Benefits programmes missing the target

Mar 12 2007 by Nic Paton Print This Article

Most American workers are unhappy with the benefits offered by their employer, believing they are being failed on even the basics of healthcare and retirement provision, in turn fuelling a worrying negativity about their companies and leaders.

Research by consultancy Towers Perrin has found that, while Americans by and large recognise it is ultimately up to them to finance and managing their benefits, especially retirement, employers are nevertheless failing to shoulder enough of the financial burden.

The vast majority of the 2,400 employees polled felt their benefit programmes were not very effective at meeting their needs for affordable health care and building their retirement nest eggs.

More worrying, this resulting frustration led to other, wider negative feelings about their company and its leadership, with potentially adverse consequences for productivity and performance, the study warned.

This was also clear when Towers Perrin looked at what the executives who ran the programmes felt about them.

Fewer than half said their programmes were very effective at meeting recruiting and retention objectives or, in other words, persuading people to stay when they might otherwise jump ship or attracting people to join in the first place.

"Ultimately," said Dave Guilmette, managing director for Towers Perrin's health and welfare practice, "it may be time to revisit certain assumptions about benefit design and delivery, because this survey shows that current approaches are not working as well as they should for employers or employees.

"Program changes are not yielding desired savings. They are not serving to attract and keep top talent as effectively as they could. And they are not being communicated to employees in a way that helps them take on a more active role in the process," he added.

The survey also found almost two-thirds of employees recognise that rising benefit costs are a serious business issue and so benefits programmes may require new approaches.

Most employees, too, agreed they had some or significant responsibility to create their own benefit safety net, particularly when it came to retirement saving and, albeit to a lesser extent, in healthcare.

Yet employees also did not believe their companies were rolling out changes in their programmes with enough support and communication.

The survey also highlighted another misconception on the part of employees: that the worst may be over in terms of ongoing changes to benefit programmes, particularly pensions.

More than half of the employees anticipated no more changes to their retirement savings plans over the next two years, while just under half thought there would be no more changes on the pension side.

Yet, the findings from employers were quite different, with a significant majority anticipating further changes in both healthcare (90 per cent) and retirement plans (more than 60 per cent).

"With most employers planning to review and further change their benefit programs in the next two years, there is an urgent need to reconnect with employees and build a meaningful change and communication process that helps employees adapt and make better decisions," said Steve Kerstein, managing director for Towers Perrin's Retirement practice.

"Employers that don't manage the change process well face significant downside risk on multiple fronts," he added.