Professional Documents
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HEARD
ABOUT BENEFITS
Small businesses (2 499 employees)
HAVE YOU
employees are saying
?
Dental Coverage
Having enough money to pay bills during a period of sudden loss of income
59% 51%
Paying off debt
Having enough money to cover health insurance (e.g., premiums and/or out-of-pocket expenses)
68%
56% 47%
I Younger Workers I Boomers
54%
As a result of current economic conditions, I am counting on more help from my employer in achieving current financial security through employee benefits
Younger Workers
50% 37%
44%
I Employees who feel a very strong sense of loyalty to their employer I Employers who believe that employees have a very strong sense of loyalty to the company
2011
Boomers
I see voluntary, non-medical and retirement benefits as bigger loyalty drivers than you do.
A choice of voluntary benefits
20
Life Insurance
38
%
Salary/wages
$
Benefits that drive loyalty in companies with 2 499 employees
71% 70%
20%
28% 38%
Vision Benefit
27
44
Health benefits
54% 59%
Company culture
Retirement benefits
9% 26% 38%
Home Owners/Rental & Auto Insurance
51% 49%
Advancement opportunities
35% 40%
52%
I Employers
I Employees
50%
8% 29% 40%
I Companies with 2 499 employees
that offer voluntary products
2% 31%
66% 53%
Employees in smaller companies who say...
Based on the past 12 months, I am willing to bear more of the cost of my benefits rather than lose benefits.
44%
Younger Workers
Boomers
* Small business is defined as employers with 2-499 employees in accordance with the Government Small Business Administration definition.
For more insights and ideas, visit metlife.com/sbtrends for MetLifes latest white paper Are You Listening? What Small Business Employees Want from their Benefits and How Employers Can Show Theyve Heard. Plus, download our Checklist for an Employee-Centric Benefits Program.
Metropolitan Life Insurance Company, New York, NY 10166
L0712270844(exp0913)(All States)
Checklist
1
Listen
Set up regular communication channels and forums to ensure you elicit and hear employee interests, concerns and attitudes toward the company and benefits. Focus on understanding the different points of view of your older and younger workers.
Process
Determine what is working (keep), what is not working well enough (drop or modify) and what is missing (consider voluntary options).
Communicate
Communicate the value and scope of the program. Repeat the message several times a year not just at open enrollment. Its never a once and done activity. Theres no need for costly campaign materials. Clear and concise emails can spark interest and inquiry. Be open to opportunities for satisfied employees to endorse the program and tell colleagues about their positive experience.
Implement
Build out the benefits strategy with voluntary products and services. Review the current program from an employee point of view and identify where employee-paid products will fill the gaps. Identify employee needs and interests and match product options to them. Work with a benefits broker, consultant or carrier to find viable products and the best administrative support and service for your situation and workforce. Develop a compelling internal marketing campaign to employees with help from your broker to ensure maximum participation. If you explain it they will sign up!
Assess
Work with your benefits adviser and carriers to analyze participation and usage data. Listen some more. (See point #1!)
Create a holistic health strategy that includes supplementary health benefits. Explore a wide range of products including vision insurance, critical illness insurance, prescription drug programs, dental insurance, accident insurance and EAPs.
Table of Contents
Introduction
01 03 07 12 18 20 20
Introduction
Companies today spend significant resources, time and focus on understanding the wants and needs of their customers. In fact, customer satisfaction is now seen as a leading indicator for measuring business success. Equally important for business success is employee satisfaction. Customer satisfaction depends on providing responsive customer service, and that requires satisfied and loyal employees. Indeed, the wants and needs of employees deserve as much attention as those of external customers. Yet in this era of austerity, many small businesses those with fewer than 500 employees* have concentrated on simple survival and staying ahead of the cost curve and, as a result, many have reduced their investment in employee satisfaction.
