The benefits balancing act

This is a period of considerable change in workforces nationwide, but particularly for public sector employees. As the older generation ages and retires, the need to attract, engage and retain new local government employees, managers and leaders is growing. However, as health care costs increase and regulations change, officials are getting creative in the way they think about benefits packages.

The benefits landscape is continually shifting, but in the midst of working to accomplish more with fewer resources, government employees and employers alike are looking at benefits packages as a means to create stability in the workforce, according to a study on state and local government benefits released by MetLife titled “Stability Amid Change.” In fact, the concept of stability is currently one of the most prevalent in the minds of local government managers, with 65 percent of respondents saying it is their top priority.

One of the most effective ways to achieve workforce stability, according to the report, is to offer meaningful benefits packages that address the basic human needs of employees while offering economic peace of mind. But not all benefits are created equal – according to the report there are 6 benefits in particular that public sector employees view as “must haves, ” which are located on the  chart below.

However, the costs of providing these “must have” benefits have drastically increased over the years. In order to remain competitive, governments are becoming more flexible, allowing employees to choose which benefits they require, and asking employees to contribute more. While cost sharing puts more responsibility on employees to manage their own wellbeing, these voluntary plans ultimately cut down on the employee’s out-of-pocket expenses as well as their employer’s overall costs.

Competitive benefits attract top talent

“Employers, be they public sector or otherwise are looking for their benefits programs to do more than they historically have,” says Randy Stram, senior vice president of Group Benefits for MetLife. Traditionally employers have focused on retention, attraction and cost containment, “but now what we’re seeing is a broader focus in addition to these elements to things like employee engagement, loyalty, productivity, presenteeism and the like.”

To accomplish this, it’s important to be mindful when selecting which benefits to offer, according to the MetLife report. As Baby Boomers exit the workforce in droves, local governments must compete with the private sector to attract the next generation of talent. In this way, benefits are an important piece of the recruitment puzzle. And competitive benefits packages don’t only attract new individuals into the workforce, they play an important role in keeping them there.

According to the MetLife study, 84 percent of public sector employees say the benefits they receive cause them to worry less about unexpected health and financial issues, and 72 percent say that if their employer stopped offering these critical benefits, they would feel less loyal to the employer. Simply put, the vast majority of loyalty in the workplace is inextricably tied to the benefits employees receive.

One way to think about the concept of loyalty is as a smaller element of the larger category of employee engagement. Renee Poole, the director of human resources for Cary, N.C., – a town which has made boosting engagement a top priority – says that benefits play an important role in accomplishing this task. However, before understanding the relationship between benefits and engagement, it’s important to define engagement and explain its importance in the local government workforce.

“‘Employee engagement’ is used really loosely right now in our industry,” Poole says. In her opinion engagement is a fluid, conceptual state. “Engagement is an end-state where you want your organization to be. It’s something you want to achieve. It’s an atmosphere where the organization and employees have alignment.”

In explaining the importance of building a culture of engagement, Poole says it comes down to the fact local governments are constantly being asked to do more with less. “The demand for services in local government continues to increase, and typically our resources are decreasing,” she says. “I believe local governments won’t be able to continue to operate if they don’t bridge that gap.”

She says the best way to bridge the gap between resources and service is by ensuring that the workforce is as engaged and productive as possible. “I think that’s what we get out of employee engagement; that’s when employees are at their best,” she says. “They’re positive, they’re motivated, they’re committed.”

Cary has gone to great lengths to foster an engaged workforce, Poole says. “I think the thing that we do best is understanding how important it is that our employees know we care.”

She says the town’s commitment to its employees starts in its workforce culture. One of the town’s statement of values defines this commitment clearly. “Employees are our most important resource. We will attract and retain the best employees and invest in their personal and professional growth.”

“I love that statement because I think that describes what we are always trying to do,” Poole says. She explains that in order to demonstrate this commitment, communication is important. Feedback is key, she explains, and a two-way street. Town leadership communicates directly with employees, and employees share their thoughts and concerns with managers, even if the conversations are difficult or uncomfortable. Additionally, employee concerns are not only valued, but acted upon, Poole says.

