July 19, 2010 | last updated May 29, 2012 8:52 pm
FOCUS ON EMPLOYEE BENEFITS

Perks Are Down But Workplace Flexibility Is On Rise

Forget massages at your desk, free gourmet lunches and sky-high sign-on bonuses.

With the job market struggling to stabilize and businesses struggling to escape the grips of a nasty recession, lavish perks like country club memberships, pet insurance and free Lady Gaga concert tickets won't be making a comeback any time soon.

Everything from tuition assistance and on-site concierge service to retirement contributions and fat stock options took a hit when the economy took a nosedive in 2007. Many employers trimmed their budgets by suspending 401(k) contribution matches and shifting higher healthcare costs onto workers.

In coming months, Greater Hartford employers have their work cut out as they look to pinch pennies and still offer creative benefits for a diverse workforce, according to compensation experts.

"Small businesses in Connecticut are continuously struggling with compensation and benefit issues," said Jason Gutcheon, a partner at Professional Business Insurers in West Hartford.

"The business sector has gradually been shrinking, with more jobs being either reduced or relocated out of state," said Gutcheon. "Increasing taxes, regulation and mandates make it very difficult for small businesses to flourish."

With the economy signaling a rebound, many companies are emphasizing wellness programs and encouraging workers to take a more active role in managing their healthcare as part of an ambitious effort to control medical costs.

Most companies that suspended or reduced contributions to employees' 401(k) plans will reinstate the match programs as the economy recovers, albeit at significantly lower levels and possibly with strings attached.

A dying breed before the Great Recession, traditional defined benefit pensions, which provide retirees with guaranteed payments based on years of service and pay, practically flirt with extinction now as fewer employers offer the plans as a workplace benefit.

Only 27 percent of the companies surveyed offer defined benefit pensions compared with 48 percent in 2006, according to the Society of Human Resource Management. Nearly 14 percent of employers said they would reduce those plans within the next 12 months.

Most companies — 92 percent, according to the society's study — offer defined contribution plans such as a 401(k) accounts and 72 percent of those offer a matching program.

The SHRM reported that 72 percent of HR professionals believe the economic downturn negatively affected their organization's employee benefit offerings over the past year.

"Companies are focused on ways to provide benefits their employees want and need without having to spend a large sum of money," said Debbie Cannavino, a shareholder with the Littler Mendelson law firm in New Haven.

"Employers want their workers to be satisfied and happy," said Cannavino, an employment and labor law expert. "But it's a challenge when you're trying to reduce every expense you can."

Healthcare coverage is a major financial issue for companies. Employees also dig deeper into their pockets at the doctor's office for higher co-pays and deductibles.

The average annual cost for healthcare coverage per employee in the state runs about $10,200 annually — or $27,520 if the plan includes family members and dependents.

Five years ago, the average employer in Connecticut contributed roughly 75 percent of the monthly health insurance premium. Today those same businesses pick up about 50 percent of the monthly tab on behalf of workers, said Gutcheon.

"Health insurance premiums are increasing roughly 15 percent a year," said Gutcheon. "A reduction in benefits and higher co-pays and deductibles is the only reasonable solution. Many employers would rather offer higher co-pay and deductible health plans than to give up wage increases to offset premium hikes."

Gutcheon said his clients typically offer group health plans with hospital and outpatient surgery deductibles that range from $1,500 to $5,000 and offer to pay a portion of that, although the amount they contribute has steadily declined in recent years.

Five years ago, the typical hospital co-pay was $500 and outpatient surgery costs anywhere between $100 and $250, said Gutcheon.

Compensation analysts have noticed companies in cost-cutting mode turning to wellness programs, which can include discounted gym memberships, nutrition seminars and smoking cessation classes, as a way to halt healthcare increases.

The perks are not always free and employees can usually save anywhere between 10 and 60 percent by signing up for programs such as Weight Watchers, Jenny Craig or Curves through their company. Most companies also offer reward incentives for participating.

The idea behind the corporate wellness programs is that healthy employees file fewer medical claims, spend less money at the pharmacy and are generally happier at the office, all of which leads to lower healthcare costs and more productivity for the company.

"These initiatives include not only offering wellness programs but also providing access to health coaches and decision support systems," said Jeanne Wyand, a senior health and group benefits consultant at Towers Watson in Boston. "However, it is increasingly moving from a fully voluntary program to requirement for employment or coverage."

Forget sneaking through the drive-through for a burger or lighting up in private when you think no one will notice. Employees will undergo physical assessments to determine eligibility for lower healthcare rates, predicts Wyand.

"Employers are willing to provide access to high quality health care but are beginning to require employees to participate more actively," said Wyand. "The days of allowing employees to opt out of the health support programs are numbered."

Even in a depressed job market, benefits play a crucial role when it comes to recruiting top talent and maintaining worker productivity.

Among the common, inexpensive perks are those that promote work-life balance and cheaper rates for insurance, event tickets and merchandise that employees can access through a corporate discount program.

More companies are offering benefits and discount programs at employee expense, including enhanced short-term and disability coverage; pet health plans; discounted car insurance and reduced tickets to entertainment, sports, cultural and local events.

Voluntary benefits are popular with employees because they can sign up for specific perks and pay all their fees through payroll deductions, said Gutcheon. And employers like it because it doesn't cost the company anything to provide the convenience.

"Employees like flexible work schedules and telecommuting opportunities," said Cannavino. "It allows them to balance their work and personal time the way they need to around other obligations."

"Employers see the advantage of it because it allows them to hire qualified people who might not be able to work a traditional schedule," said Cannavino. "Those workers might have family obligations or lack childcare at certain times."

Under a flextime benefit, employees can schedule their hours outside the standard nine-to-five workday, such as arriving and leaving work early, clocking four 10-hour days or taking two days off during the week in exchange for working weekends.

Nearly one-half of the companies surveyed offer flextime, which allows employees to select their work hours within limits established by the employer, according to the society's study.

The study also found 55 percent of the companies it surveyed offer telecommuting; 13 percent allow job sharing, where two people share the responsibilities, accountability and compensation of one full-time worker, and 34 percent offered compressed workweeks, a benefit similar to flextime.

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