During the darkest days of the recession, when employees may have been glad just to have a job, this was acceptable. However, after many months in which associates have worked harder, faced layoffs and accepted stagnant compensation, how do employees feel about their company and their benefits? Are employers living up to employee expectations? There is mounting evidence that small business owners insights into their employees attitudes may be inaccurate on a number of counts. These misperceptions could have important implications for the business as the economy shows signs of growth. In the first quarter of 2012, the S&P 500 had its best first quarter since 1998.1 Moreover, small businesses are in the forefront of this recovery. The June 2012 ADP Payroll report shows that small business payrolls have reverted to 96.9% of their pre-recession levels, whereas larger companies are only at 92.4%.2 Motivated, committed and productive employees will be a key component for leveraging these encouraging trends, and this will require a heightened awareness of talent needs and a renewed focus on employee hiring and retention on the part of small business owners. In addition, a keen appreciation of employees wants and needs will be advantageous as small businesses make key health care decisions in the wake of the U.S. Supreme Courts upholding of most of the provisions of the Patient Protection and Affordable Care Act.
* This
paper defines a small business as one with 2-499 employees in accordance with the Government Small Business Administration definition
The perspective is so different; I cant imagine that any generation would see things the same way.
Gen X 3
FIG 1
Based on responses to the 10th Annual MetLife Study of Employee Benefits Trends, younger workers in companies outnumber Boomers. Their opinions should carry weight
Small businesses (2 499 employees) 15% 41% Younger Workers
I Gen Y I Gen X
56% 41%
Older Workers
Only about a third (32%) of small business owners strongly agree that they strive to understand and meet different generational benefits needs.4 Typically, employee communications are more easily facilitated in smaller companies, providing an opportunity to better understand and act upon generational concerns to ensure that benefits are meaningful for all employees. Based on findings from the 10th Annual MetLife Study of Employee Benefits Trends, this paper explores the current mindset of older and younger small business employees in four key benefit areas. It reveals why employers would do well to listen carefully to these issues and proposes low-cost remedies that employers can adopt to show they have heard.
Section 1
Key Findings
Throughout the economic downturn, small business employees have tolerated the tough measures required to keep the business running, and they have worked harder for less reward as evidenced by the fact that 31% of small business employers report that productivity increased in the past 12 months. However, productivity gains have come at a cost for morale. More than one-half (58%) of small business employees report that in the past 12 months they have experienced at least one of the following situations: increased stress, decreased job security, heavier workloads and a decline in the quality of their work. The result is that employee loyalty has been on a downward trend for several years and is today lower than many employers realize (FIG 2).
FIG 2
A misperception of employee loyalty small business employers overestimate employee company loyalty a trend that has been evident since 2008
Small businesses (2 499 employees)
57%
53% 50%
2009
54%
54%
49%
2008
44%
2010
44%
2011
FIG 3
Younger workers at smaller companies are especially likely to show the positive effects of benefits satisfaction on loyalty and retention
71% 46
%
70% 47
%
61 39%
72% 50% 32
%
46
56% 42%
I Younger Workers who are very satisfied with benefits I Boomers who are very satisfied with benefits
Get
Small business owners certainly recognize the important role for benefits in retaining employees 84% report that it is an extremely important benefits objective for them, comparable with their other top objective of controlling benefit costs (85%). Moreover, employers are not sidestepping their commitment to benefits. More than three in four (77%) small business employers believe they have a responsibility to pay at least part of the cost. Current economic conditions, however, have put pressure on small business benefits budgets, to the point that 65% report that their ability to pay for benefits has been hindered.
Given this financial squeeze, it is more important than ever to channel investment dollars toward those benefits that deliver the greatest impact for least cost, yet research shows this may not always happen. Many employers underestimate the power of non-medical benefits to drive employee loyalty almost as much as health coverages but at a fraction of the cost (FIG 4). In particular, comparatively lower-cost life, dental and disability insurances can be smart choices both for the budget and for supporting business retention objectives.
FIG 4
There is a disconnect between small business employers and employees regarding the role non-medical, retirement and voluntary benefits play in driving employee loyalty
A choice of voluntary benefits Salary/wages
20
38
$
Benefits that drive loyalty in companies with 2 499 employees
71% 70%
27
44
+ 54
35%
Health benefits
59%
Company culture
Retirement benefits
51% 49%
Advancement opportunities
52%
I Employers
I Employees
40%
50%
Toot
It is likely that employees have little appreciation for the dollar value of the benefits they receive. Employers can maximize the benefits loyalty halo with some self-promotion. A third of small business employees (32%) say that they expect their company to reduce benefits in 2012. Yet only 10% of smaller companies report that they plan to take this course of action. Rectifying such misperceptions is an opportunity to reinforce the companys commitment to maintaining employee benefits and also to promote the program.
