Stragegies for Growth - New Benefits

Save Money and Keep Employees Happy with New Benefits Package

Challenge: Develop a Cost-Effective and Competitive Benefit Package in the Midst of Escalating Healthcare Costs.

A high-growth manufacturing company experienced double-digit increases in health care costs. At the same time, it needed to reduce Selling, General & Administrative (SG&A) expenses to improve its bottom line. Because the Company was operating in a robust employment market, benefits had to be competitive enough to attract and retain the right talent. To maintain high employee morale and productivity, employees could not interpret the benefit changes as takeaways – reductions in the Company’s level of benefits.

Solution: Team Approach and Thorough Analysis

A benefits and compensation committee, made up of executives from different parts of the organization, met with Heather Edelman to discuss the Company’s dilemma – to reduce costs while remaining competitive in the battle for talent.

Working closely with a benefit broker, competitive bids were solicited from numerous medical and dental plan providers.
Changes to the medical plan’s design were made. The impact of each change was analyzed to project cost savings and to ensure that the financial impact on employees passed the test of reasonableness.
The premium cost-sharing structure was adjusted based on industry standards.
Different scenarios to increase employees’ share of healthcare premiums were analyzed; cost savings were projected and the financial impact on employees was again tested for reasonableness.
To provide some balance to the financial impact of these changes on employees, the benefit program was enhanced with the addition of a few low-cost or no-cost benefits. A modest increase in the 401(k) match was made and dependent life insurance and discounted automobile insurance were added.
Prior to open enrollment, an extensive communication plan was implemented for headquarters and field sales employees to explain the changes, “sell” the enhancements and answer employee questions.

Result: High Employee Acceptance Levels

Employee acceptance levels were high, so morale and productivity also remained high. Participation in the health care plans remained stable and the benefit program continued to be an effective recruiting tool. The Company’s fringe benefit rate did not increase.