Employee retention is a top priority for businesses, with one 2024 report noting that 64% of businesses say hiring and retention is their number one concern. Yet, many struggle to address one of the underlying factors potentially driving turnover: a lack of benefits literacy. While employers invest substantial time and resources into crafting high-value benefits packages, employees may remain confused about what is available if plan options aren’t properly communicated. This disconnect can leave employees disengaged and dissatisfied and more likely to seek opportunities elsewhere.
A 2023 survey highlighted the extent of this gap, revealing a staggering 72% of employees struggle to understand their benefits, and nearly one-third have difficulty comprehending the monetary value of what their employer offers. This gap between benefits availability and employee understanding is a significant threat to employee engagement and retention. However, this threat can be easily quelled by prioritizing benefits education and communication, ensuring employees know what’s available and can fully leverage the benefits provided.
The Disconnect: Where it Begins
Benefits can be overwhelming for employees, especially during open enrollment periods when it can feel like a race against the clock to make important decisions about health plans, retirement savings, and other options. Employees may be aware that their employer offers benefits, but understanding how to use them effectively is a different story.
From the employer’s perspective, frustration crops up when they see well-constructed benefits packages go underutilized. Low utilization often stems from a breakdown in communication and education. Even when employers offer a comprehensive array of benefits—such as health insurance, financial wellness programs, and mental health resources—employees may not know how to access them or may feel unclear about where to start. The result is disengagement and frustration, with employees perceiving a gap between what they need and what they are offered.
The Role of Benefits Literacy in Retention
For employees, the benefits offered and their employer’s level of care for their teams go hand in hand. This is why a poor system for education and administration of benefits can translate to the perception of a lack of care. Benefits-based factors all directly impact their decision to stay with the organization. On the other hand, when employees have a clear understanding of their benefits, they are more likely to feel valued and engaged.
This is particularly true in areas like financial wellness and retirement savings. In the 2023 survey, 49% of employers reported offering financial wellness benefits, yet only 28% of employees utilized them. This low utilization highlights education’s critical role in closing the benefits literacy gap. Without proper guidance, employees may overlook or misunderstand the benefits available to them, leading to dissatisfaction.
By improving benefits literacy, employers can cultivate a more loyal workforce. When employees fully understand the benefits available to them and know how to use them, they are more likely to feel secure and satisfied in their roles. This sense of security is crucial in creating an environment where employees are less inclined to leave for other opportunities.
Bridging the Benefits Literacy Gap: Strategies for Success
Closing the benefits literacy gap requires a multifaceted approach that combines clear communication, continuous education, and accessible technology. Here are some key strategies employers can implement to help employees better understand and utilize their benefits:
1. Consistent Education and Communication
Benefits education should not be limited to open enrollment periods. To truly engage employees, a year-round communication strategy that keeps benefits at the forefront of their minds. Regular updates, access to webinars, and other informational resources can help employees understand their options and make informed decisions.
Employers should also leverage various channels, from email reminders to video tutorials, to ensure that information reaches employees in the ways they prefer to consume it. Creating a culture of ongoing education around benefits helps demystify complex topics and encourages employees to ask questions and seek guidance.
2. Leverage Technology for Centralized Access
A modern, user-friendly benefits platform can be a game changer in improving benefits literacy. These platforms provide employees with a centralized, mobile-friendly location to access all their benefits information, compare options, and manage their accounts. With features like automated reminders, personalized dashboards, and self-service tools, employees can easily navigate their benefits packages, make informed decisions, and access educational resources.
For HR teams, these platforms streamline the administration process, reduce errors, and ensure compliance. More importantly, they provide a seamless way to keep employees engaged with their benefits year-round, making it easier for them to stay informed and involved.
3. Customized Benefits Education
Employees have different needs and preferences regarding benefits, so a one-size-fits-all approach to education often falls short. By offering personalized benefits education—whether through one-on-one consultations, tailored resources, or interactive decision-making tools—employers can ensure that employees receive the guidance they need based on their unique situations.
For instance, younger employees might prioritize information about student loan repayment and savings options, while older employees might focus more on retirement planning. Tailoring benefits education to meet these diverse needs helps employees feel more supported and valued.
4. Transparency and Simplification
Transparency is key to improving benefits literacy. Employers should strive to simplify complex benefits information and present it in a way that is easy to understand. This could involve breaking down the costs and benefits of different plans, providing clear explanations of terms, and offering comparisons that help employees weigh their options.
Additionally, offering clear insights into the financial value of benefits can help employees better understand the full scope of what is being provided. When employees can see the tangible value of their benefits, they are more likely to appreciate and engage with them.
The Future of Employee Engagement and Retention
Employee engagement and retention will remain top priorities for organizations, meaning businesses must do their due diligence in meeting employees halfway on benefits utilization. This is a critical step in moving toward improving both. Employers can create a more satisfied and loyal workforce by providing employees with the tools and knowledge they need to understand and utilize their benefits fully.
Ultimately, business leaders know offering a wide range of benefits has long been a proven method of attracting talent. However, as this article outlines, building a strong team is only half the equation. Companies that invest in ongoing education, transparent communication, and user-friendly technology will be better positioned to close the benefits literacy gap, improve engagement, and reduce turnover.
The benefits literacy gap is a significant challenge for employers, but it also presents an opportunity to enhance employee engagement and retention. By prioritizing clear communication, leveraging technology, and offering customized education, organizations can ensure that their employees fully understand and utilize the benefits available to them.
Employees have more choices than ever, and understanding and utilizing benefits can be a decisive factor in their commitment to a company. Employers who recognize and address the benefits literacy gap position themselves as leaders who genuinely care about their workforce’s well-being, fostering a more loyal, engaged workforce that feels supported and valued for the long term.
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