Enhance
Prior to the recession, encroaching technology was already melding the boundaries between time spent at work and time spent with family and friends. In the face of job insecurity and understaffing, many employees are now working longer and harder further eroding work-life balance. Fifty percent of Gen Y report that they are working harder than their parents,5 and 33% of employed workers say that their employer made them work longer hours and more overtime since the recession began.6 Time is a highly valued commodity and more than 60% of employees identify flexible schedules as the most important work-life practice their employer could provide.7
Your personal life and your business life just commingle. Im reading emails sometimes at midnight.
Gen X
Pressure to choose between work and family demands has consequences for companies as well as employees in terms of lost productivity and performance. Adding job flexibility may be a low-cost solution (FIG 5) that can be easily and informally administered in smaller companies as a way to help employees feel valued and engaged.
FIG 5
Work-life balance programs contribute to employee loyalty in small businesses8 especially for younger workers
Boomers Work-life balance programs are very important in making me feel loyal to my employer. Younger Workers
43%
31%
Section 2
While these are signs of economic recovery, employees may not be personally feeling it. The recession has been tough for everyone, but younger workers have taken the brunt of the impact in terms of unemployment and underemployment (FIG 6). While Boomers have been hit less hard, they have been forced to postpone and rewrite their retirement plans. Overall, concerns about financial security are higher among workers in smaller companies compared with larger ones, perhaps reflecting the deeper difficulties experienced by the small business sector during the economic downturn.
FIG 6
Younger workers in smaller companies are feeling more financially stressed by the effects of the recession than Boomers
Employees in small businesses (2 499 employees) who are very concerned about:
Having enough money to pay bills during a period of sudden loss of income
51%
Job security
59%
+
$
58%
Having enough money to cover health insurance (e.g., premiums and/or out-of-pocket expenses)
68%
44%
I Younger Workers I Boomers
49%
Paying off debt
54% 51%
56% 47%
In addition to deeper economic day-to-day concerns, faith in government safety nets is also declining especially among younger workers. Only 15% of Gen Y workers in smaller companies expect that Social Security benefits will be there by the time they retire. This widespread sense of financial insecurity has significant implications for employee benefits. Forty-three percent of surveyed small business employees report that, as a result of current economic conditions, they are counting on their employers for more help in achieving financial security through their employee benefits (FIG 7).
With the not-so-secure future of Social Security, I think workplace retirement programs and insurance have become increasingly valuable to people.
Gen X
FIG 7
The economy and holes in government safety nets have made employees in smaller companies more dependent on their workplace benefits
Small businesses (2 499 employees)
As a result of current economic conditions, I am counting on more help from my employer in achieving current financial security through employee benefits
Younger Workers
50% 37%
Boomers
Almost three out of four (72%) small business employees report they are interested in their employer providing financial education programs. However, just over one in four small businesses (29%) offers them. Investing in financial wellness means helping employees feel more confident and more in control of their personal financial situations. Providing financial education is a proven way to do this. Financial skills such as budgeting, credit management and saving for the future can be learned, however, many employees, especially younger ones, may not have resources for this.
72
Almost three out of four small business employees report interest in their employer providing financial education programs.
29
Employers should be encouraged by the fact that across companies of all sizes where financial education programs are available, the participation rate is quite high. Forty-four percent of employees who have access to a financial education program at work say they attended in the last two years. In addition, employees who participate are 35% more likely to say that they are confident in their financial decisionmaking compared with those who did not take part.
Select
A key to success is delivering the right topics in the right format to meet specific employee needs (FIG 8). For example, younger workers might be more interested in financial literacy skills rather than planning for retirement. Never underestimate the power of face-to-face interactions. Even tech-dependent Gen Y still values the opportunity for one-on-one advice. Benefits carriers, brokers and local agents are good resources for providing financial education services. There is often no cost to employees or the company for these educational programs.
