Key to employee retention: build your own benefit plans
Customization is the key to building a benefits package that appeals to all ages, according to the CEO of a national benefits advisory firm.
Five generations are currently working side by side in the U.S. workforce, and that’s unlikely to change in coming years. The Bureau of Labor Statistics projects that a quarter of the workforce will be age 55 and up by the year 2028. Around 22% of the workforce will be between the ages of 25-34. With so much age diversity, employers will have to get creative if they want to appeal to their entire workforce.
“Employers who want to be competitive in a tight labor market have to stop using one-size-fits-all benefit packages,” says Elliot Dinkin, president and CEO of Cowden Associates, a Pittsburgh-based benefit adviser firm. “Different generations have different priorities and goals; the most competitive packages will reflect that.”
Dinkin spoke with Employee Benefit News about how employers can develop flexible benefit offerings.
How can benefit offerings be flexible?
You can tinker your offerings to be specific for individuals. Employers can do this by creating trade-offs that give employees more of, or redirect, a benefit based on where they are in their career. It might be complex on the administrative end, but it can be worked out and will ultimately differentiate you as an employer.
Why do you think this model will attract and retain employees?
Even if you have great health plans, it might not be all that appealing to employees based on where they are in their lives. Having flexible benefits makes it possible to cater to all demographics.
How would younger workers benefit from flexible offerings?
If I’m coming to your company straight out of college, I won’t care that you offer a great 401(k) plan. I’m either going to want more money or tuition reimbursement. A higher starting salary is always great, but a lot of people graduating college have student loans; tackling that is going to make their life better, and help you stand out as an employer.
Since these workers probably won’t sign up for the 401(k) anyway — because they’re so bogged down with student loans — you can add what you would’ve spent on their retirement match to their salary, or you can reallocate the contribution to their student loans.
The same can be said for healthcare benefits. If I hire someone who’s 22, they have four years until they’re taken off their parent’s health plan. That means I can take what I would’ve spent on their healthcare to help pay off their loans for the next four years.
What about more seasoned workers?
Again, depending on what their priorities are, they’re either going to want more retirement contributions, PTO or voluntary benefits — like life insurance and disability.
One way to do this is to change the design of your 401(k) plan so employer contributions increase with employee age and years of service. Employees who are getting closer to retirement will appreciate higher contributions. Or, if they want more PTO, another option is they can turn in some of their employer’s retirement contributions to receive more days off.
Young employees aren’t the only ones who waive employer health plans. If you have an employee who’s covered on their spouse’s company plan, you can redirect the contribution to provide more voluntary benefits.
Also, employers have a tendency to award bonuses to employees who’ve capped their salary. It’s a strategy for retaining people who are generally very experienced and talented workers. But bonuses aren’t very creative. Instead, employers can use that money to purchase better life and disability insurance for these employees. It gives them more recognition for their service than a bonus that’s automatically added to their pay.
How do employers offer these benefits without opening themselves up to age discrimination lawsuits?
Generally that won’t be an issue if it’s all voluntary and employees have the freedom to choose how their benefits are tailored.