“When we [communicate], we start to earn trust,” she says. “Trust is very important. You’ve got to do what you say you’re going to do with employees. If you don’t, you lose trust. And if you lose trust, you’re done.”

In Cary, the trust and communication between managers and employees has lead directly to an extremely low turnover rate of 6 percent. It has also been instrumental in employees ability to create new and unique plans and initiatives. When employees feel empowered and engaged, they have the best ideas, Poole says.

So what role do benefits play in boosting engagement? “In my mind, benefits are a good way to put your money where your mouth is with all of this. It’s your way to prove you care,” Poole says. “If you have a benefit package that is not substantial, if you don’t spend a decent amount of your budget on that…if you don’t offer the benefits your employees care about, then what message are you sending?”

Stram agrees, saying it’s important that employers understand what employees value. “We know when it comes to recruiting top talent, dental insurance, along with medical coverage and defined contribution retirement plans are the most important benefits public sector employees consider,” he says.

Additionally, flexibility in allowing employees to choose which benefits they need is becoming more popular as costs of coverage are increasing. “In general, voluntary benefits are growing year over year, in particular, programs like critical illness and accident insurance are growing fastest, Stram adds. “The main reason for this is that as employers migrate their employees to consumer-driven and high-deductible healthcare plans. Attendant in those plans is that employees have more out of pocket exposure.” Employees value these voluntary benefits as a way to mitigate the risk of high deductible plans, Stram explains.

Poole says that by allowing employees to give feedback on the types of benefits they wish to receive, Cary has been successful in fostering a culture of feedback and engagement, but on a national scale, some benefits are more desirable than others. The chart iabove demonstrates these benefits’ relative importance.

It seems many local governments are getting it right when it comes to the benefit/engagement equation, as a significant portion of the public sector workers are already engaged – much more than their private sector counterparts. “Local government employees, for the most part, are engaged,” Leisha DeHart-Davis, an associate professor at the University of North Carolina Knapp-Sanders School of Government, says. “The reason for that is that city and county careers tend to be rewarding; they involve doing meaningful work.”

However, there are barriers to engagement that the public sector must be aware of by which the private sector may not necessary be impeded. “Local governments tend to be hierarchically structured,” DeHart-Davis says. “It’s hard for new ideas to bubble up because there’s a chain of command that is sometimes threatened by new ideas.”

With this in mind, she says pushing back from this hierarchal structure and “flattening out” organizationally can bolster engagement rates. “If an enterprising local government manager wanted to change her or his workplace to be less hierarchical and more open and soliciting of employee input, they can do it, it just takes intentionality.”

Retirement benefits, too, inspire loyalty and engagement with employees, and this is where governments are particularly competitive with their private sector counterparts. According to the report, 66 percent of state and local government employees say their retirement benefits are one of the main reasons they stay on the job. The retiree benefits local government employees view as most important are below.

Communication is key

Another important element to consider regarding benefit packages is how benefits are communicated to employees. While most public sector employees understand traditional benefits like medical, dental and prescription drug coverage, many are unclear when it comes to voluntary benefits like critical illness insurance and group legal plans, according to the report.

“Public sector employers must be sure they are providing the advice and guidance and decision support tools so that employees can truly understand the benefit programs that are available to them,” Stram says. “The top quartile benefit plan that is communicated in a bottom quartile way will have far lower perceived value than a bottom quartile plan communicated in a top quartile way.”

Overall, public sector employers could do a much better job when it comes to communicating information about the benefits offered as well as soliciting feedback on enrolment experiences. The report found that more than half of local and state government employees wanted more help when they selected their benefits.

Perhaps indicative of the workforce’s shifting demographics, employees increasingly want to receive information about their benefits online, and manage them digitally. The report found that while 58 percent of employees would ideally like one-on-one consultations with impartial benefits experts, 53 percent would be interested in managing their benefits digitally through mobile apps, 43 percent would like to enroll through these apps, and 41 percent would like to use apps to learn about the benefits their employer offers.

Overall, benefits packages are major players in the overall success of any government agency, Stram says. “Loyal, productive, engaged employees need to be happy and satisfied,” he says. “A well designed, and well communicated benefit program is a critical component in driving that employee satisfaction.”

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