Provide
access to adequate coverage when the benefits budget does not stretch An important component of financial security is protecting ones income. Yet 42% of the American workforce reports it could not cover its financial obligations for more than a month, in the event of job loss.9 Thirty percent of U.S. households have no life insurance.10 So, its no wonder that more than two-thirds (68%) of younger workers and more than half (58%) of Boomers report they are deeply concerned about coping with sudden income loss risks that may ultimately be addressed by life insurance and disability income protection coverage. Small business employers can play an important role in helping ensure that their workers have access to adequate income protection. Many employees are unclear about how much coverage they need and in the case of disability insurance even how it works. Online insurance calculators, often available on carrier websites, can provide easy and no-cost solutions for educating employees of all ages on this important issue. If providing adequate levels of life and disability insurance for employees is beyond the scope of the benefits budget, consider offering supplementary life and disability products that permit employees to buy the coverage they need at the workplace. In addition, of course, communicate these opportunities clearly and often to employees.
Younger Workers
68
42
%
deeply concerned with sudden income loss
Boomers
58
30%
%
cannot cover financial obligations for more than a month
American Workforce
10
FIG 8
It is important to ensure that selected financial education topics and forums meet the preferences of both older and younger workers
Small business employees are interested in...
Online tools
66%
52%
59%
41%
53%
40%
50
38%
42%
31%
I Younger Workers
I Boomers
11
Section 3
Americans have come to expect a wide choice of products and services in every aspect of life, and benefits choice is no exception. Employees today say that they are looking for a wider variety of benefits to choose from, and they prefer that programs be customized to their individual circumstances and generational interests. This is especially true for younger employees who are already accustomed to personalizing their world through technology (FIG 9). This can be a challenging expectation for small businesses budgets that may not be able to stretch to add employer-paid options to meet diverse employee needs. When asked about projected benefits changes over the next five years, less than half of small business employers say they are planning to respond to employee preferences for increased choice and customization.
FIG 9
Small business employers lag in adapting benefits programs to respond to employee desire for customization and choice when it comes to benefits
Younger Workers
Boomers
Employers
74%
71%
72
64%
66%
64%
44%
46%
47%
12
Take their word for it employees are willing to pay to get the benefits they want
Workers understand that when it comes to benefits the deal with their employers is different today, and they no longer expect their employer to foot the entire benefits bill (FIG 10). Indeed, since entering the workplace, younger workers have always had to reach into their wallets for co-pays and deductibles. Even Boomers are more accepting of this new reality. Voluntary benefits, where employees pay 100% of the cost of benefits through the workplace, are clearly a viable solution for small businesses and can serve to fill gaps and supplement employer-paid programs to provide a more holistic benefits offering.
FIG 10
Employees of all ages would rather pay for benefits than lose them
66
Younger Workers
53
Boomers
13
FIG 11
2010
2011
This is a missed opportunity for small businesses one that could be costly when it comes to attracting employees. The Study shows just how much benefits factor in decisions to choose one employer over another especially for younger workers (FIG 12).
14
FIG 12
Benefits are more important for attracting younger workers than older workers
Small businesses (2 499 employees)
Younger Workers
46%
The employee benefits offered to me were an important reason why I came to work for this employer.
29%
Boomers
Currently there is a discrepancy between employee interest in voluntary benefits and the percentage of small business employers who offer them (FIG 13). This gap is especially notable for younger workers. There is significant opportunity for smaller companies to stand out from the competition by adding these desirable programs. The next step should be to explore where voluntary products can be offered and thus effectively motivate and satisfy employees. Smaller companies may be able to obtain this feedback from informal employee communications rather than formal surveys.
15
FIG 13
Life Insurance
Dental Coverage
20%
28% 38%
Disability Income Replacement Coverage
8%
2% 31% 44%
40%
I Companies with 2 499 employees that offer voluntary products I Younger Workers interested in the product even if they have to pay 100% of the cost I Boomers interested in the product even if they have to pay 100% of the cost
16
Introduce
Voluntary benefits also provide a low-cost way to introduce non-traditional benefits with employee appeal. Think broadly and beyond the standard benefits offerings. Consider programs such as legal services that may offer a convenient and affordable resource for will preparation, child adoption or identity theft resolution. Or, explore offering auto and home insurance through the workplace, which provides the advantages of group rates and timesaving payroll deduction.
Actively
market voluntary benefits to drive increased participation and appreciation It will be important not only to inform employees about their employeepaid benefits options but also to actively market these opportunities. Employees need to fully understand and appreciate what the benefits do for them and how they are relevant. Although this may sound arduous to an overworked small business employer pulled in many directions, benefits advisers and carriers offer a range of solutions that can do the heavy lifting.
