ViewPoint. HR Strategies That Drive C-Suite Results

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1 ViewPoint HR Strategies That Drive C-Suite Results HR executives have long struggled to demonstrate the value of human resources at the strategic planning table, especially when HR results are often regarded as soft or intangible. Recent HR and benefits trends reveal this may be changing as HR leaders are strategically poised to influence, support and engage a company s workforce to impact business results. Now is the time. In today s marketplace, companies are faced with a multitude of market pressures, compliance concerns and drastically increasing health care costs. Companies have already begun to shift these health care costs and, according to the 2012 Aflac WorkForces Report, 1 they have even started to cut compensation, bonuses and benefits. Still business leaders prove they are both resilient and innovative. Insights from a 2009 Towers Watson study reveal that the recession has served as a catalyst for many businesses to consider additional employee benefits options and experiment with different benefits strategies. 2 While 38 percent are focusing on cost-reduction efforts, the study found that 50 percent are considering new strategies they would not have considered otherwise. Another 2012 study from The Conference Board found similar results, with 67 percent of respondents saying they have made at least some change in their strategy for human capital initiatives due to current market turbulence. 3 Reducing health care costs, increasing workforce productivity and improving employee retention rates are complex business challenges, spanning industries and regions because they are deeply tied to individual attitudes, motivations, behaviors and circumstances. As business leaders actively seek new strategies to achieve business results, HR executives will have a significant role to play in shaping and implementing these strategies, and will be held accountable for their success. Whereas in the past C-suite executives may have resisted change, their eyes and ears are now open to benefits approaches that will empower and engage a talented workforce. Along with benefits partners, HR leaders can help build strong objectives and tactics that will have an impact on their company s bottom line. Z AFLAC // VIEWPOINT 8/12

2 The Advantages of People- Centered Strategies There is undeniable evidence linking benefits offerings and employee loyalty. In fact, the 2012 Aflac WorkForces Report found that workers who are extremely or very satisfied with their benefits program are six times more likely to stay with their employer, compared to those workers who are dissatisfied with their benefits program. Similarly, when asked what their current employer could do to keep them in their jobs, 49 percent said, Improve my benefits package. It s clear that HR strategies can add tremendous value to the organization by understanding their company s overall business objectives and actively addressing the roadblocks to achieving those initiatives. Strategic business objectives vary from business to business; still there are several core strategies that are effective across industry and business size. The 2012 Aflac WorkForces Report, a U.S. study of over 6,100 employees and 1,800 business leaders, identifies the most important issues facing HR decision-makers and their organizations. The majority of business leaders say that the top HR issues facing their company right now include: (1) controlling health/medical insurance costs (38%), (2) increasing employee productivity (21%), and (3) retaining employees (17%). TOP HR ISSUE 1 Controlling health/medical insurance costs. Tactic: Manage cost-shifting and its negative impact on workers. Every company has unique challenges when it comes to managing the costs of employee benefits, and it is not surprising that rising health care costs continue to be a challenge for both employees and employers. Controlling medical costs is nothing new. While average premiums have increased by 9 percent for family coverage in only a year s time, 4 according to the Kaiser Family Foundation, average premiums for family coverage have increased by 113 percent since 2001 and health care spending has exceeded U.S. economic growth in every recent decade. 5 One of the main ways companies manage these costs is to shift increases to the workforce. Unfortunately, many workers are unprepared to handle the additional expenses. According to the 2012 Aflac WorkForces Report, 33 percent of employees say they do not have enough money to meet their current expenses and just over half (51%) say they have less than $1,000 to pay for out-ofpocket expenses associated with an unexpected serious illness or injury. Many workers remain unaware and even skeptical about cost increases. Nearly half (44%) believe rising health care costs have little or no impact on the overall growth of their company. Still, a similar percentage (47%) say they would feel more negatively toward their employer if the employer increased health insurance costs. If employers continue to shift the burden of health care costs to workers, without effectively managing the perception of such increases, resentment among em- AFLAC // VIEWPOINT Page 2

