HROFFICE USER CONFERENCE 2005

Do your employees appreciate their benefits?

Dale DeWhittDirector of Human Resources

Bank & Office Interiors

HROFFICE USER CONFERENCE 2005

How has your company been affected by the national health care crisis?• Changes in what is covered?• Increased cost sharing?• Cutting benefit plans?

Do any of the following pictures feel “true” at your company?

HROFFICE USER CONFERENCE 2005

Is it Covered in the

Benefit Plan?

HROFFICE USER CONFERENCE 2005

Can You Get the Quality of

Care You Want?

HROFFICE USER CONFERENCE 2005

How Can We Reduce

Our Premiums?

HR

HROFFICE USER CONFERENCE 2005

Should We Eliminate a

Benefit?

HROFFICE USER CONFERENCE 2005

Health Insurance Premium Increase History

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1988 1989 1990 1993 1996 1999 2000 2001 2002 2003 2004 2005

Health Ins Inflation Wages

The Impact of Health Insurance Inflation

2000-05:• Premiums +73%• Wages +15%• Inflation +14%

2000-05:• Premiums +73%• Wages +15%• Inflation +14%

HROFFICE USER CONFERENCE 2005

How many of you have faced this problem?

• Health care cost increases are causing your company to:– Increase employee cost sharing

(premiums)– Increase point of care costs (copays,

deductibles, maximums, etc.)(the real economic value of benefit plans is declining)

• What has been the response of your employees?

• Has their satisfaction with your benefit package increased or decreased?

HROFFICE USER CONFERENCE 2005

B&OI’s Benefits Dilemma--2002• Context: small company (120 employees) • Recession: 50% of our market

disappeared• Impact: RIFs, wage freeze, 401k match

suspension, etc.• Morale plummeted

• Broker: Expect 20% increase in cost of health insurance!– How can we pay for this when the company

has no money?– Risk: losing key employees

HROFFICE USER CONFERENCE 2005

Actions—How we responded to this crisis

• All company communications: meetings (large & small), e-mails, benefits survey, news articles (it’s a national problem!)

• Special education: FSA & voluntary benefits• Involvement: cross-functional focus groups,

simulation exercise, feedback (opened up a mysterious process that had a lot of emotion attached to it)

• Plan design changes: point of care costs (copays, deductibles, etc.) and premium cost sharing

• Open enrollment: small groups, online

HROFFICE USER CONFERENCE 2005

Results—what were the outcomes?• All employees still have access to

affordable health insurance• Employee satisfaction with benefit

plans has risen significantly– Survey data: employee satisfaction with

benefits has risen at the same time the real value of these benefits has declined!

• Health FSA:– Enrollment increased from 8% to 59%– Ave. deferral increased by 25%

HROFFICE USER CONFERENCE 2005

Lessons Learned at B&OI

• Employee involvement and effective communication made a huge difference!– Involvement:

• Focus Group & Simulation• Took the mystery out of benefits• Seeded supporters across the company

– Communication• Small group: interactive and understandable• Online enrollment: one decision per page

with just-in-time support documents• Intentionally marketed how to get the

most value from benefits

HROFFICE USER CONFERENCE 2005

Benefits Communication Research• Watson Wyatt: 2001 study found that employees who were

satisfied with their company’s benefit communications were 5 times more satisfied with their company’s benefits (than those not satisfied with communications). Communication efforts strongly correlate with employee satisfaction with benefits.

• Towers Perrin: 2003 study found that health care benefits were the #1 factor in attracting new employees and a major factor in retaining existing employees.

• Watson Wyatt: 2004 study of top performing health care benefit programs (lowest quartile in cost increases) all had strong benefit communication programs (and often CDHP).

• Watson Wyatt: 2005 study found that companies with strong benefits communication programs had 50% less turnover among top performers (compared to companies with low communications). Communication strongly correlates with staff retention.Benefits Communication Strategies

Impact the Bottom Line!

HROFFICE USER CONFERENCE 2005

401k Communications Research• Watson Wyatt (2005): “The Word is

Mightier than the Match”– 17 large companies w/ $.25 matching– Impact of increasing the match– Impact of increasing communication– Result: increasing the

communication effort from “low communications” to “high (targeted) communications” had the same impact as increasing the match rate from $.25 to $1.00

– (but at much less cost!)

HROFFICE USER CONFERENCE 2005

How to Market Your Benefit Plans• Understand your benefits value proposition

– Why do you offer them?– What competitive advantages do you have?– Target your plans around what matters most to

your employees• Take advantage of “free” benefits

– Use voluntary benefits to make your package look more progressive

– Use FSAs to put money back in people’s pockets (employer tax savings pays for the program)

• Draft a “Benefits Overview” that summarizes all of your benefits and perks (B&OI Sample)– Distribute to employees & applicants– Supplement with HRO Benefits Statement

($ Value)

HROFFICE USER CONFERENCE 2005

How to Market Your Benefit Plans• Build targeted communication campaigns to influence

behavior (FSA, 401k examples)– Establish clear objectives for your campaign– Grab attention– Use simple, but powerful, themes– Use multiple channels to repeat the message– Personalize (target) the message

• Sell Your Program!– Don’t apologize!– Don’t over-focus on restrictions

• Use HR Office!– Data for analysis and merge documents– Open Enrollment– “Portal” concept—the place to go for resources

and information on benefits