Employee Benefits: Managing Benefits and the MessagePay Attention or Pay Big
Understanding the Issue – 4 Ways to Manage the Message to Employees
GIVING RAINCHECKS ON RAISES?
With inflation hovering around seven percent, and the cost of just about everything consumers purchase up by… well, a lot, employees are finding that their pay is not going as far as it once did. And they’re asking their employers for raises to make up for it. According to a recent survey by payscale.com, 69% of workers who asked for a raise last year, did not get one, and didn’t believe or were not provided the rationale behind the decision plan on seeking out a new job. That can be concerning… particularly for employers who denied them.
CAN YOU SAY… TURNOVER?
Typically, when employees feel underpaid or want more money, they switch jobs. In today’s job market where open positions outnumber people looking for work by almost two-to-one, there is ample opportunity for workers to find another job – and at a higher rate of pay that can more than cover the impact of inflation.
A recent study by ZipRecruiter found that about 63% of recent hires got raises when they started new jobs while about half of them gained raises of more than 10%. They didn’t have to look very long, either. According to the latest Bureau of Labor Statistics data, the average length of unemployment is about nine weeks, the same as it was back in 2020. With the cost of living rising, purchasing power of pay dwindling, and opportunities for finding a new job extremely promising, employers who find it difficult to meet expectations for raises may face a harsh reality: pay employees now or pay (even more) later.
HOW CAN EMPLOYERS MANAGE THE MESSAGE TO EMPLOYEES WHO SEEK INFLATION-SPARKED RAISES?
If your organization can’t afford higher-than-planned wage hikes at this time, consider leveraging the power of your benefits program to let employees know what you’re already doing to put more money in their pockets.
Did you pick up employee healthcare costs last year? Are you planning to this year?
Many employers absorbed the cost of health plan increases last year to keep health plan premiums level and minimize the rising impact of inflation on employees’ take-home pay. Others reduced cost-sharing amounts.
According to the 2022 Employer Benefits Study from the Kaiser Family Foundation, employers made contributions to employee savings accounts to reduce their personal financial obligation for health care, one of the highest costs they have today.
14% of covered workers in an HDHP with a Health Reimbursement Arrangement (HRA), and 3% with a Health Savings Account (HSA)-qualified HDHP received a contribution greater than or equal to their deductible. Source: KKF, 2022
Do you provide mental health and wellness services at little or no cost to employees?
Often employee assistance programs (EAP) can be an affordable way for employers to provide employees with free access to highly valued mental health services. Some even include a number of free counseling sessions, demonstrating how employers are helping take care of employees’ mental AND financial health… beyond raises.
Thirty-five percent of employees surveyed feel mental health benefits are more important than salary or higher pay. Source: SHRM Foundation
Did you roll out new benefit offerings that can lessen the impact of inflation?
Student loan assistance. Childcare subsidies. Contributions to dependent care accounts. Not only are these important benefits for employees today, but they are also ones that can help lessen the impact of inflation on an employee’s wallet.
Can you/did you provide greater access to no-cost, high-value benefits?
Some of the benefits employees value won’t cost employers a cent to provide, such as flexible work schedules, remote work, and four-day-work-weeks. But they will go a long way to proving you are sensitive to their needs and doing what you can to help lower the rising cost of living.
For example, work-from-home can cut down on commuting expenses, like gas and transit fees, which saw sharp spikes in pricing and had an impact on employee paychecks last year. By eliminating gas and public transportation fares from the equation, employees can end up with more in their pocket.
Strategies to Manage the Issue – 5 Ways to Offset the Raises Your Employees Expect this Year | Help Employees Manage Finances with Confidence in an Uncertain Economy
Salary and wages are historically the biggest factor in compensation. But benefits are a significant portion, as well. However, despite the sizable investment employers make in their workers, many do not have a full picture of (or appreciation for) the entire compensation package they receive. And that can lead to unnecessary turnover and higher recruiting and retention costs for a company.
In LIMRA’s 2022 BEAT Study: Benefits and Employee Attitude Tracker:
- Almost 2/3 of U.S. employees say benefits, beyond salary, are important for staying with an employer.
- 3 in 10 say they’re not even sure if their employer offers the benefits they want the most, like health, dental, and flexible work arrangements!
As of September 2022, the U.S. Dept. of Bureau of Labor Statistics (BLS) reported that:
Total Compensation Costs Employers Pay Employees
- BENEFITS 29.5%
- SALARY 70.5%
Help Employees and Recruits Understand the Total Value of their Compensation Package:
A total compensation statement can be a useful tool to make employees aware of how much they receive every year… beyond salary and how much you’re investing in them. A typical total compensation statement may include information about:
- Financial benefits, like salary
- Health benefits, like medical insurance
- Nice-to-have perks, like free meals, parking, or company-paid gym memberships
As helpful as they are, however, total compensation statements can be time-consuming to put together and update every year. To make that task easier, use the following worksheet as a sample to create one that best reflects your compensation package. By documenting the value of each component in your plan and adding them up at the end, you can help employees realize their true compensation at your organization.
