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SHRM Survey Cuts in Benefits Causing Headaches for HR

June 27, 2011
Related Topics: Future Workplace, Benefit Design and Communication, Telecommuting, Latest News

The recession has taken its toll on employee benefits with more human resources professionals reporting a decrease in benefits and more workers taking on greater responsibility for managing their retirement savings and health care costs, according to the Society for Human Resource Management 2011 Employee Benefits Research Report.

According to the report, which was released June 27 at SHRM’s annual conference in Las Vegas, nearly three-fourths of HR practitioners surveyed reported a negative impact on benefits because of the economy—a 5 percent increase from 2010. Pension plans continue their downward spiral with the vast majority of employers—93 percent—offering defined contribution plans compared with just 8 percent that offer cash balance pension plans.

There’s also been a steep decline in housing and relocation programs during the past five years with 25 percent of employers offering them in 2011 compared with 42 percent in 2007.

“These are significant cuts,” said Mark Schmit, director of research at SHRM. “We’re seeing a convergence of things. There is a 9 percent unemployment rate and hiring expectations are starting to drop for the first time in 18 months.”

Workplace flexibility benefits, which increased in 2011, are on an upswing. More than half of HR professionals surveyed said their companies offer flex time, up 5 percent from the previous year. Twenty percent offer full-time telecommuting, up from 17 percent in 2010.

“We have seen so many cuts to HR benefit budgets over the last three years,” Schmit said. “Organizations have had to be creative to find ways to compensate for the loss of benefits with hard cuts in order to stay competitive in the recruitment and retention of top talent. The addition of workplace flexibility programs has been one of the primary tactics organizations are using to offset the benefit losses.”

Given the number of employers looking for ways to cut health care costs without reducing benefits, Schmit says that few have turned to wellness programs, which Schmit said is surprising. According to the survey, the percentage of companies offering these programs has hovered around 59 percent between 2007 and 2011.

“We don’t see wellness programs growing,” Schmit said. “There’s a huge opportunity here. In a meta-analysis of 56 studies that look at the impact of wellness programs, it was found that for one dollar spent an employer can reap six dollars of benefit. It’s surprising that more organizations aren’t taking advantage of them.”

—Rita Pyrillis

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