracking the trend in 2008 and the numbers hold steady.
• Health care and welfare benefits for domestic partners are holding steady. Thirty-seven percent of respondents report offering the benefit to same-sex domestic partners, and 38 percent offer the benefits to opposite-sex domestic partners. The numbers hold steady to 2008 when tracking began.
• Overall, health care and welfare benefits were a mixed bag of offerings in the 2010 report. While the “rehabilitation assistance” benefit increased from 37 percent in 2009 to 45 percent in 2010, the “long-term health care insurance” benefit dropped from 39 percent to 31 percent during the same time period. “Mental health coverage” benefits continue to increase—from 80 percent in 2009 to 82 percent in 2010, and from 73 percent in 2006.
• The “other” benefits category continues to decline in several types of coverage. HR professionals reported fewer companies offering: non-cash company-wide performance awards and company-purchased tickets to cultural and sporting events and theme parks. Also on the decline are take your child to work day, holiday parties, company picnics and milestone awards.
Want to Build an Effective Workforce for the Future?
Why waste money seeking the best candidates to fit into outdated job descriptions or match the staffing requirements in short-term, short-sighted business plans? Changes in technology, members, market niches, competition, and other forces call for shifting the focus from finding capable people to developing new capabilities.
In his latest book, The New HR Analytics (AMACOM May 2010), human capital management pioneer Jac Fitz-enz shows how capability planning leads to succession planning that leverages quality employee engagement and drives revenue growth.
“While all people are important, all skill sets are not of equal importance,” he notes. “Treating the workforce like a monolith is absurd and costly.” Fitz-enz presents a plan for subdividing the workforce into the following capability categories:
• Mission critical. A few capabilities are absolutely key to ongoing success. If you think about it, you know what these are. Do you currently have sufficient mission-critical capabilities in place? Do you have back-ups being developed? (According to Fitz-enz’s survey of 1,200 companies, 54 percent of companies have ready backfills for fewer than 30 percent of their positions.)
• Differentiating. Given your current or desired future market possibilities, which capabilities separate your organization from the competition? These often augment the mission-critical capabilities, but are not identical.
• Operational. Certain skills are necessary to keep the operation going. These are often characterized as administrative and maintenance, but also include technical skills. Their absence would reduce efficiency, impair timely response to customer needs, and increase operating costs.
• Movable. As markets, customers and products change, some skills become less important or even obsolete. Companies sometimes forget this and allow these to remain, causing operational expenses to build. In the worst situation, this can culminate in massive layoffs. People in these positions need to be retrained, reassigned or let go, and the processes outsourced, if needed at all.
