From the organization’s perspective the rationale for providing benefits is attraction and retention relative to employee-perceived compensation value. However, when benefits are not well designed or are communicated poorly, the organization’s return on investment per benefit dollar can be significantly diminished. In fact, Frederick Herzberg observed in his theory of motivation that benefits can actually become “dissatisfying” and reduce motivation if the employee consumer develops negative perceptions of them.

Over the last quarter century American organizations have struggled with rapidly escalating costs relative to two major benefits: retirement and healthcare coverage, both of which for most organizations historically have assumed the form of defined benefits. The ramp-up in costs and prospective liability attendant to these two areas has been such that organizations have felt compelled to make changes in benefits provisions. In fact, some quick math compounding average annual increases demonstrates that cost escalation relative to both benefits are real threats to profitability, if not viability. The evolution in benefits design for retirement programs, in the form of shifting from defined benefit to defined contribution, has probably run its course with most organizations. However, the healthcare benefit reconfiguration has been a protracted process over the last two decades with successive “solutions” like managed care, premium shifting and wellness programs having mixed success in decelerating cost increases.

The most significant recent development has been the tandem concept of Health Savings Accounts and High Deductible Healthcare Plans. Many organizations have shown strong interest in the concept with polls of employers in 2004 indicating that as many as two out of three organizations intended to install Health Savings Accounts and High Deductible Healthcare Plans within a couple of years. However, the actual number of adopting organizations seems to be falling short of those projections, and while there is not a lot of discussion on the reason the concept has not lived up to its initial billing, it seems likely that most are concerned about negative employee reaction.

Notwithstanding the challenges attendant to benefits program modifications, including Health Savings Accounts and High Deductible Healthcare plans, with appropriate employee benefits research and planning, organizations can develop and implement programs that achieve the organization’s objectives of controlling benefits costs while maintaining positive employee perceptions of value in the indirect compensation package. Written employee opinion surveys and focus groups are powerful tools for providing concrete benefits planning decision data, including:

• Comparison of the “consumer appeal” and return on a benefits dollar invested for design alternatives 
• Determination of current understanding/misunderstanding of key points relative to marketing the new program 
• Identification of audience segments where change resistance is greatest and, thus, in need of the greatest attention 
• Development of a detailed communications strategy for program implementation, including media, content, theme, tone, source, sequencing and timing.

Most notable in employee benefits consumer research is the power of focus groups to allow for alpha or beta testing of “trial balloon” plans using a pre-test>educate>post-test research model.

All employee benefits design research is designed and managed by Charles F. Schanie, Ph.D. Dr. Schanie has more than a quarter century of experience in employee benefits consumer research. Over the course of his career he has conducted more than 75 projects in this area. His clients in employee benefits consumer research have included: Carnegie Mellon University, Columbia Presbyterian Hospital (NYC), Indiana Gas, Mazda USA, and the Michigan Education Association.

We welcome all requests for proposals (RFP’s) for human resources services. And if for some reason you don’t need a full-blown project, but would like some over-the-shoulder support or hand-holding, we’re prepared to consult with you on an ad hoc basis at our daily consulting rates.

Call us today at 502-584-2112 for a free telephone consultation on your current needs in employee benefits design research.