10 Best Practices for Better Benefit Design
Designing and managing any benefits program is both a financial investment and a time commitment. Smart businesses know how to make the most of both.
Each year, the Principal Financial Group® (The Principal®) recognizes The Principal 10 Best Companies for Employee Financial Security, based on top-notch employee benefits, tools, and resources, as well as outstanding corporate cultures that encourage and support employees' long-term financial wellbeing.
With the support of The Principal, these 10 best practices can help catapult your benefit design and administration to "10 Best" level.
- Recognize the real benefit of your benefit program.
When you offer top-notch benefits and an encouraging, supportive company culture, it's not only your employees who reap the rewards.
Your business does too, by attracting and retaining top talent and encouraging greater productivity: turnover rates at 10 Best companies are significantly lower than industry averages.
- Offer meaningful retirement savings benefits.
All 10 Best companies offer a 401(k) or 403(b) retirement savings plan. And they don't stop there—many also offer profit-sharing programs, defined benefit pension plans, or employee stock ownership plans (ESOPs).
By sponsoring a variety of retirement savings vehicles, you directly support your employees' choice for their long-term financial security—and provide a powerful incentive for career growth and development.
- Make it easy for employees to participate.
Auto-enrollment and auto-escalation features are common among 10 Best companies' retirement savings plans, which report higher-than-average participation rates. Periodic sweeps can also identify (and encourage) eligible employees who don't participate to join the program.
- Reinforce employees' long-term savings habits.
By adding direct contributions and matching funds to employees' retirement savings plans—as 80% of 10 Best companies do—your business can offer the kind of financial bonus employees will benefit from not just now, but far into the future.
- Commit to developing financial literacy.
Helping your employees to increase their financial knowledge isn't as simple as providing one handout or holding a single information session.
10 Best companies offer a variety of financial planning resources on an ongoing basis, from seminars and workshops to online resources, educational print materials, and dedicated phone help lines. Many also provide access to one-on-one guidance for truly personal help.
- Default your 401(k) asset allocation to a lifecycle fund.
Don't leave the burden entirely on your employees to determine which asset allocation choices are in their best interests. Follow the lead of 90% of 10 Best companies in designating a lifecycle fund as the default choice, setting your employees up for success without guesswork.
- Care for employees' health wellness too.
A full 100% of 10 Best companies offer comprehensive health, dental, and vision insurance, covering 75% or more of the premiums. Sponsoring supplemental group coverage, such as life, critical illness, accident, or long-term care insurance, can also help employees to stay on track with savings goals and protect their families if the unexpected happens.
The majority of 10 Best companies go even further, offering perks like paid or discounted health club memberships, on-site fitness coaches, and other wellness programs to promote proactive health (and potentially offset dependency on medical care in the future).
- Build flexibility into your benefit program.
Life changes—and so do your employees' health and financial needs. By sponsoring Health Savings Accounts (HSAs) or other types of flexible savings accounts, you give your employees more options to plan for their healthcare needs.
Some 10 Best companies also offer dedicated financial assistance during major life events, such as buying a first home, purchasing a car, or saving for a child's education, helping employees to make smart financial decisions in high-stakes situations.
- Reward involvement in financial and health wellness.
It can pay to give employees an extra incentive to participate in company-sponsored retirement savings and wellness initiatives.
A number of 10 Best companies offer reward programs for participation, sometimes extending benefits not just to employees, but also to their families. Many also sponsor events to build team morale while making participation memorable and fun.
- Support employees' long-term success.
Investing in the education and development of valued team members encourages employee retention and career growth, while also enriching the company resource pool.
Almost all 10 Best companies offer tuition reimbursement benefits and leadership development programs, and 100% actively encourage (and sponsor) attendance at conferences and seminars to strengthen employees' professional skills and connections.
A healthy, financially thriving workforce with numerous incentives and opportunities to grow and progress within the company? We call that a win-win for everyone involved—and our 10 Best companies, with their divrse range of industries, sizes, and geographic locations, set a powerful example.
Need a place to start? The Principal Business Owner & Executive Solutions include a range of products and services to help you design a benefits program that supports your employees and your business.