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Bringing Value to The Employee Experience with Employee Benefit Literacy

Oct 26, 2022 | Benefits, Employee Experience

I was in HR for two years before I understood benefits.  It was 2007 and I’d been released from the hospital where I had been in ICU for a week, recovering from a tracheotomy and virus.  Still with an open incision in my throat and a voice no louder than a whisper, I began receiving bills.  And then more bills.  Bills from the anesthesiologist, labs, internal medicine physicians, ear-nose-and throat specialists, the hospital………..the list went on an on!  All the while I had not yet even been cleared to return to work.  And for fear of being consumed by medical bills, at the age of 27, moved into my mother’s town home.  Having grown up in a financially strained home without insurance, it was all new to me.  I didn’t understand any of it.  And now, as the only HR person in our small company, there was no one else to help me sort through the bills and documents from the insurance company.  Calls to the insurance carrier were a struggle as I lacked the ability to project my voice enough into the phone.  Insurance representatives couldn’t help me if they couldn’t hear me.  It was a low, frustrating point but I was lucky.  My company offered a short-term-disability benefit, allowing me six weeks to recover from my sudden and serious illness.  And I had good insurance coverage, although I didn’t realize that at the time.  Having managed to avoid the benefits responsibilities of being in HR to that point, I realized their importance.  In these 15 years that have followed, I’ve learned a lot about this expensive aspect of total compensation and why today it continues to be overlooked as key to bringing value to the employee experience.

Benefits are expensive, but are they valuable?

After wage and salary costs, benefits rank #2 in total compensation costs for employers.  According to the most recent BLS survey data, 29.5% of total compensation is, on average what employers spend on employee benefits.  The most expensive benefit being medical insurance of course, costing employers nearly $6,000 annually for employee only medical coverage and nearly $16,000 annually for family coverage in 2021 according to research firm, Kaiser Family Foundation data.  And employers aren’t the only ones to feel the financial weight of benefits, costing employees 7.6% of their total compensation.  Benefits, when it comes to attracting and retaining talent, it seems matters.  88% of job seekers consider benefits when choosing a job.  Clearly, there’s no doubt both employees and employers give great importance on benefits as a core part of the employee experience.  So, why are so many employees still dissatisfied with their benefits package?

Stats & Steps to Improve the Employee Experience & Benefit Literacy

Click to download the Employee Experience and Employee Benefit Literacy Infograph

 Why are employees so dissatisfied with workplace benefits?

Only 40% of employees are either extremely or very satisfied with their company’s benefits package, according to recent research.  Separate research shows an astonishing 86% of employees are confused about benefits.  Benefit literacy ranks lowest among younger (GenZ) employees and those earning less than $30,000 annually.  Both troubling and frustrating findings for HR professionals and benefit teams as it’s estimated 80% of employees never even review their benefits materials. Still, only 52% of employees rate their employer’s communications about benefits as excellent or good.  30% of employees rely on their own research to understand benefits while only 30% use information from their employer. Nonetheless, these statistics leaves HR professionals to wonder, is employee dissatisfaction with benefits less to do with the quality of employer-benefit packages and more to do with the education and marketing of employer-sponsored benefits? 

HR’s opportunity to improve workplace culture with benefits.

It’s difficult to fully appreciate anything we don’t understand, particularly when it costs us money.  Benefits, by all accounts, are expensive, for employers and employees alike.  But, expense is about cost and price.  Value on the other hand, reflects significance.  There are three ways HR & leadership teams can start building value, without any additional benefit expense, today.  The first step is prioritizing benefit literacy within the workplace.  The employee experience improves simply by educating everyone on the significance benefits have on employee health and wellbeing, workplace culture.  For smaller companies, this means HR professionals and leaders learning at least basic information on employee benefits, answering employee benefit-related questions internally rather than referring them to outside consultants and benefit brokers.  For larger companies, benefit teams and HR leadership should be working closely together, ensuring benefit questions and messaging tie back to employee retention and engagement initiatives.  Secondly, tailor benefit materials to the employee population.  Today, benefit materials continue to be distributed in print.  High-gloss branded materials for each benefit, assembled into a large and often overwhelming packets.  Today’s data reveals most of these materials are tossed aside, unopened by employees who’ve been recently hired or are approaching an open enrollment deadline.  Instead, HR teams should look to partner with marketing and learning & development teams, incorporating their expertise in creating engaging and educational content.  For most, benefits are boring.  Building excitement requires innovation and creativity, delivering relevant and timely benefit information to employees when they need it. For some teams looking to align the value of employee benefits with an improved employee experience, Culture Engineered embeds company benefit data into the daily employee feedback tool, getting the right benefit information to employees at the right time.  Whether consumer or learner, we are attracted to and digest content similarly and it’s beneficial to everyone when employees are both excited and knowledgeable about their benefits.  Lastly, employers must be transparent on what the company pays for employee benefits.  Although money isn’t everything, it’s unfair to assume employees know the financial investment the company is making in their benefits package.  By sharing the financial significance employers place on employee wellbeing, it encourages employees to prioritize their understanding of benefits.  Regardless of what someone makes, it’s difficult to swallow a nearly 30% pay cut.  When employees fail to understand and in turn, use employer-sponsored benefits, this is exactly what they are doing.

Benefits continue to increase each year.  It’s unlikely this will change anytime soon.  But, the value benefits have on the employee experience and how our benefit messaging reflects our workplace culture is 100% within the employer’s control.  There’s a proverb that says, “a bad workman blames his tools”.  While this proverb may be biased terminology, and perhaps an overly broad generalization, I feel it’s absolutely true of benefits as they relate to an employee’s experience and company’s culture.  A poor HR and leadership team will blame employee dissatisfaction with benefits on the cost and complexity of benefits.  A great team however, will instead respond to the feedback, taking an intentional transparent approach that empowers employees with benefit transparency and education.  It is only the great HR & leadership teams after all, that dare to create a valuable employee experience.


Struggling to engage & retain remote employees?  Click here to read last week’s article, 3 Principles on Keeping Remote Teams Engaged.