Employee retention and cost control are the top two benefits objectives for most employers, according to MetLife's 6th Annual Employee Benefits Trends Study. However, for employers in the manufacturing industry, cost control issues dominate -- nearly two out of three (62%) manufacturing employers indicated cost control was their top benefits issue compared to 48% of employers across all industries. The current economic climate is certainly increasing the pressure to contain costs. However, employee benefits programs can also be strategic differentiators aiding in addressing employee loyalty, satisfaction and retention goals. How then can manufacturing firms maximize their benefits spend to address employee retention goals and still keep costs in check? One strategy is to broaden the use of voluntary benefits. Voluntary benefits, where the employee pays most or all of the cost of the premium, provide the ability to enhance a benefits program without adding notably to an employer's overall benefits spend.
Using Voluntary Benefits
Which voluntary benefits will be most effective for achieving business objectives? To answer this question, it is important to understand what other employers in the same industry, region, or size are offering. It is also important to have insights into which benefits are most valued by the employees that comprise your workforce. Age, gender, life stage and family status are all factors affecting employee desires and decision making. Benefits benchmarking can provide new perspectives on benefit practices. MetLife has made available an online Benefits Benchmarking Tool at whymetlife.com/benefitsbenchmark that easily allows for the comparison of benefit offerings and objectives through customized queries in 35 areas.
As the MetLife Benefits Benchmarking Tool slices the data along different segments interesting stories unfold. One such story is with regard to dental benefits. Across all employees surveyed, dental benefits are among the top five most important benefits. However, among young singles (ages 21 through 34); dental benefits rise to second in importance - valued slightly more than vacation time. Considering how Generation Y workers are nearly twice as likely to switch employers as their older Baby Boomer colleagues, if your goal is to attract and retain these younger workers you should take a closer look at this demographic's benefits preferences.
While some employers may feel that medical expenditures make it difficult to manage any cost for a dental plan (the Benefits Benchmarking Tool reveals that manufacturing employers are spending 56% of their total benefits spend on medical coverage), not providing dental coverage can have both direct and indirect costs. For one, employee benefits satisfaction might be affected given the value employees place on that benefit. Furthermore, MetLife research also reveals that one out of two people without dental benefits will not see a dentist. Poor oral health could, in turn, lead to medical implications having an adverse effect on a company's health insurance, disability, and absenteeism-related costs, not to mention the personal financial impact to employees. While most large employers offer dental insurance, the percentage decreases significantly among smaller employers. Only a little more than half (58%) of employers with 2 to 49 employees offer dental coverage. That number rises to 69% for employers with less than 500 employees but escalates to 90% for employers with 500 or more employees. Therefore, if you are not currently offering dental coverage, a voluntary dental program can be a way to offer a competitive benefit program while balancing employer budget concerns. A voluntary dental plan can be designed to cover preventive and diagnostic services, with cost sharing for the more expensive dental services.
The MetLife Benefits Benchmarking Tool also provides insights into factors affecting employee loyalty. The Tool actually reveals a disconnect between employers and employees in this area. For instance, employers in the manufacturing industry indicated that the top three factors affecting employee loyalty were: 1) salary/wages, 2) health benefits, and 3) company culture.
While employees did have salary/wages and health benefits as their top two, their number three may come as a surprise. Retirement benefits and advancement opportunities tied for third. A loyalty gap can be seen clearly with this example -- 73% of manufacturing employees say retirement benefits are an important factor in loyalty, whereas only 36% of employers in the manufacturing industry say the same. In addition, use of the Benefits Benchmarking Tool reveals that more than half (51%) of manufacturing employees are interested in having their employer provide access in the workplace to financial planners for retirement needs. This is a significant since 52% of manufacturing employees also state they are behind in their savings goals for retirement.
While benefits benchmarking can help to better align a company's benefits offerings and strategies with employee attitudes and expectations, it is also important that your employee communications are effective. Only 41% of employees in the manufacturing industry believe that their employers' benefit communications effectively educate them about the overall benefits program. Improving employees' understanding of their benefits can help them appreciate the value of what they receive in the workplace. Interestingly, MetLife research has found that among employees who are highly satisfied with their benefits, 85% plan to be working for their current employer 18 months from now, compared to just 50% of those who are not satisfied with their benefits.
Take the time now to utilize benefits benchmarking to better understand your workforce's needs, expectations and where your company's benefits programs fit in the competitive landscape. The MetLife Benefits Benchmarking Tool is another resource that can help you to better position your benefit program to help you meet your current -- and future -- business objectives.
Robert C. Love is a Senior Vice President at MetLife Institutional Business. MetLife is a provider of insurance and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. For more information, please visit www.metlife.com.