41% of small business employees say that access to benefits information on the Internet would be helpful.
Minimize
administrative angst
The service and enrollment experience for small businesses has evolved, and voluntary benefits administration is not as onerous as it once was. Many brokers and carriers now offer convenient, webbased enrollment tools that provide a simpler, quicker enrollment experience one that integrates multiple provider enrollments for reduced administrative responsibilities, provides participation reports, reduces costs and frees up time to focus on running the business. Such systems can also boost participation because employees value the ease of enrollment as well as guided decision support from calculators to live operators to help them understand and make the best benefits choices.
17
Section 4
The Affordable Care Act recently survived the challenge to the constitutionality of the individual mandate in the U.S. Supreme Court and, for businesses with more than 50 full-time employees, implementation will move forward. (There may still be significant legislative challenges for health care reform ahead, depending on the outcome of the 2012 presidential election.) The Affordable Care Act contains provisions to help small businesses make health care coverage available to their employees, such as the availability of Small Business Health Options Programs (SHOP exchanges) where small businesses will be able to access affordable insurance for their employees. The opportunity to provide affordable health coverage has advantages for small business employers because 59% of small business employees cite health coverage as a reason for their loyalty to the company. Moreover, healthy employees are productive employees. Although details of the legislation are still complex and developing, small business employers should work closely with their advisers to consider how they will comply with the Affordable Care Act and if it presents them with new opportunities to increase employee satisfaction.
Over the last decade, for many employees there has been an inexorable rise in their health care costs. With increased premiums, higher deductibles, and larger co-pays, many families are now unable to afford to pay their out-of-pocket costs. Supplemental health products, such as employee-paid critical illness insurance, accident and hospital indemnity products, vision benefits and dental insurance, have a great deal to offer employees facing this challenge. These programs cost much less than medical plans vision benefits, for example, can be as little as one tenth of the price. They are benefits that nearly everyone can use, and they provide high value/high return for employees and employers.
18
Some of these newer benefits will be unfamiliar to employees. For example, 72% of full-time employees said they have never heard of critical illness insurance and two-thirds of those who have heard of the product confuse it with health insurance and disability coverage.11 However, once the products features are explained and they understand that critical illness insurance provides a lump sum cash payment to help with the extra bills associated with a serious illness, employees find the concept of the benefit appealing and most are willing to pay the entire premium.
Improve
health outcomes
Supplemental benefits are also beneficial to employers as they can improve health outcomes and enhance wellness. For example, employers may recognize that vision benefits are popular with employees, but they may be surprised to learn about the added advantage of encouraging employees to get regular eye exams. Eye doctors are often the first to uncover diseases such as diabetes and hypertension at a stage where they are less costly to treat and before complications sap productivity.12 Additionally, the connection of dental health and overall health is well established, and employees with dental benefits are more likely to get regular dental checkups. A healthier workforce is associated with improved productivity and lower health costs for the company.
19
Conclusion
20
End Notes
1 2 3
Business This Week, The Economist, April 7, 2012 ADP Employment Report, June 2012 This and subsequent employee quotes are from MetLife qualitative research conducted in Summer 2011 or from video interviews with employees conducted in Winter 2011. Respondents are from companies of all sizes All data referenced is from the 10th Annual MetLife Study of Employee Benefits Trends unless otherwise indicated Fifth Annual MetLife Study of the American Dream, 2011 A Balance Sheet at 30 Months: How the Great Recession Has Changed Life in America, Pew Research Center, June 2010 Work-Life Balance, Bloomberg Business Week, March 27, 2009 9th Annual MetLife Study of Employee Benefits Trends MetLife Study of the American Dream, 2011 LIMRA Life Insurance Ownership Study, 2010 MetLifes Financial Impact of a Critical Illness Study, April 2010 Human Capital Management Services Group (HCMS), April 19, 2011 Generations are defined as full-time employees: Gen Y born 1981 2000. Respondents are age 21 and older Gen X born 1965 1980 Younger Baby Boomers born 1956 1964 Older Baby Boomers born 1946 1955
4 5 6 7 8 9 10 11 12
21
1900033423(0712) 2012 METLIFE, INC. L0712266929(exp0913)(All States) PEANUTS 2012 Peanuts Worldwide
Metropolitan Life Insurance Company 200 Park Avenue New York, NY 10166 www.metlife.com