Employee Retention: The Primary Benefits Objective?

Traditionally, when employers strategize over their health and welfare benefit plans, the one goal that stands out in the process is to control benefit costs.  But according to MetLife’s Fifth Annual Study on Employee Benefit Trends, employee retention not only has become one of the leading benefit strategy objectives, it has replaced minimizing costs as the number one goal in putting together an employee benefit plan.

In MetLife’s recent national survey of over 1,500 benefits decision-makers and over 1,200 full-time employees, 55% of employers rank employee retention as their top benefit goal, up from less than 50% in 2003.  It marked the first time retention has moved ahead of controlling costs as a benefit plan objective for the first time in the five years MetLife has conducted this survey.  It also demonstrates how important benefit plans have become in recruiting and retaining top talent.

In the area of employee retention, the survey indicates a strong link between benefit satisfaction and job satisfaction.  Among employees who are “highly satisfied” with their benefits, 57% believe benefits are an important reason why they stay with their company, 72% feel a strong sense of loyalty to their employer and 80% are satisfied with their job – a factor that has increased 15% from 2005.  To further emphasize the issue, the study shows that employees with families were more likely to cite benefits as a top consideration in joining their current employer, as were married couples (32%) and young families (41%).

The survey did indicate, however, that employers are missing the opportunity to increase employees’ benefit satisfaction.  Only 33% of surveyed employees feel strongly that their company effectively educates them on their benefits options.  This suggests that increased investment in education and communication may be a cost-effective way for employers to maximize the value of their benefit plans.  Another measure is to outsource plan administration, which 30 percent of employers cited as an important cost-reduction strategy (up from 24% in the previous two years).

The results of this study indicate that companies can no longer afford to view benefit plans as “merely a cost center to be minimized” – they must realize that these plans now serve as a key point of differentiation among businesses competing for talent.  If today’s companies intend to survive, compete and succeed in this business landscape, they will need to offer an employee benefit package that stands out among their competitors.

To view the results of MetLife’s Fifth Annual Study on Employee Benefit Trends, click here.

Questions or comments about this article? Email us at comments@hcwbenefits.com.

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April 13, 2007

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