Strategic Benefits Planning

Building a Better Workforce

How voluntary benefits are critical to any ‘attract and retain’ strategy

by Chris Wilson

Mr. Wilson is Regional Practice Leader, Voluntary Markets for Reliance Standard Life Insurance Company. Visit

No one starts their first job anymore expecting the trusty model of the career track. One simple “You’re hired!” used to signal the start of a long, satisfying career at the same firm. Case in point, here at Reliance Standard our current CEO started his career as a sales representative in 1984 and never left! His entire career arc has been spent in a single industry niche, with one employer.

In today’s reality, this is an elusive and unreasonable expectation from both employers and job-seekers. There’s both an opportunity and a drive for continuous improvement and advancement, and a generational restlessness that places even greater pressure on businesses to be flexible, innovative and responsive to the prospective work force in order to remain competitive.

Similarly, economic cycles have sent a loud message to the brightest, most talented and successful employees: Winners are agile and mobile. Rather than settle with one company and hope for the best, younger workers are focused on updating their skills. Rather than wait for the right time for a promotion at their current firm, they don’t hesitate to search elsewhere so they can ladder up as quickly as possible.

In 2019, no one is ever really finished with job hunting and hiring. With historically low unemployment rates, the balance of that burden skews toward businesses. In September 2019, unemployment rates in the U.S. reached a new milestone. At 3.5%, the jobless rate is the lowest it’s been since December 1969, according to the Bureau Of Labor Statistics.

Today’s business climate offers no silver bullets to the talent shortage. At the root of the problem, there’s still a universal truth: Employees still view their employer as a source of financial stability. One way to remain competitive is to strengthen the compensation package. An employer’s benefits strategy is an integral part of that, and the following will examine why.

Health benefits are no longer enough

Most businesses struggle when it comes to inspiring high-quality, well-qualified workers both to apply for positions and stay for longer tenures. But if employees are still after financial security, you can better meet their needs by understanding some of their most significant financial challenges.

Health care expenses rise to the top of their list of financial challenges. For decades, employer-issued health insurance was a reliably sound fortress against financial hardship. But take a look at these sobering trends, and it’s clear that the traditional fortress offered by health insurance has weakened considerably. Employees need more protection, and the following illustrates how and why.

Escalating health costs:
In the past decade, out-of-pocket health spending has risen. According to the Kaiser Family Foundation 2019 Employer Health Benefits:

  • Since 2009, family premiums have increased by 54%. In 2019, the average family health insurance premium reached an all-time high of $20,576.
  • Most employees pay a portion of those premiums, on average of $6,015 a year for family coverage, while employers pay the rest.
  • Nearly one-quarter (22%) of workers on a family health insurance plan have a deductible of $6,000 or more.

Bottom line, even if someone has a job with health insurance benefits, all it takes is one serious event for someone to incur a five-figure medical debt.

Embarking on the second recovery:
 When an employee (or a covered family member) has surgery, fractures a bone or navigates a serious illness, such as cancer, they need to take time for physical recovery. Thanks to high premiums and high deductibles, these patients also face a second recovery and it’s a financial one. In many cases, most people are ill-equipped to take that on. According to the U.S. Federal Reserve Report on the Economic Well-Being of Households in 2018:

  • 39% of Americans don’t have enough in savings to pay an unexpected $400 in expenses.
  • 20% of adults had significant, unexpected medical bills to pay in the prior year.
  • 40% of these had unpaid debts from these bills.
  • 25% of adults skipped needed medical care in 2018 because they couldn’t afford the costs.

As the employee navigates this second recovery, it comes at a cost to businesses. Many surveys and studies have drawn a correlation between financial wellness and workplace productivity, including this one by PwC (PricewaterhouseCoopers). In 2017, their findings showed that nearly half (46%) of employees say money, and their struggle to pay monthly bills, is their most significant stress. Money stress affects their productivity (22%), and causes them to miss workdays (12%). On top of that, half (50%) spend three or more hours during the workday addressing their personal finance issues. Given the hit on productivity, the hidden costs of financial recovery to a company are genuine.

Covering the gap:
 When employers offer voluntary benefits, they can eliminate this wide-open gap left by deductibles and other medical costs. Short- and long-term disability insurance, hospital coverage, critical illness coverage and accident coverage all provide valuable financial reinforcements employees need during their time of medical crises. These benefits offer coverage for things like out-of-pocket medical costs and in some cases, they can even replace a portion of their lost wages during an extended time off work.

These days, having this high level of financial reinforcement during a medical crisis is rare. When employees know their employer benefits have their back, it gives them tremendous peace of mind. Better yet, it frees them up to focus on the essential things, like healing and recovery, seeking the medical care they need to stay healthy, and staying on task at work. That’s why robust coverage in the workplace is a critical part of any workplace recruitment and retention strategy.

Recruiting and retention: What drives employees to seek greener pastures?

