Do your employees appreciate their benefits?

1. Do your employees appreciate their benefits? Dale DeWhitt Director of Human Resources Bank & Office Interiors

2. How has your company been affected by the national health care crisis? • Changes in what is covered? • Increased cost sharing? • Cutting benefit plans? Do any of the following pictures feel “true” at your company?

3. Is it Covered in the Benefit Plan?

4. Can You Get the Quality of Care You Want?

5. HR How Can We Reduce Our Premiums?

6. Should We Eliminate a Benefit?

7. The Impact of Health Insurance Inflation • 2000-05: • Premiums +73% • Wages +15% • Inflation +14%

8. How many of you have faced this problem? • Health care cost increases are causing your company to: • Increase employee cost sharing (premiums) • Increase point of care costs (copays, deductibles, maximums, etc.) (the real economic value of benefit plans is declining) • What has been the response of your employees? • Has their satisfaction with your benefit package increased or decreased?

9. B&OI’s Benefits Dilemma--2002 • Context: small company (120 employees) • Recession: 50% of our market disappeared • Impact: RIFs, wage freeze, 401k match suspension, etc. • Morale plummeted • Broker: Expect 20% increase in cost of health insurance! • How can we pay for this when the company has no money? • Risk: losing key employees

10. Actions—How we responded to this crisis • All company communications: meetings (large & small), e-mails, benefits survey, news articles (it’s a national problem!) • Special education: FSA & voluntary benefits • Involvement: cross-functional focus groups, simulation exercise, feedback (opened up a mysterious process that had a lot of emotion attached to it) • Plan design changes: point of care costs (copays, deductibles, etc.) and premium cost sharing • Open enrollment: small groups, online

11. Results—what were the outcomes? • All employees still have access to affordable health insurance • Employee satisfaction with benefit plans has risen significantly • Survey data: employee satisfaction with benefits has risen at the same time the real value of these benefits has declined! • Health FSA: • Enrollment increased from 8% to 59% • Ave. deferral increased by 25%

12. Lessons Learned at B&OI • Employee involvement and effective communication made a huge difference! • Involvement: • Focus Group & Simulation • Took the mystery out of benefits • Seeded supporters across the company • Communication • Small group: interactive and understandable • Online enrollment: one decision per page with just-in-time support documents • Intentionally marketed how to get themost value from benefits

13. Benefits Communication Research • Watson Wyatt: 2001 study found that employees who were satisfied with their company’s benefit communications were 5 times more satisfied with their company’s benefits (than those not satisfied with communications). Communication efforts strongly correlate with employee satisfaction with benefits. • Towers Perrin: 2003 study found that health care benefits were the #1 factor in attracting new employees and a major factor in retaining existing employees. • Watson Wyatt: 2004 study of top performing health care benefit programs (lowest quartile in cost increases) all had strong benefit communication programs (and often CDHP). • Watson Wyatt: 2005 study found that companies with strong benefits communication programs had 50% less turnover among top performers (compared to companies with low communications). Communication strongly correlates with staff retention. Benefits Communication Strategies Impact the Bottom Line!

14. 401k Communications Research • Watson Wyatt (2005): “The Word is Mightier than the Match” • 17 large companies w/ $.25 matching • Impact of increasing the match • Impact of increasing communication • Result: increasing the communication effort from “low communications” to “high (targeted) communications” had the same impact as increasing the match rate from $.25 to $1.00 • (but at much less cost!)

15. How to Market Your Benefit Plans • Understand your benefits value proposition • Why do you offer them? • What competitive advantages do you have? • Target your plans around what matters most to your employees • Take advantage of “free” benefits • Use voluntary benefits to make your package look more progressive • Use FSAs to put money back in people’s pockets (employer tax savings pays for the program) • Draft a “Benefits Overview” that summarizes all of your benefits and perks (B&OI Sample) • Distribute to employees & applicants • Supplement with HRO Benefits Statement ($ Value)

16. How to Market Your Benefit Plans • Build targeted communication campaigns to influence behavior (FSA, 401k examples) • Establish clear objectives for your campaign • Grab attention • Use simple, but powerful, themes • Use multiple channels to repeat the message • Personalize (target) the message • Sell Your Program! • Don’t apologize! • Don’t over-focus on restrictions • Use HR Office! • Data for analysis and merge documents • Open Enrollment • “Portal” concept—the place to go for resourcesand information on benefits