3 ployees will continue to rise. There are many benefits strategies that can help lower costs while minimizing the cost shift to employees. For instance, an increasingly popular method for offering more benefits options without any direct cost to the company is through voluntary benefits options. Companies are also looking to successful low-cost options such as wellness programs and offering flex-time options. TOP HR ISSUE 2 Additional options include: Communicate the Realistic Situation to Employees» Focus on total compensation.» Dedicate time slots to talk individually with workers.» Bring in financial and insurance experts to talk with workers. Involve Employees in the Solution» Ask workers to offer cost-cutting solutions.» Gain buy-in and insight into desirable/undesirable benefits.» Create an expense-cutting committee. Seek Effective Ways to Fill Coverage Gaps» Ask benefits advisor/broker for solutions to control costs.» Consider voluntary benefit solutions to better protect workers.» Work with carriers to negotiate reduced costs. Increasing workforce productivity. Tactic: Engage workers with better protection and coverage. With the majority of companies saying that their business has either maintained or declined over the past 12 months, it is not surprising that 1-in-5 employers (20%) say that increasing employee productivity is the top HR issue facing their company right now. To most effectively utilize existing resources, savvy HR leaders are providing employees with benefits that adequately protect and secure workers:» 58% say an overall benefits package is extremely/very important to their work productivity.» 56% say a flexible work schedule has a strong/very strong impact on helping them cope with personal issues.» 47% say adequate insurance benefits has a strong/very strong impact on helping them cope with a personal issue» 73% of workers who are extremely/very satisfied with their benefits are not at all likely to look for a new job in the next year (more than six times those who are dissatisfied with their benefits). AFLAC // VIEWPOINT Page 3

4 One way employers can ensure that employees are adequately protected is to offer a range of benefits offerings. Workers are more likely to take advantage of benefits programs that meet their needs, and they want options that are tailored to them. The Aflac study found that 67 percent would be more likely to take advantage of a benefits package tailored to their + When businesses offer robust benefits and workplace options, they still may not be communicating their programs effectively to help employees feel valued and rewarded for their hard work during a down economy. personal situation. Many employees also say they would be likely to apply for the voluntary benefits options if these options were made available by their employer, and they are interested in participating in wellness initiatives. Both options can be low cost and offer opportunities for proactive health management options to meet employee needs. When businesses offer robust benefits and workplace options, they still may not be communicating their programs effectively to help employees feel valued and rewarded for their hard work during a down economy. The 2012 Aflac WorkForces Report found that 45 percent of workers say their organization communicates too little about benefits, which is not surprising when you consider that most companies communicate less than three times a year about benefits. In the absence of information, employees are left to turn to less-thanideal sources to gain insight and advice. Surprisingly, 2-in-5 workers (41%) say they receive information and/or advice on employee benefits from friends or family. Meanwhile, only 13 percent prefer to do so. The Aflac study found that nearly 2-in-5 workers (39%) agree that they need to be more engaged in making benefits decisions, a sentiment shared by their employer. Business can begin to bridge the engagement gap by investing time and resources behind more effective and more frequent benefits communication. This can include initiatives such as:» Producing employee newsletters or lunch-and-learn sessions to provide ongoing guidance to workers.» Providing online benefits portals or platforms where employees can have immediate access to their benefits plan.» Developing customized benefit booklets, and using FAQs and other marketing pieces that advise employees on how to best utilize their benefits.» Surveying the workforce to determine specific benefits needs and desires among employees. AFLAC // VIEWPOINT Page 4

5 TOP HR ISSUE 3 Retaining employees. Tactic: Establish HR and benefits offerings that demonstrate the company cares about its workers. Nearly 1-in-5 employers (17%) say retaining employees is the most important HR issue facing their company today. What many employers may not realize is that employee loyalty, or lack thereof, is highly correlated to the degree to which workers feel their employer takes care of its employees, and whether the company is a great place to + 76% of U.S. workers who agree that their employer takes care of its employees are unlikely to look for another job in the next 12 months. work. Consider this: 76 percent of U.S. workers who agree that their employer takes care of its employees are unlikely to look for another job in the next 12 months. Additionally, a full 66 percent of workers who are extremely satisfied with their job also believe their employer has a reputation as a great place to work. Unfortunately, many workers do not think their companies have their best interest in mind. The Aflac WorkForces Report found that only 24 percent of workers today strongly agree that their employer takes care of its employees, and less than half of workers (44%) believe the objective of their company s benefits program is to take care of its workers. These negative perceptions can have a significant impact on retention. In fact, 35 percent of workers who don t believe their company has a reputation as a great place to work are extremely likely to leave in the next 12 months. This compares to a full 40 percent of workers who believe their company has a great reputation and say they are very unlikely to look for a new job in the next 12 months. When working to design an organization s benefits plan, the importance of offering a wide range of benefits options and investing in the brand s reputation shouldn t be underestimated. AFLAC // VIEWPOINT Page 5

