Feeling the Benefits Squeeze, Employers Turn to Flex

 -  7/12/11

Budgets continue to take a toll on benefits. Workplace flexibility, wellness programs and better communication may ease the pain.

Faced with the rising cost of health care on the one hand and the need for enticing benefits packages to compete for talent on the other, many organizations are feeling the squeeze.

According to the Society for Human Resource Management (SHRM) “2011 Employee Benefits Research Report,” released in June at SHRM’s annual conference, nearly three-fourths of the 600 HR practitioners surveyed reported the economy has negatively impacted their benefits offerings, an increase of 5 percent over 2010’s already grim figures.

“It’s hard to tell if it’s going to be sustained or not, but it has been a downward trend for the last two and a half years,” said Mark Schmit, director of research for SHRM.

Schmit said benefits are closely tied to wages so that when the economy goes into recession and wages drop, benefits do too. Wage growth is expected to pick up modestly this year, increasing 2.8 percent in 2011 and 2.9 percent in 2012, according to a WorldatWork salary budget survey.

“Having said that, there’s still the impact of rising cost on certain benefits,” Schmit said. “The rising cost of health care, for example, has a large impact on what employers can afford in other benefit areas and what they have to pass on to their employees.”

Passing that cost off to employees drags down satisfaction with benefits, meaning employers need to find creative ways to compensate for higher costs and loss of benefits to continue to compete for talent, Schmit said.

Discretionary benefits that cost the organization little in terms of administrative time and dollars are an option. According to the SHRM research, workplace flexibility programs increased in 2011, and more than half of organizations (53 percent) now offer programs like flextime and job sharing as an added benefit, up from 49 percent in 2010.

“The trend there is on a steeper incline for large companies than for small companies,” Schmit said. “Part of that is due to the cutbacks that small companies have had to make during the recession.”

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