Benefit costs top consideration for reward decisions
By Amanda McGrory-Dixon
When it comes to affecting total reward decisions, 58 percent of respondents say employee benefits are the top consideration, according to the 2012/2013 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey.
Because of this, respondents are balancing the need to manage costs with the hope to attract employees at 47 percent and retain employees at 48 percent.
“As the dust from the economic crisis slowly settles, business leaders are challenged with rising benefits costs, evolving health care reform, calls for increased transparency and regulatory changes,” says Martha Sadler, managing director of Verisight Inc. “Despite this strained economic backdrop, decision makers are staying the course when it comes to total rewards for employees. In general, leaders are being asked to do more with less, and this directive is defining current practices in compensation, retirement, and health and welfare benefits programs.”
The survey finds that base salary increases in 2012 for salaried workers grew an average of 2.6 percent including salary freezes. For 2013, salary increases are estimated to increase by 2.7 percent. Respondents from the service, finance, banking and insurance companies report the highest increases while respondents from construction and real estate companies come in at the lowest salary growth. Among high performers, the average salary increase in 2012 was 4 percent, but it was only 0.9 percent for low performers.
The major contributors that influence decision making regarding retirement plans are costs of investments at 59 percent, costs of services at 57 percent and quality of service at 53 percent. Another 51 percent of respondents provide between 11 and 20 plan investment options, though mutual funds remain the most prevalent investment at 92 percent.
“The survey makes clear that employers are conscientiously evaluating their retirement plans to ensure that participants are getting the best service at a reasonable cost,” says Lynn Dudley, senior vice president, policy, of the American Benefits Council. “As we move into an era of increasingly shared responsibility, public policy needs to strike a similar balance between ensuring effective personal retirement saving and promoting continued plan sponsorship.”
According to 80 percent of respondents, health care costs rose in 2012, and one-third of respondents report that costs jumped by at least 8 percent from 2011. Respondents say they are managing these higher costs by passing on some of the financial responsibilities to employees. They report doing so by by raising their share of the premiums, deductibles and co-payments.
“Employers are entering a key phase in the implementation of the health care law with tough decisions to come about the risks and rewards of health plan sponsorship,” Klein says. “Twenty-six percent of employers in this survey are undecided on whether they will continue group health coverage in the next 24 months. As the price of health coverage increases, employers will continue to consider additional cost-sharing with employees as well as innovative new plan designs to promote better overall health, such as wellness programs.”
Originally published on BenefitsPro.com