A Research Report by the Society for Human Resource Management (SHRM) 2012 Employee Benefits The Employee Benefits Landscape in a Recovering Economy Sponsored by Media Contacts Kate Kennedy [email protected] + 1-703-535-6260 Julie Malveaux [email protected] + 1-703-535-6273 USA SHRM 1800 Duke Street Alexandria, VA 22314 Phone: + 1-800-283-7476 Fax: + 1-703-535-6490 E-mail: [email protected] China SHRM China 11th Floor, Building A Gateway Plaza No.18 Xiaguangli, North Road East Third Ring Chaoyang District Beijing, 100027 China Tel: +86-10-59231001 Fax: +86-10-59231055 India SHRM India 702, 7th Floor Raheja Towers Plot C- 62, G Block Bandra Kurla Complex, Bandra (E) Mumbai 400051 Maharashtra Tel: +91-22-42472000 Fax: +91-22-42472010 SHRM Online: www.shrm.org SHRM Research: www.shrm.org/research SHRM Survey Findings: www.shrm.org/surveys SHRM Research on Twitter: @SHRM_Research To order printed copies of this report, visit www.shrmstore.shrm.org or call 1-800-444-5006. 12-0297 2012 Employee Benefits A Research Report by the Society for Human Resource Management (SHRM) Table of Contents About This Report �����������������������������������������������������������������������������������������1 A Message From Colonial Life ����������������������������������������������������������������������2 Executive Summary: The Employee Benefits Landscape in a Recovering Economy ��������������������������������������������������������������������������������������������������������3 Survey Results �����������������������������������������������������������������������������������������������7 Health Care and Welfare .............................................................................................8 Preventive Health and Wellness ..............................................................................14 Retirement Savings and Planning Benefits ............................................................21 Financial and Compensation Benefits ...................................................................28 Leave Benefits .............................................................................................................34 Family-Friendly Benefits ..........................................................................................39 Flexible Working Benefits ........................................................................................43 Employee Programs and Services...........................................................................49 Professional and Career Development Benefits ....................................................52 Housing and Relocation Benefits .............................................................................54 Business Travel Benefits ............................................................................................57 Other Benefits ............................................................................................................60 Employee Benefits in Today’s Business Environment .........................................62 About This Research �����������������������������������������������������������������������������������65 Survey Demographics ...............................................................................................66 Survey Methodology ...................................................................................................67 Appendix �����������������������������������������������������������������������������������������������������69 Prevalence of Benefits ...............................................................................................70 Benefits Index ..............................................................................................................76 Endnotes .....................................................................................................................86 Additional SHRM Resources ����������������������������������������������������������������������87 About This Survey Report The following report provides an analysis of the 2012 SHRM Employee Benefits Survey results. In January 2012, the Society for Human Resource Management (SHRM) conducted its annual survey to gather information on the types of benefits employers offer to their employees. The survey instrument listed 297 benefits and asked human resource (HR) professionals to indicate whether their organization offered these benefits. If the HR professional reported that his or her organization did not offer the benefit, the respondent was asked if there were plans to offer the benefit in the next year. About SHRM The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM at www.shrm.org. 1 | 2012 Employee Benefits A Message from Colonial Life Colonial Life makes benefits count for you and your Education employees by providing personal benefits that fit your Our team of professional benefits counselors is the best company’s and employees’ needs. We understand you in the business at helping employees learn about their want to make the best benefits program decisions for your benefits choices. In 1-to-1 personal benefits counseling company, and we know what you’re up against: sessions with employees, our benefits counselors listen to employees and get to know them, explain your company’s • Figuring out what health care reform means for your core benefits program, help employees decide if they need company and employees. additional coverage based on their personal situation and • Finding benefits strategies that help you not only help them enroll in the benefits they choose. better manage your benefits budget but also remain Educating employees about their benefits is very competitive in hiring and keeping top talent. important. We can help you provide effective benefits • Looking for ways to ease your benefits program’s education through our wide range of educational materi- administrative burdens. als and tools. You’ll really like our interactive website, BenefitsLearningCenter.com. It helps employees learn • Providing education to help employees learn about more about insurance terms and different kinds of insur- the benefits they have, what they cover and where ance. In the website’s Youvillesm section, employees can their gaps are. have fun answering questions about their unique situation and getting personal coverage suggestions to consider. Whew! You’re wrestling with a lot of issues. How do these educational services and tools benefit your We Can Help company? Employees will better understand their benefits, make smarter insurance decisions and have greater ap- Colonial Life has been a market leader since 1939 in preciation for what your company provides. You’ll also know providing personal insurance benefits for employees and how your employees liked the 1-to-1 benefits counseling their families at the workplace all across the nation. We sessions through our post-enrollment survey. Our national pioneered worksite voluntary benefits in 1955, and it’s our score is the top grade – an A! specialty. But personal insurance isn’t all we do. There’s a whole lot more. Today, we serve nearly 80,000 businesses, Administration many just like yours. Here are just a few of the services we provide – at no direct cost to you – to help you get better Let’s face it. Open enrollments and ongoing new hire value from your benefits program and effectively handle enrollments can be an administrative hassle. Colonial program administration: