Worksite Marketing 101
by Shawn Smith
Employee benefits have reached beyond simple health insurance to become a key part of almost every working person's financial security. The most talented sought-after employees expect a benefit package that constitutes about 35% of their total compensation, according to The Handbook of Employee Benefits by Jerry S. Rosenbloom.
Retention is a top priority for most employers, especially those with skilled labor positions. As of 2004, the average worker was expected to change employment approximately 14 times in their career, according to the Bureau of Labor Statistics. I don't believe voluntary worksite benefits help recruit good employees. That is determined mainly by salaries and job titles. I do believe that worksite voluntary benefits play a significant role in retaining the best employees.
Brokers and consultants must know how to design benefit plans, communicate plan information, and administer the plans using the latest technology. The broker must continually improve these benefit plans to further the client's objectives.
Worksite marketing is an evolution of traditional voluntary employee paid group plans. In the purest sense, worksite marketing consists of a licensed insurance agent who communicates voluntary employee paid benefits at the employer location and enrolls employees.
In California, the target market for most voluntary worksite marketing products is the blue collar to gray collar employee who earn an hourly wage and has a household income of less than $100,000. These employees, who account for 90% or more of the workforce, are the most underinsured, according to the Bureau of Labor Statistics. Most blue-collar employees do not understand additional insurance needs since, usually; they are not heavily solicited by financial planners or life and health agents. Studies show that hourly waged and salaried employees would prefer to buy their personal benefit plans through the convenience of payroll deduction.
Having individual ownership and portability is what distinguishes voluntary worksite products (employee-paid benefits) from other group voluntary products. What also distinguishes them are higher first-year commissions to offset the big expense of one-on-one employee communication and enrollment. At first, employers were not enthusiastic about employee portability of voluntary products, but they soon learned that they must consider what is best for the employees and their families in order to stay competitive in todayÕs labor market.
I divide voluntary worksite marketing products into core and secondary products. Core products include term and permanent life insurance and short-term and long-term disability insurance. The core voluntary worksite products coupled with the medical plan are necessary components of employers benefit programs if they are not offered on an employer paid basis. Core voluntary worksite products have the highest participation outside of the employers' core benefit plans.
Secondary worksite marketing products include, but are not limited to, accident insurance, critical illness insurance, cancer insurance, and legal plans. The secondary plans are added to the core voluntary plans for secondary enrollment opportunities.
I recommend presenting no more than two worksite products for any first-time enrollment or future open enrollments. Open enrollment is already a confusing time. So, unloading numerous product materials on employees leads to lower participation and gives employers and employees a negative perception of the worksite benefits.
Adding one or two additional worksite benefits a year helps focus employees on their insurance needs and increases participation in new and existing worksite benefits. The added bonus of a multi-year solution is that the broker has the opportunity to meet with all employees each year, not just the newly eligible employees.
Underwriting for core worksite products plays a considerable role in determining the success of a worksite enrollment. I use underwriting leverage to gain better employee access. For example, if a 1,000-employee company decided to offer our life and disability products, I would help the employer understand the importance of a good underwriting offer. Without 90% employee access and 30-minute employee meetings, we will not offer preferred underwriting, such as guaranteed issue or conditional guaranteed issue. The voluntary program would not leave a good impression if several employees didn't qualify for the worksite products.
Technology has made benefit details more readily available to employees, but do employees fully understand what they read (if they read the benefit information at all)? Is self-service really service when it comes to employee benefits? Most employers would say "no" if asked whether their employees really understand and appreciate their employer sponsored benefits. Employees generally have no idea about the substantial employer cost of their employer sponsored benefit programs. Just a few years ago, most workers expected their employers to provide these benefit programs at no cost to them. Now, some employers are cutting employment to afford the double-digit healthcare increases.
Mid-size to larger employer groups will find quality value added services when they partner with a credible benefit communication and enrollment firm. It is imperative for most organizations to have understandable face-to-face core benefit communications as part of their employee retention strategy. Compensation from worksite products offsets the employerÕs cost for core benefit communications. A rational benefit communication strategy will be a win-win for most organizations and the employees' perception of their benefit program will increase noticeably.
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Shawn Smith is the Transamerica Worksite Marketing Western Regional Vice-President for California, Oregon, Washington, Hawaii and Alaska. Since 1996 Shawn has lived in Southern California and is a worksite marketing veteran of 14 years- much of it advising employees at the worksite. Shawn can be reached at (949) 216-9725.
