In honour of Benefits Canada’s 35th anniversary, we took the opportunity to go back to the source to explore why employers offer employee benefits programs.
Our research looks at the past, present and future of employee benefits—and shows how much senior business leaders value them.
While senior decision-makers agree that health benefits and retirement plans play a significant role in keeping employees happy and engaged, there is a disconnect when it comes to understanding the ROI.
While 82% of respondents agree that their company’s benefits plans provide good value for money and 80% agree that benefits play an important part in attraction and retention, only 29% say they calculate the ROI of their plans.
Costs in context
Turning employees into consumers
Educating for engagement
The advisor’s role
Will the PRPP matter?How they calculate that ROI is also an issue. Only 34% look at claims experience, with other common measures being employee satisfaction surveys and anecdotal comments from employees (also at 34% each). Methods such as reviewing absenteeism and return-to-work rates for disability leaves are used by a mere 22% and 12%, respectively.
“With the recent economic changes, it means plan sponsors have to take a closer look at their benefits plans, and measurement is an increasingly important thing to have in place,” says Marilee Mark, vice-president, marketing, group benefits, with Manulife Financial..
If employee benefits are going to be part of a long-term sustainable strategy for an organization, metrics need to be used, tracked—and, ideally, integrated. Sponsors can look to their providers for information on which metrics to track and how to do so in an integrated manner across the organization, so that the real impact can be measured.
“Without this, a sponsor may make a decision to cut a high-cost drug only to later discover that it puts someone out of work, which increases overall costs more than the drug did,” Mark adds.
But it’s not always so straightforward, says Matthew Rotenberg, manager, marketing communications, group products, with Standard Life. “You have to look at the ROI differently between the health benefits and the group retirement sides. On the health side, it’s a bit easier to track absenteeism and benchmark against other similar organizations, for example.”
Tracking the value of a retirement plan requires looking a bit further out. “How do you measure that? You can look at attracting and retaining employees as one measure. You can also look at how well member outcomes are aligned with their needs. Do they have an income gap at retirement, or are they on track to meet their expectations? Members—and plan sponsors, by default—should be getting this information regularly,” he explains.
With almost one-quarter (23%) of respondents expecting an increased focus on cost-effective benefits—both retirement and health—in the future, there’s an opportunity for providers and other stakeholders to figure out how to more clearly demonstrate the connection between benefits and a more successful and productive organization.
If this opportunity is missed, cost-cutting could shape the state of employee benefits in the coming decades.
Leigh Doyle is a freelance writer based in Toronto. leigh.doyle@gmail.com
Get a PDF of this article and other special coverage of Benefits Canada’s 35th anniversary.