Life makes benefits enrollment administration easy with our Harmony® enrollment system and various online and electronic services. Our trained benefits professionals can Consultation tell you more about how our E-Services can help. Our national team of benefits professionals can help you get the most return on investment from your current On a Personal Note benefits program. They can also recommend personal insurance plans to round out your benefits, giving employ- Call us at (803) 798-7000 to see how we can make ben- ees choices to fill any gaps in their financial safety nets. efits count for your company and employees. Visit us at ColonialLife.com, and tour BenefitsLearningCenter.com where you can experience Youvillesm, too. Call us at (803) 798-7000. We’d love to hear from you. ADVERTISEMENT Executive Summary The Employee Benefits Landscape in a Recovering Economy The employee benefits landscape has changed profoundly over the last 10 years. Over the last three years, It has been transformed primarily by the escalating costs of benefits, coupled with legislative changes and new benefit options. Over the last three years, HR HR benefits budgets have benefits budgets have experienced substantial cuts because of the economy. As a experienced substantial cuts result, employers are shifting employee cost accountability and decision-making because of the economy. to employees. This has forced organizations to be creative in their efforts to remain competitive in the recruitment and retention of employees. It is not surprising that this research confirmed that employers continue to remodel their benefits plans, giving employees greater responsibility to manage their benefits. Noteworthy findings from this research include: • Health care and welfare: Health savings accounts (HSAs) have continued to gain in prominence in recent years. • Preventive health and wellness: Over the last five years, there has been an increase in the percentage of organizations providing health and lifestyle coaching, health care premium discount for getting an annual health risk assessment, health care premium discount for not using tobacco products, and rewards or bonuses for completing certain health and wellness programs. • Retirement savings and planning benefits: Employer-sponsored retirement plans continue to shift toward defined contribution retirement savings plans and Roth 401(k) savings plans. However, there was a decline in the percentage of organizations that offered employer-matching contributions to the defined contribution savings plans. • Financial and compensation benefits: Financial and compensation benefits have experienced considerable declines in the last five years. The most sig- nificant decreases were to automobile allowances for business use of personal vehicles, business cell phone or smart phone for personal use, credit union, employee computer purchase discounts (not a loan), employee discount on company services, employee referral bonus, employee stock purchase plan, life insurance, life insurance for dependents, matching employee charitable contributions, and sign-on bonus (executive and nonexecutive). • Leave benefits: Paid time off plans, which combine traditional vacation time, sick leave and personal days into one comprehensive plan, continue to gain in popularity. 2012 Employee Benefits | 4 • Family-friendly benefits: With the exception of adoption assistance and elder care referral service, family-friendly benefits have remained relatively stable in recent years. • Flexible working benefits: After slight declines between 2008 and 2010, the percentage of organizations offering some form of telecommuting is once again trending upward. • Employee programs and services: Executive club memberships, organiza- tion-sponsored sports teams and travel planning services have experienced significant declines over the last five years. • Professional and career development benefits: After gradual declines over the last five years, certification/recertification fees, mentoring programs, professional license application or renewal fees, and professional memberships appear to be trending upward again. • Housing and relocation benefits: In the last five years, there were several decreases in the number of organizations offering many housing and reloca- tion benefits. The following benefits experienced sharp declines: cost-of-living differential, location visit assistance, rental assistance, spouse relocation employment assistance and temporary relocation benefits. • Business travel benefits: Business travel benefits have remained relatively stable in recent years. • Percentage of payroll reflecting the employer costs of employee benefits: Organizations spent on average 19% of an employee’s annual salary on volun- tary benefits, 18% on mandatory benefits and 10% on pay-for-time-not-worked benefits. Strategies to Remain Competitive in Retaining and Attracting Top Talent HR professionals in recent SHRM studies have indicated their organizations are having problems matching job seekers with the skill sets required for their open positions. More than one-half of organizations reported having difficulty finding skilled workers for specific job openings, with engineering, medical, technical, scientific and executive positions being especially hard to fill.1 Organizations that continue to have problems filling key jobs should examine their employee benefits offerings as a way to retain and recruit top talent. Workplace Flexibility: A low-cost initiative with high returns A recent report by the Families and Work Institute and SHRM revealed that workplace flexibility has a positive impact on employees’ work-life experiences. These low-cost initiatives can lead to increased employee job satisfaction, lower turnover and lower insurance costs.2 SHRM believes that the United States must have a 21st-century workplace flexibility policy that meets the needs of both employers and employees. As opposed to a one-size-fits-all mandate for all employers, we support a new approach that reflects diverse employee needs and preferences, as well as differences among work environments, representation, industries and organizational sizes. This workplace flexibility policy should support employees in balancing their work, family and personal obligations and, at the same time, provide certainty, predictability and stability to employers.3 5 | 2012 Employee Benefits Improve Benefits Communication It is unreasonable for organizations to assume that employees are able to retain and understand elements of their entire benefits package from a distinct event, such as open enrollment or new-hire orientation. As organizations continue to shift benefits cost decision-making responsibilities to employees, employers may need to develop a benefits communication approach that continues throughout the year. According to a national study, employees who reported that their organization had effective benefits communications were more likely to be loyal to their organization, and more satisfied with their benefits and with their jobs.4 Continuous benefits communication can make it more likely that employees will value, understand and use their benefits program. In addition to a benefits com- munication strategy that involves an ongoing process, it is becoming important for organizations to have messaging that is tailored to different segments of the workforce. 2012 Employee Benefits | 6 Survey Results