6 Common Roadblocks and Solutions to Offering Robust Benefits and Driving Business Results Actively leveraging robust benefits programs and addressing common roadblocks will help HR executives to drive bottom-line results and ensure that employees are better prepared for whatever life may bring. HR Roadblock 1 : Too much administration, too little time. Solution: Leverage broker or benefits partner. Most HR executives feel they simply don t have the time or resources at their disposal. The idea of taking on more initiatives or administration of additional benefits, such as voluntary, can appear overwhelming, especially when HR departments are asked to work with fewer personnel. What these leaders may not realize is they can lean on broker services or the administration services of insurance partners. The administration of many insurance products is built in as a value-added service to companies. With the emergence of new technologies, such as online enrollment and tools, and centralized customer support centers, often the degree of in-house administration is very small or even nonexistent. HR Roadblock 2 : Employee benefits needs and expectations are unclear. Solution: Clear up misconceptions about employee interest. Less than one-quarter (24%) of organizations survey their workers to determine their preferences or needs when it comes to benefits options. Further, more than one-third (31%) survey their employees to gauge their level of satisfaction with benefits offerings. Making assumptions within the realm of benefits and health insurance can be potentially damaging, not only to workers who may feel their needs aren t being met, but also to a company s productivity and retention levels. Advances in technology as a result of the digital age have made the ability to survey workers much more accessible and at very little cost. In fact, most HR partners and insurance providers offer these services either as part of, or as an added value solution. Companies can also choose to lean on benefits and HR partners to help design and implement outreach tools or initiatives that can deliver crucial insight into exactly what employees expect and need. AFLAC // VIEWPOINT Page 6

7 HR Roadblock 3 : Employees don t value benefits offerings. Solution: demonstrate true cost of benefits. Benefits statements are one effective and simple solution to demonstrate exactly how much an employer pays for health coverage and other benefits programs. Most HR partners and providers are capable of administering benefits statements as part of the overall benefit program. Not only can benefits statements shed light on the true investments made by the organization, but they can also point out gaps in a workers coverage. By alerting employees that they may be lacking in certain areas, such as life insurance or critical illness coverage, companies not only have better-informed workers but also a better-protected workforce. HR Roadblock 4 : Additional benefits cost too much for workers and the company. Solution: Consider Voluntary Benefits. Many providers offer supplemental insurance policies at no direct cost to the company and at a competitive rate to workers. Adding voluntary plans to a company s offerings can help companies build robust benefits packages while staying within budget/cost constraints. Although only 37 percent of employers believe so, voluntary insurance benefits have no direct cost to employers. This misperception can be a costly one for companies, many of whom are seeking ways to keep health care costs down while still providing access to the coverage their employees need and demand. Making voluntary insurance policies available to employees not only has no direct cost to employers, but may reduce corporate taxes by cutting FICA tax contributions. Many voluntary insurance providers offer a range of products that fit most budgets. For example, Aflac offers consumers basic insurance coverage options, including accident, hospital confinement indemnity, and life insurance policies. And voluntary insurance is competitively priced. For example, Aflac offers a guaranteed-renewable individual accident insurance policy with rates starting at $13.65 per month (based on individual coverage for ages 18 70, Accident Essentials plan, no riders, payroll deduction). AFLAC // VIEWPOINT Page 7

8 conclusion Companies are looking for innovative and effective approaches to control benefits costs, increase productivity and retain their employees. Given the importance of benefits to attract, retain and motivate talented employees, it is crucial for HR executives to approach the C-Suite with results-driven tactics. Understanding the top HR challenges and aligning HR tactics with overall business strategies will be imperative to making significant strides with business results and will help to build a workforce that is informed, engaged and protected. Works cited Aflac WorkForces Report, a study conducted by Research Now for Aflac, February Towers Watson (April 2009), Benefits in Crisis: Weathering Economic Climate Change, towerswatson.com/research/740/, accessed on August 3, The Conference Board (2012), The 2012 Talent Management Strategies Conference, conference-board.org/publications/publicationdetail.cfm?publicationid=2148, accessed on August 3, Kaiser Family Foundation (2011), Employer Health Benefits 2011 Annual Survey, ehbs.kff.org, accessed on August 3, Kaiser Family Foundation (May 2012), Health Care Costs A Primer, kff.org/insurance/upload/ pdf, accessed on August 3, AFLAC // VIEWPOINT Page 8