Those concerns wouldn’t seem to be irrational given recent trends, but employers also are underestimating the role that health care and retirement benefits play in retaining top employees, according to two forthcoming studies by Watson Wyatt Worldwide, a leading global human capital consulting firm.
The Watson Wyatt WorkUSA 2006 study found that more than two-thirds (69%) of workers are concerned their employer will increase out-of-pocket health care costs through higher deductibles and co-payments over the next three years. More than half (53%) of survey respondents claim to be concerned that their employer will reduce the scope of their health care benefits by limiting providers or items covered in the next two years.
According to the WorkUSA survey, two out of three employees said health care benefits are an important reason to stay with their company. Moreover, Watson Wyatt’s 2006 Strategic Rewards study found that more than one in five (22%) of top-performing employees cite health care benefits as one of the top three reasons they leave a company. Ironically, none of the employers surveyed think health care coverage is a key reason top-performing employees leave.
The WorkUSA study shows that employees are also concerned about retirement benefits, although to a lesser degree. Nearly half (43%) of employees are concerned their company will reduce pension, retirement or retiree medical benefits in the next three years, while nearly a third (30%) of employees covered by a defined benefit pension plan are concerned their company will freeze or terminate their plan over the same time. And while the Strategic Rewards study shows that only 2% of employers believe that top performers would consider leaving over retirement benefits, 17% of top employees cited retirement benefits as a main reason for leaving.
“It’s not surprising that employees are concerned about benefits reductions, given the changing relationship between employers and employees,” said Laury Sejen, director of strategic rewards at Watson Wyatt. “Employers can help ease those concerns by explaining the competitive pressures they face in the marketplace and associated trade-offs in reward programs. By clearly communicating their total rewards strategy, management can pave the way to better employee understanding of their total package and acceptance of any benefit changes that need to be made.”
The Watson Wyatt 2006 WorkUSA, which reflects the sentiments of more than 12,000 workers across all job levels and in all major industries, and the 2006 Strategic Rewards surveys will be available in October.