Losing a valuable member of the team is always a setback to a company. Unfortunately, it’s become more a norm for business than an exception. According to the Bureau of Labor Statistics, the employee “quit rate” has risen year-over-year since 2010, exceeding 40 million in 2018. Finding ways to recruit and retain highly skilled employees takes top priority.

When turnover is high and economic opportunities abound, it’s worthwhile for any company to conduct some soul searching. But regardless of how the economy is performing, it’s a valuable exercise to know the common factors behind an employee’s motivation to seek out greener pastures. Many factors exist, but the Work Institute names the top 10 reasons in 2018 behind employee departures (listed in no particular order):

There’s a plethora of survey data out there that confirms what you’ve already suspected: The annual benefits meeting is too technical, too complicated, leaving employees in the dark on the actual value of their benefits...

1. Retirement

2. Career development/opportunity

3. Work-life balance

4. Manager behavior

5. Compensation and benefits

6. Well-being

7. Job characteristics

8. Work environment

9. Relocation

10. Involuntary

Preventable departures:
When you look at the common preventable reasons, like career development, compensation, well-being and environment, they come together into one common theme: Employees desire a workplace that meets their basic needs. Part of that is taking a role where they can use and develop their skills, because it empowers them to earn enough to support their families and secure their financial future. When things like management, work-life balance and environment fall below expectations, it’s easy to see the motivation to leave.

Examining these categories systematically — opportunity, a safe and positive environment, a supportive boss — can go a long way for a company to create a workplace of choice. Since 2010, quitting over pay and benefits has risen by a whopping 26%, and in survey after survey, employees cite pay and benefits as a top reason for leaving. While the other factors are worthy of attention and effort, getting financial security right should take top priority

The high price of turnover: 
When turnover rises, it can affect not only the performance of the team, but it can also cost organizations more money in the long run. Consider the direct costs of off-boarding (such as reimbursing an employee for accrued paid time off), recruiting, hiring and training. Indirect costs include lost productivity and time spent helping the replacement learn their new role. As a rule, the costs associated with employee turnover equate to 20% of that person’s salary. In many cases, this would exceed the cost of raising pay and benefits.

The benefits solution:
 The first solution that comes top-of-mind is paying a market-rate or competitive salary. But employers may not realize the answer should go deeper than that.

Take a look at the average employee’s top financial worries, and it becomes clear how a robust benefits package can lock in a heightened sense of security. When money stress is this universal, providing a measure of relief can make you stand out from other employers. According to PwC:

  • 59% of employees cite money as a primary source of stress, ranking it higher than relationship stress, health concerns and even job stress.
  • Nearly half, 49%, struggle to meet their monthly expenses.
  • More than 80% of workers say they expect they’ll have to continue working once they reach retirement age.

When you look at the things that a robust voluntary benefits plan covers, from retirement, accident coverage, long-term disability, and how they address the big-worry issues that top people’s lists, the solution is clear.

The Final Hurdle: Educating Employees

Now that you know that money worries are on the minds of employees, and how medical expenses threaten financial security, a suite of voluntary benefits is the solution that offers that protection. Once those financial reinforcements are in place, it’s critical to get the next part right: Telling them what their benefits are and how they help them.

Unfortunately, many employers, insurers and brokers fall down when it comes to helping everyday people understand their benefits. There’s a plethora of survey data out there that confirms what you’ve already suspected: The annual benefits meeting is too technical, too complicated, leaving employees in the dark on the actual value of their benefits. When that much information is coming at them in a short period, expect many to get overwhelmed and tune out. When the time comes to make these big financial decisions, the last thing they want to do is choose incorrectly, especially when out-of-pocket premiums are on the line.

How do insurers and brokers do a more effective job of conveying the value of voluntary benefits? These simple strategies can help:

  • Convey the value: Use specific dollar amounts to show employees how voluntary benefits are a powerful shield against financial risks.
  • Customize: Clear the information clutter with decision tools that use predictive analytics and medical claims data to offer a customized list of choices.
  • Humanize: Illustrate the value of voluntary benefits using situational stories that show how they actually work.
  • Streamline: When employers offer full voluntary coverage, it eliminates the decision-making step. Given the high cost of turnover and financial stress on employees, doing so provides an indisputable return on investment.

A Few Steps Ahead…

Within a generation, the mindset around careers and hiring has shifted considerably and, as a result, star employees are always thinking a few steps ahead. Through these shifts, one thing has remained constant: Employees still very much view their employers as a primary source of financial security. As the evidence shows, financial stress is a top source of worry for employees, and out-of-pocket medical expenses constitute a significant threat to the financial security of many Americans. These factors can take a hit on workplace productivity.

However, insurers and brokers hold one part of the solution that lets employers offer enhanced financial security for employees. Much can be accomplished in providing a well conceived, well executed suite of voluntary benefits. ◊