KEY COMPONENTS OF YOUR TOTAL COMPENSATION PACKAGE
The annual amount you pay an employee. $__________
The amount of any initial sign-on, retention or annual bonuses you provide employee. $__________
The amount an employee earns on the sale of products or services. $__________
How much you contribute for single coverage. (The average amount employers contribute for each of their employees is approximately $6,440.) $__________
Health Savings Account:
How much you contribute to offset the amount employees have to pay out-of-pocket to meet health plan deductibles. (According to recent estimates, the average contribution was $600.) $__________
Mental Health Benefits/Employee Assistance Program (EAP):
How much you pay per employee per year for free access to mental health benefits and/or dollar value of free virtual sessions. $__________
Dental/Vision Care: How much, if any, you contribute for single coverage. $__________
How much, if any, you contribute for short- or long-term disability coverage. $__________
Retirement Plan Match:
How much you will contribute to an employee’s retirement plan (The average employer match is about 3.5% of annual salary.) $__________
The annual cost you pay to provide each employee with a free amount of life insurance. $__________
How much of a stock grant/bonus, if any, you provide to new hires and employees. $__________
Student Loan Repayment:
How much you contribute to help employees repay student loans. (The CARES Act allows employers to pay up to $5,250 tax-free per employee.) $__________
Cell Phone and Other Equipment:
How much of an allowance you pay every year toward an employee’s cell phone bills and/or other equipment, such as laptop, computer, printer, etc. $__________
How much of an allowance you pay every year to reimburse an employee for using his/her car for business. $__________
The annual amount of PTO you offer employees: e.g., daily wage x # of days off per year. $__________
Holidays and Personal Days:
The number of days off/holidays you offer employees: e.g., daily wage x # of days per year. $__________
Company-Paid Fitness Offerings:
How much you pay toward a gym membership for employees to maintain physical fitness. $__________
How much of a stipend or free lunch (e.g., Taco Tuesdays) you offer employees every year. $__________
Free Parking and/or Commuter Fares:
How much you pay toward employee parking or commuter fares on public transportation. $__________
Remote work arrangement:
Flexible work schedules:
COMPENSATION GRAND TOTAL:
Our employee benefits team can help you put together a benefits strategy that can help both employees and recruits appreciate the total compensation package you offer and motivate them to join (and stay with) your organization.
Will inflation keep rising? Will a recession rear its ugly head? These days, economic uncertainty is weighing heavy on employees.
A recent study from the World Economic Forum found that many workers are seeking financial help from employers beyond their regular paychecks.
39% are looking for pay raises outside normal review periods
30% said they need help affording current living expenses
Another survey from Salary Finance revealed:
~60% spend at least one hour a week dealing with financial issues while they are at work
1/3+ spend at least 5 hours per week thinking about it
NOTE: That can add up to lost productivity for employers… at a time when they’re also dealing with economic challenges.
So, what can employers do to help employees manage financial stress and keep productivity up?
Now more than ever, employers should engage their benefits broker and financial advisor for help delivering messages to employees about available resources to manage finances. Working together, employee benefits and financial advisors can help you deliver a cohesive benefit to your employees. A trusted financial advisor can help educate employees throughout the year, provide guidance that helps ease financial worries, and put current economic forces in perspective, so employees can have more confidence in their financial future. And your employee benefits team can assist with communicating the message and ensuring your employees understand the breadth and depth of these benefits available to them.
How your benefits broker and financial advisor team up to help your employees:
Highlight benefits that can help ease financial pain
Your benefits advisor can remind workers of the financial benefits you already offer that can help them get through a tough time. For example:
- Employee assistance programs (EAP) – that offer confidential counseling and often free sessions to talk through what’s going on and how to get meaningful help.
- Money-saving perks – like cycle-to-work programs, for example, that can help offset the high cost of gas and driving to work. Or vouchers than can be used for dependent care, or discount programs with major brands that can offer lower prices on everyday goods and services, such as groceries, oil changes, etc.
Lead webinars and meet with participants to be a resource for employees year round
Your financial advisor team can be available for webinars or Zoom meetings to give employees a greater sense of understanding and control about topics such as:
- The state of the market – to explain what’s going on in the economy and explain why it’s normal to have ups and downs over time.
- Financial literacy – to review the basics of how to budget, bank, borrow, and invest responsibly, and cover things, such as setting a household budget and cutting unnecessary spending to free up cash.
- Personal planning – to provide finance tips that emphasize the importance of:
- setting aside money for an emergency fund, as well as saving for long-term financial goals, such as: retirement, or buying a new house
- keeping a mix of stocks, bonds, and cash within investment portfolios or retirement plan accounts to help protect against inflation, for example, and market volatility
- staying calm and not doing anything rash that could severely compromise financial security
Evaluate your retirement program
Financial advisors can review your retirement plan with you and help identify the resources offered through it that can help you plan and stay on track for your financial future.
Suggest digital tools
Financial advisors can also guide employees to use helpful, easy-to-use tools to provide clarity around long-term retirement planning, such as:
- Quizzes to help identify how much risk an employee can handle.
- Interactive games to model “what if” scenarios that use current income, age, and savings rates to determine best- and worst-case scenarios for reaching goals.
- Point to online calculators that can:
- answer personal financial questions
- calculate interest and loan payments
- estimate taxes
- simplify how much employees may need to save and invest over time
Determining a Path Forward – Solutions to Help Manage Your Finances During Challenging Times – Contact Us Below.
By partnering with an experienced benefits broker and financial advisor team, employers can give employees tools to help manage their finances during particularly challenging times. For more information about how our teams can help your organization, contact us today.
This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.