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Seventy two percent of HR professionals report that benefits offerings at their organization have been affected in some way by recession

According to annual benefits research conducted by the Society for Human Resource Management (SHRM), the majority of HR professionals indicate that their organizations have been negatively affected by the U.S. and global economic recession. In this ever-changing economic climate, organizations are looking for ways to manage costs while at the same time dealing with the escalating expenses of employee benefits. So it is not surprising that 72 percent of HR professionals report that the benefits offerings at their organization have been affected in some way.

Additional noteworthy findings included the following:

  • Employee benefits remained relatively stable from 2009 to 2010. Last year’s study revealed a small decrease in the percentage of organizations offering benefits from 2008 to 2009.
  • The areas that experienced the biggest downward trend since 2009 were housing and relocation benefits and business travel benefits.
  • Even though employee benefits have remained relatively stable since 2009, benefits offerings experienced a downward trend when compared with results from five years ago.
  • With a few exceptions, the survey findings suggest that organizations with larger staff sizes were more likely than smaller ones to offer any given benefit.
  • More than three-quarters (79 percent) of organizations report they reviewed their benefits programs annually, and 10 percent report reviewing them even more frequently.
  • Organizations spent on average 19 percent of an employee’s annual salary on mandatory benefits, 18 percent on voluntary benefits and 11 percent on pay for time not worked benefits.

What do these findings mean for your organization? A 2010 SHRM research report on job satisfaction found that employees ranked benefits among their top contributors to job satisfaction. Employee benefits offerings have become an increasingly important element of an employee’s total compensation package. As a result, it is important for an employee benefits package to be attractive to both current and prospective employees while simultaneously being cost-effective.

Additional ways organizations can further leverage their benefits programs:

  • Monitor legislation and its potential impact: HR professionals should constantly monitor changes in legislation to make sure their benefits programs are compliant with local, state and federal laws. The 2010 health care reform law in particular will affect how all organizations administer health care benefits. This new law is extremely complex, with some parts executed immediately and other parts implemented over the next several years. HR professionals will be relied upon to lead their organizations through this complex legislation.
  • Communication is vital: Employee benefits play an important role in employee satisfaction and engagement. However, a disconnect exists between the dollar amount organizations spend on benefits and the employees’ perception of the value of their benefits package. It is important that HR professionals help employees fully understand all of their options and the true value of their benefits. Total compensation statements, benefits workshops, employee meetings and social networking tools are examples of communication methods that organizations can use to help ensure their benefits program is valued, understood and used by employees.

Q&A examines employee benefits in midst of recovering economy
Mike Aitken, director of Government Affairs at SHRM, participated in the following Q&A regarding benefits—particuarly, health care—in today’s unstable economy, and how HR is affected.

Q: What do you think will be the most immediate impact of the health care legislation for HR professionals?

A: Right away, employers and HR professionals will need to take a close look at their health care design, speak to their counsel and consider how these changes will influence their business down the line. In particular, employers that have early open enrollment periods will need to consider very soon what these changes mean for their health care benefits plans. For example, there is a new statute that says that dependents up to the age of 26 will be able to obtain coverage under their parents’ insurance, and with so many people under 30 lacking health insurance, this component alone could have big implications.

There is going to be an increased role for HR throughout this process, in both educating other members of their organizational leadership team and answering the questions of employees. This means there will be a strong communications responsibility for HR in educating employees and managing expectations.

Q: What effect do you think the law will have on the way U.S. HR professionals do their jobs and on the profession itself?

A: Because it is going to be phased in over the number of years, this law will be a focus for HR from a tactical standpoint for years to come. From a strategic standpoint, HR professionals will need to consider various future scenarios they can envision in their organization as a result of taking any different approaches to managing health care benefits.

Q: What impact might the new law have on companies’ ability to help limit health care expenditures?

A: One of the concerns we had during the development of the legislation was that it did not do enough to control costs. There were not a lot of provisions for dealing with medical malpractice reform, for example. Many HR professionals remain concerned that it does not do enough to bend the “cost curve” for employers and employees. Others think that the health insurance cooperatives will not be as effective as a public option in creating competition within states. There are a number of different views, and HR professionals will need to look at their plans to see how they stack up.

Q: Will wellness-related incentives for lifestyle choices by employees have a big impact?

A: The bill appears to do a fairly good job in incentivizing wellness programs. Some employers that have not up to this point taken advantage of the cost savings that wellness programs produce will probably want to take a new look at what these kinds of programs can offer them.

Q: Consumer-directed health care has been growing in the United States. How will the new law affect efforts to put workers in control of their health choices and expenditures?

A: One of our issues had been the need for greater transparency and more information on health outcomes. Part of the recovery act enacted in 2009 provided infrastructure for health IT network. Though we think the Patient Protection and Affordable Care Act did not go far enough in encouraging these kinds of cost savings, it did take positive steps that lay the groundwork for consumers to be more actively engaged in understanding their costs and choices in the years ahead.

Q: How will the new law affect the relationship between employer and employee over time? Between government and the business world?

A: The bill maintains the blend of employer- and publicbased system that existed before, and this is what it will remain after. There are some who think there will be more government interference in some areas of health insurance, but for employers that want to continue to provide the kinds of benefits they have been providing for years, it may not make such a big difference. Overall, the jury is still out, and we probably won’t be able to evaluate the full extent of the bill’s impact on business and society for another decade or so.

Source: “2010 Employee Benefits Examining Employee Benefits in the Midst of a Recovering Economy,” released by the Society for Human Resources Management at the 2010 SHRM Annual Conference & Exposition, held June 27-30 in San Diego, CA; www.shrm.org.