In many firms, employee benefit offerings vary little from year to year. The common mind-set is that what worked fine five or 10 years ago suits us well now too. But the needs and expectations of workers do change over time, and if the benefit package is outdated, it could be a factor in your turnover rate and in recruiting.

A big challenge to adjusting a benefit plan to best serve employees is the difficulty in finding out what they really want. The larger the firm, likely, the more difficult the task.

Many companies base their benefit packages on industry benchmarks that can be tracked from industry-wide surveys. Some firms also use internal employee surveys to track trends in benefit wants and needs, and employee satisfaction.

It’s interesting to note that employee surveys can produce somewhat surprising results in terms of employee and employer perceptions about the working environment, salary, and benefits. The 2004 Job Satisfaction Survey, conducted by the Society Human Resource Managers (SHRM) and CNNfn, highlighted some differences on the perceptions of the importance of job-satisfaction factors between employees and HR professionals.

Each group ranked 21 factors according to their importance—HR managers ranked them according to what they believed employees would most value. On the employee side, “Benefits” came in at number one; HR pros ranked it number three. “Relationship with immediate supervisor” was the top choice of HR pros, while that factor ranked seventh on the employee side.

Perceived value of benefits not always consistent
Some companies have found that certain benefits improve retention for some groups of employees, but have little impact on others. For example, according to a 2005 SHRM magazine article, IndyMac Bank, a California mortgage lender, found that while stock awards had an overall positive retention influence on all employees, turnover for management was only slightly lower for those awarded stock than those who weren’t, but for operations staff granted stock, turnover was more than 50 percent lower.

It may be that managers took stock options for granted and were motivated to stay or leave based on other factors, while operations personnel saw stock awards as above-average rewards for their positions, and were more likely to stay as a result.

There are a few lessons we can deduce from IndyMac’s experience:

• The impact of your benefit plan on employee satisfaction can be measured with solid data.
• Different employee groups value certain benefits more than others.
• Analysis of surveys and turnover data gives insight into which benefits impact turnover.