How health benefits can be a competitive advantage for your company

When Gracelyn McDermott’s team at Kaiser Permanente first began working with a construction company, the business was struggling with high turnover. Employees kept leaving, and the company was constantly retraining and rebuilding its staff. 

So McDermott’s team looked at the company’s benefits package: It included health care coverage, but for employees only. Dependents weren’t covered, at all.

“One of my account managers had a conversation with them and said, ‘Do you realize that dependent benefits are an added value that you can provide to your employees? And if you covered just a portion of the benefits of the dependents, this could improve the stickiness of your employees?’” explained McDermott, an executive director at Kaiser Permanente, a national health care provider and not-for-profit health plan. 

The company decided to give it a try, offering dependents 50 percent coverage. And it worked, McDermott said. 

“Their attrition rate decreased, and now this year, they’re moving to 75 percent coverage for dependents because they’re seeing the impact,” she said. 

Health care is the most important benefit employers can offer, according to the 2017 Employee Job Satisfaction and Engagement survey from Society for Human Resource Management (SHRM). But when it comes to the quality and effectiveness of those benefits, there is ample room for improvement. 

The SHRM survey found that 63 percent of employees said health benefits were “very important,” followed closely by leave and flexibility. But, just 31 percent were “very satisfied” with the benefits their employers offered. 

That matters in a tight labor market, where it’s not enough to offer the bare minimum. If companies want to keep the talent they have and bring new people in, they have to take an innovative, thoughtful approach to benefits packages, McDermott said. 

Businesses are seeing the value in tailoring their benefits packages to the needs of their employees, rather than taking a one-size-fits-all approach, McDermott said. The construction company offers a prime example: Giving employees what they want and need has become a competitive advantage. 

“What’s important to a boomer won’t necessarily be important to a millennial. You have to have a comprehensive package that will fit the needs of everyone, from Gen Y all the way to the boomers,” McDermott said. 

Millennials, for instance, tend not to rely on a primary care provider and instead use urgent care or telemedicine. Older generations, on the other hand, may be tied to their physicians and the ability to have face-to-face conversations, she explained. 

“We need to make sure that we have a plan that makes both options available,” she explained. 

That doesn’t necessarily mean companies will spend more on benefits, she added. If you give your employees the benefits they need and get rid of what they don’t, your company can eliminate wasteful spending. 

“Oftentimes, that’s where the conversations with employers start: ‘Let’s not focus on cost. Let’s focus on what you need, and what’s going to be the best solution for your employees overall.’” McDermott said. “The more they’re able to offer and the more an employee can see it as their total compensation package, the more competitive those employers will be.” 

That competitive advantage brings value to the business, reducing the costs associated with employee attrition, hiring and onboarding, McDermott said. And it’s important for companies to measure factors like that as they are evaluating the effectiveness of their benefits strategy. 

“In the past, the thought has been, ‘if you’ve had less claims, then you’ve done a good job in managing health.’ And of course there’s a certain element of that. But to really connect it to the business, you want to look at more than that,” McDermott said. “Is your retention improving? Is your productivity improving? You need to look at the overall well-being of individuals.” 

It’s part of a larger cultural shift impacting companies in all industries. Increasingly, employees want to work for companies that see them as more than a number. That involves paying attention to what they need, she said. 

“Anybody who is not looking at this and working to really help their employees thrive has really not bought into this whole idea of people coming to work to have a purpose,” McDermott said. “A lot of people think it’s just millennials, but it’s not. It transcends all demographics. They’re tying everything into their overall purpose, and they’re looking for organizations that can help them build that purpose.” 

 

Originally published on the Washington Business Journal.

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