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Survey: Economy negatively impacted employee benefits

The economy negatively affected the employee benefits offered by more than three-quarters of organizations, according to a Society for Human Resource Management (SHRM) survey report released today at its 63rd Annual Conference & Exposition in Las Vegas.

Seventy-seven percent of surveyed HR professionals said in 2011 that the economy negatively affected benefits to some or to a large extent, an increase from 72% in 2010, SHRM’s 2011 Employee Benefits Research Report showed.

In addition, the national survey found that more employers offered benefits that put responsibility on employees for managing retirement savings, leave and health care costs.

The majority of organizations (84%) provide a preferred provider organization (PPO) for employee health care, with only a third of employers using health maintenance organizations (HMOs). Health savings accounts (HSAs) are gaining in popularity as a health care benefit. In 2011, 35% of organizations provided HSAs, up from 29% in 2007.

Most businesses (93%) offer defined contribution retirement savings plans for retirement savings, more than those that offer defined benefit pension plans (22%) and formal phased retirement programs (5%). Although employees are more responsible for managing retirement savings, 42% of employers provide individual investment advice and 37% supply retirement preparation planning advice.

“We have seen many cuts to HR benefit budgets over the last three years,” said Mark J. Schmit, director of research at SHRM. “Organizations have had to be creative to find ways to compensate for the loss of benefits with hard cuts in order to stay competitive in the recruitment and retention of top talent.”

The future of employee benefits includes workplace flexibility benefits, which increased in 2011. More than half of surveyed HR professionals (53%) said their organizations provide flextime as a benefit, up from 49% in 2010. Twenty percent offer telecommuting on a full-time basis, an increase from the 17% of employers that offered it last year.

“The addition of workplace flexibility programs has been one of the primary tactics organizations are using to offset the benefit losses,” Schmit said. “These programs can have positive outcomes for both the employees and the organization.”

Employer spending on employee benefits remained stable this year. Organizations spent an average of 19% of an employee’s annual salary on mandatory benefits, like Social Security and workers’ compensation. Employers spent an additional 19% on voluntary benefits and 11% on leave pay benefits. Larger organizations spent more on voluntary benefits than organizations with small staff levels.

The survey of 600 randomly selected HR professionals examines 284 benefits. Among other findings:

  • Since 2007, elder care referral services, adoption assistance and foster care assistance have declined. Most other family-friendly benefits have remained stable.
  • Sixteen percent of organizations offered some form of domestic partner benefits other than health care. Fourteen percent of organizations offered same-sex domestic partner benefits, excluding health care, the same number that provided opposite-sex domestic partner benefits.
  • In the past five years, housing and relocation benefits experienced significant declines, including temporary relocation benefits (25% in 2011 vs. 42% in 2007) and location visit assistance (18% in 2011 compared with 40% in 2007).
  • Forty-nine percent of employers offer retirement savings and planning benefits to part-time employees; 84% offer those benefits to full-time employees.
  • The percentage of organizations offering bariatric coverage for weight loss has increased dramatically — from 16% in 2007 to 36% in 2011.
  • Six percent of organizations allow employees to take pets to work, while 1% allow them to bring their babies to work.

Colonial Life, based in Columbia, South Carolina, is the exclusive sponsor of the SHRM 2011 Employee Benefits survey report.

SHRM’s annual Employee Benefits Research Report helps HR professionals to see benefits trends.

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