People everywhere crave immediate gratification, so why should it be any different when it comes to their employee benefits?
Global HR consultant Mercer just released their Making Smart Benefit Choices survey of workers in 10 key markets (the U.S., UK, Ireland, Canada, Brazil, Spain, France, Italy, China and Hong Kong), and guess what they found? “Given the choice, employees worldwide tend to select benefits that offer immediate gratification rather than those that potentially deliver value over the long term.”
According to the survey, an extra week of paid time off was among the top-three employee choices in seven of the 10 markets surveyed (all but Brazil, Spain, and France). And underscoring this trend of “immediacy” over longer-term benefits, employees selected a salary increase over all benefit offerings listed in the survey (except in Canada, where paid time off edged out a salary increase.)
A challenge to understand and communicate value
“Employers worldwide are asking their employees to make more and more decisions for themselves when it comes to their benefit programs,” said Dave Rahill, President of Mercer’s Health & Benefits business, in a press release about the study.
He added; “Employees valuing more time off and increased pay in the current stress-filled economic environment may be understandable, but there are other benefits that have the potential to create more income protection through health benefits and income replacement through retirement and savings vehicles. This challenge puts even more pressure on employers deeply understand and communicate the value of various benefits to their employees so they can make smart choices.”
The Mercer Making Smart Benefit Choices survey talked to 10,400 workers in 10 key global markets during July and August 2012. The goal was to measure the perceived value employees place on various employer- and employee-paid benefits. The survey also asked employees to rank the kind of benefits they are willing to pay for themselves, often referred to as “voluntary” or “flexible” benefits. These benefits are usually paid for by the employee out of pocket or through an employer’s flexible benefits plan. These company-run programs can offer employees discounted prices compared to the open market.
In order to measure the value of the benefits, the Mercer survey took this approach:
All benefits included in the study were of roughly equivalent value. While not strictly a benefit, an additional salary increase of $500 was used as a benchmark variable against which to measure how benefits are valued by employees. In addition, we asked employees to select, from a separate list of voluntary benefits, the top three products they would be willing to pay for themselves through a voluntary benefit program.”
How U.S. workers rank their benefits
With a $500 salary increase set as the benchmark, here is the ranking of benefits by U.S. employees:
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- $500 salary increase — chosen by 22 percent;
- Additional week paid time off (PTO) — 18 percent;
- $500 401(k) increase — 14 percent;
- $500 health care premium reduction — 9 percent;
- $500 pension accrual — 8 percent;
- $500 in health spending account (HSA) — 7 percent;
- $500 health incentive (to reward a healthier lifestyle) — 6 percent;
- $500 tuition reimbursement — 4 percent;
- Onsite health clinic — 3 percent;
- Gym membership — 3 percent;
- Financial planning — 2 percent;
- $500 pre-tax transportation deduction — 2 percent;
- $500 for child care — 2 percent.
What “voluntary” benefits U.S. workers want
When it comes to “voluntary” benefits — the things that employees are willing to pay for out of their own pocket — the U.S. ranking came out like this:
- Disability insurance — chosen by 38 percent;
- Life insurance — 34 percent’
- Auto insurance — 34 percent;
- Accident insurance — 29 percent;
- Hospital indemnity insurance — 25 percent;
- Retail discount program — 23 percent;
- Critical illness insurance — 22 percent;
- Homeowners insurance — 22 percent;
- Long-term care — 19 percent;
- Appliance purchasing program — 17 percent;
- Pet insurance — 16 percent;
- Legal assistance — 11 percent;
- Identity theft insurance — 11 percent.
The only real surprise (to me, anyway) on this list is how low pet insurance ranks when it comes to voluntary benefits. That’s somewhat surprising given how many companies offer it as part of their benefit mix, and the ranking here tells me that perhaps it is more about hype than it is a huge employee need.
Finding a win/win for employers and employees
I also didn’t dig in to the various preferences in benefits among the various global markets for the simple reason that the choices that employees make among benefit offerings are often skewed by government polices, requirements, and cultural values and differences.
For example, the benefit preferences among U.S. employees will undoubtedly be very different in five years should Obamacare proceed along the course it is currently on. Such government involvement in employee benefits simply changes the nature of what organizations offer, and what employees choose.
If you work in HR, or management, and have a hand in what benefits get offered in your organization, you will want to read the Making Smart Benefit Choices survey to get a better fix on what you are doing now and may be doing down the road. Mercer’s advice on all of this is worth considering, too:
We recommend that all employers revisit the benefits they offer their employees, and this research can provide direction in terms of the perceived value employees place on various benefits. the win for companies would be to add benefits, both employer- and employee-paid, to their plans that show the biggest gap between perceived value by employees and real cost to the organization. these new benefits may be incremental to what is already offered or replacements for existing benefits. taking benefits away will never be popular, but if they are replaced by other benefits with higher perceived value (and lower costs), the result is a win/win situation for employers and employees.”