(by Jordan Johnson)
How to avoid employee retention mistakes is on the minds of many HR teams across the country, especially during ‘The Great Resignation.’ Employers are looking for ways to improve and it’s best to start with employee benefits.
Organizations that offer benefits that never come to fruition, whether by design or accident, will find their employees to be more disengaged, unproductive, and ready to look elsewhere for employment.
What problems are organizations facing when offering benefits?
The problem for organizations comes when employees realize that the benefits that drew them into the organization are unattainable, invaluable, or simply a burden, which can seriously affect employee retention.
Here are some examples of such benefits at a glance:
- Health insurance with high-premiums and lousy coverage.
- Discount programs that benefit the employer more.
- ‘Unlimited vacation days’ that come at the manager’s discretion.
- Childcare vouchers for those without children.
- Free gyms and free lunches for those who don’t use them.
It’s not that employees want to see critical benefits removed from their peers; they just want a fair deal and receive what they signed up for, without gimmicks they can’t or won’t use.
“When employees feel cheated, they retaliate and give it back to the company when they get the right opportunity” – Sunil Singh.
While comprehensive benefits look good on the surface, once employees begin to think about their overall package, they may realize it’s much more diluted than they initially thought. The last thing an organization wants is for its employees to feel duped!
An example of promised benefits that don’t always work out.
Using ever-increasing healthcare costs as an illustration, let’s explore how employer-sponsored healthcare may be inaccessible or a burden to some.
The average premium for a family health insurance plan in 2021 was $22,000, with many employers across the US fronting around 73% of the bill for a total contribution of about $15,000.
That said, many healthcare providers only require employers to contribute a minimum of 50%, and so some Americans will be left to come up with $11,000 out of their salary to ensure their families are covered.
That means many on the higher side of coverage are typically getting a great deal, but those whose employers aren’t contributing as much or offering enough coverage might be left in the dark.
So, can benefits be a burden?
Sometimes. Government healthcare subsidies typically only become available to individuals when their employer-sponsored healthcare plan is considered unaffordable.
Currently, the affordability rate is 9.61% of total household income, and that’s just for the employee, not their family. Furthermore, employers are only required to offer insurance that covers an average of 60% of medical costs, similar to bronze-level insurance.
This means the scope for individuals to find more suitable healthcare plans is diminished simply because their employer isn’t looking out for them.
And does that affect overall retention?
If you want to avoid these employee retention mistakes, it’s more important than ever to offer flexible health insurance that meets the needs of the individual, as premiums are getting more expensive than ever, and the minimum coverage is lousy.
Depending on the individual, it could make more financial sense to avoid the insurance plan offered by their employer, perhaps if they have better coverage from a spousal or family plan, which is unfortunate given tax advantages are non-transferable.
That’s bad news in an environment where many employees choose one job over another simply because of a better benefits package.
Are organizations communicating their benefits correctly?
Communication issues relating to benefits can also affect retention rates. For example, when employers don’t know what they are getting, how their benefits work, or how they match up to their peers, they might feel they are getting a bad deal.
Consider implementing the following strategies if your organization is having communication issues when it comes to benefits:
- Be clear about what you are willing to offer.
- Don’t promise benefits that go unfulfilled or are gimmicky.
- Keep up-to-date with benefit renewals and talk with your employees before renewing any contracts.
- Don’t silence your employees from discussing their benefits package with their peers.
- Gather and utilize feedback about benefits from employees.
- Don’t be afraid to have conversations. It’s not awkward; it’s important.