Boost your employees’ benefit knowledge and help them get more out of their workplace with these helpful tips.
Quick takeaways
When it comes to the value of benefits, business owners like you are convinced: 8 out of 10 say benefits help to attract, retain, and boost productivity for employees.
Some insights offer clues. For example, 25% of employees reporting feeling only “a little” or “not at all” informed about benefits.
As a business owner or decision maker, you can help your employees to better understand their benefits, plan for their costs, and realize their value. Here’s how.
It’s one thing to have a benefits package. It’s another to figure out what current employees know about those benefits. Nearly 1 out of 5 employees report uncertainty about the benefits offered by their workplace.
Some data and conversations can help. To dig in, find out:
- What percentage of your employees are enrolled in various benefits, and does that match industry standards? Useful data points include yearly sign ups and use. Nearly three-fourths of employees don’t change their benefits from year to year, and just 49% of employees use voluntary benefits they have access to, for example.
Understanding the ROI of voluntary benefits (The Principal Business Needs Assessment can you understand which benefits help you plan for your business’s future.) - Why aren’t employees enrolling? Say you have hospital indemnity insurance as an optional benefit. Can you initiate conversations with employees who didn’t sign up to find out why?
- What about employees who used benefits? Talks with them matter, too. Why did they sign up and how did they use the benefits?
Not every employee brings the same education about or understanding of benefits to their job. Members of Gen Z, for example, may be first-time job holders; no wonder, then, that 40% report lack of education about benefits.
To help your employees better understand their benefits, you’ll have to dive into how you’re communicating. Are you using simple, clear language that explains the basics? You can start with the types of benefits. They are:
| Benefit type | Required or optional? | Types |
|---|---|---|
| Standard, or mandatory | Required by the federal government and, in some cases, by state government | Federal: Social Security, Medicare, workers’ compensation, unemployment insurance, health care (if the business has 50+ employees), and family and medical leave (if the business has 50+ employees). |
| Voluntary | Optional | Includes options such as critical illness, hospital indemnity, accident, dental insurance, vision insurance, life insurance, disability insurance |
| Lifestyle | Optional | A variety of extras such as gym memberships, wellness and other perks, time off for volunteering, tuition reimbursement, and hybrid or remote work arrangements |
Using the three types of benefits as an example, you can create a list of what you offer. Definitions help here, too, as do examples. Take accident insurance:
| Benefit | What it is | When you might use it | How it helps employees | How the cost is paid for |
|---|---|---|---|---|
| Accident insurance | Supplemental insurance to cover out-of-pocket costs after an accidental injury | A concussion, broken bone, and more | Provides a payment to help with treatment, hospital costs, or other care needs | If provided through work, covered by employee |
Every type of benefit has a cost; either an employer or an employee (or both) contribute to what it takes to pay for the benefit. That, in turn, creates value for your employees.
Take paid time off, for example. It’s a benefit that employees earn by working for you. They don’t have to pay for taking time off; you, as a business, absorb the costs by providing them their same income even when they aren’t working. There’s value to you as an employer; paid time off helps employees feel better. And there’s value to employees, too, by being able to leave work for different reasons.
Reminders of costs and value can help your employees better understand their benefits.
| Type of benefit | Who pays for the benefit |
|---|---|
| Standard | A combination of employer and employee contributions |
| Voluntary | Employee; participation is optional |
| Lifestyle | Mostly employer; some employee contribution may be required |
Say Widget Company offers a basic benefits package that they know, because of past employee participation, will encourage enrollment. It includes dental, disability, and financial wellness programs; because the company knows these are valued and used by a majority of employees, they decide to contribute to some of the costs.
In addition, the Widget Company’s benefit provider also offers pet insurance. The company doesn’t know how many employees would use this benefit, so they don’t want to contribute to the costs. But they do know that some employees may like to have easier access to the benefit so they don’t have to go find their own pet insurance. The Widget Company offers it as a voluntary benefit.
Whatever benefits you offer as a business, you probably made those choices for financial as well as practical reasons. You’re using benefits to protect your employees, your business, and yourself (if you’re an owner) and your family.
Costs certainly influence your benefits philosophy. Take health insurance: The medium premium for small businesses has risen 23% in four years.
As a business owner or decision maker, you’re probably grounding some of your benefits philosophy in the makeup of your workforce. Your business may employ more people of one age group than another, so your inclusion of a particular voluntary benefit is a way to support employees based on their life stage. That’s all information you can share to help employees better understand their benefits.
It’s hard to understand a benefit—how it works, how it adds value—until you’ve actually used it. Is there a way for employees to thoughtfully share some of their own experiences, without revealing any confidential details?
Take a hospital stay, for example: Have you offered hospital indemnity, and has an employee used it for a planned or unplanned hospital stay? If so, their story may be helpful for others to build their own understanding of this benefit.
Opportunities, both formal and informal, abound for you to help your employees better understand their benefits. If you need the honesty of anonymous feedback, free online survey tools can help. There are also everyday conversations and structured opportunities. What do employees value, and how does it align with your benefits offering?
That can lead you to think about how to extend or enhance benefits—or even to share a plan of what you’d like to do, if you’re able. Year over year, your business, workforce, and customers change—and you change with them. If you’re able to accommodate some of those asks, you may be able to improve your employee retention and your employee benefit engagement.
If you’re unsure how to compare your benefits coverage based on your business’s size, industry, and region, two options can help: the insights from a financial professional, or the Principal® Benefit Design Tool, with a downloadable report that compares relative levels of coverage for dental, life, and disability insurance as well as retirement plans.
