Group Benefits

high low

The Enrollment Challenge

Retirement readiness decisions are a daunting task for most employees. According to a 2012 Participant Engagement Study conducted by Lincoln Financial:

  • 41 percent of employees are only somewhat engaged or fully disengaged from any retirement plan
  •  7 percent of employees only are fully engaged and interact with their retirement plan on a regular basis.

Plan communication and education can provide people with the financial knowledge needed to better understand their employee benefits and make better enrollment decisions to achieve better outcomes.

Communication Is Key

The U.S. Employee Benefits Security Administration’s ERISA Advisory Council published a key report in 2010 on how plan communication practices and design options impact participation and contribution rates. They researched strategies for tailoring communications to different subgroups of employees through direct communication, and their effectiveness in influencing participants of diverse demographic market segments, including segments categorized by income level, household status, generation, gender, and ethnicity.

The report then provided recommendations of best practices for enrollment that are statistically proven to be effective, including education to plan sponsors on specific proven techniques and communication practices. In evaluating what communication methods are most effective in encouraging participants to save for retirement, the following considerations were made:

  • Cost: an effort was made to balance the need for comprehensive plan communications against cost.
  • Delivery: A variety of methods were explored including the use of current and emerging social media.
  • Plan Design: The study reviewed how plan designs relate to increasing participant enrollment and savings. In particular, the Council studied the use of automatic features. Automatic enrollment plans automatically choose the employees’ contribution percentage and enroll the participant in an investment vehicle. This raises participation rates to close to 90 percent. However employees enrolled at low contribution rates of 3% or less tend not to deeply consider or increase their contributions.


9 Recommendations and Best Practices

The Council found that effective plan communication and education can provide people with the financial knowledge needed to understand their employee benefits, make better financial decisions, and achieve better outcomes.

Given that the most successful plan communications make use of many channels from print to external websites, online tools, social media, and creative marketing, the Council highlighted best practices that balance personalized, targeted content to help employees evaluate benefit offerings with cost efficiency. They highlighted specific techniques and communication practices that have been statistically proven to be effective in increasing the involvement of employees in saving for retirement. The following are 9 recommendations:

  1. Communications tailored to particular segments drive results
  2. One-on-one or small group meetings increase participation
  3. Immediate “on the spot” communication is most effective
  4. Short, simple and focused communication drives participant response
  5. Multiple “touches” with various creative formats increase participation
  6. Increased technology use is effective and cost efficient
  7. Behavioral economics and “social norming” can increase participant involvement and savings
  8. Incentives given by sponsors and “gamification” help trigger participant involvement
  9. Responsive marketing principles may assist plan sponsors in improving communications

Here is a brief synopsis of these 9 practical recommendations and some best practices:

1. Communications Tailored to Particular Segments 

tailored-skill-development-imageThe Council found that communications that target participants based on their interests, background, and/or economic status were more successful than the “one size fits all” approach.

Understanding the culture and background of the workforce being targeted is key. For instance, since Hispanics will soon constitute one-third of the US population, Council member Donna MacFarland of Lincoln Financial Group stated that in her experience education materials typically are translated from English to Spanish, whereas she recommended that sponsors design the material using the reverse approach, developing  materials first in Spanish to address specific cultural needs and language differences.

Human Resource professionals also have found that allowing employees to map out an action plan rooted in realistic scenarios is an extremely effective tool. Some plan sponsors have successfully used a “three-pronged” approach to reach out to their participants by combining simple income replacement projections, behavioral finance strategies and a personalized message. For example, JP Morgan developed 36 different personas based on three age groups (younger than age 30, age 30-50 and older than 50). The firm also targeted participants based upon their regional median income (e.g., Kansas’ median income is $30,000 while in New York City it is $70,000). The basis for this approach was to enable these groups to compare themselves against their peers and take the appropriate action toward saving for retirement.

By narrowly tailoring their target audience on behalf of the plan sponsors that retained them, JP Morgan subsequently monitored whether employees opened their email communications and took action toward saving for retirement. If the individual took action, that person was considered “active,” while someone who opened the email but did not take action was considered “interested.” Based upon the action taken by the individual, the participant received specifically targeted information. This technique resulted in three to four times the response rate of participants who were not targeted.

However, some witnesses advised that there is a general concern regarding the use of targeted communications because complex data collection may provide gender or ethnic identification. Thus, there is concern over whether specific segments identified based upon race or gender could raise discrimination or deferential treatment issues. The Council heard testimony from Donna MacFarland of Lincoln Financial and Thomas Ryan of Fidelity that the use of particularly sensitive demographic information causes concern among plan sponsors. There are also practical concerns about housing information technology. Nevertheless, the overwhelming opinion received during testimony was that targeted communications work.

Branding helps targeting through the use of communications that include a unique positive image that is the group can relate to.

Here are some best practices of participant-centric communication methods:

  • Best Practice 1 – The Power of Example: Trustees of the Elevator Constructors 401(k) Plan used materials featuring the story of three employees who made different savings decisions during their careers. The narrative of the three employees was used throughout one-on-one sessions with printed materials to demonstrate how a 401(k) contribution would benefit participants in a variety of circumstances including temporary layoffs, hardships and early retirement. As a result, plan participation rates increased from 26.56 percent to 29.82 percent in 2011. The plan also experienced an 85 percent increase in plan activity from meeting attendees.
  • Best Practice 2 – Employer/Employee-Centric Content: M.A. Mortenson Company, an international construction firm, employed construction-related themes in its financial education to engage participants and foster pride in the company. Financial education was made mandatory and workshops were divided by career stage, age, and gender. The plan sponsor focused on participants’ preferences by surveying them after the workshop and making recommendations based on their feedback to yield desired results.
  • Best Practice 3 – Bilingual: Consolidated Citrus Limited Partners wanted to 1) increase attendance at plan educational meetings, 2) increase plan participation, 3) increase deferral rates and 4 encourage participants to maximize their match. Ninety percent of the workers spoke only Spanish, and the majority of their day was spent in the orange groves. An in-language campaign was initiated. The company’s Spanish speaking leaders met with small groups in the orange groves. Straightforward collateral in both Spanish and English Collateral were available on site, including announcement posters. By bringing the meetings to the employees, 95 percent of the targeted group attended the meetings. Plan participation increased from 40 percent to 75 percent and deferrals expanded from 4 percent to 8 percent.
  • Best Practice 4 – Branding: The Animation Guild 401(k) Plan was implemented for artists working at Southern California animation studios. The sponsors worked with the Guild’s representatives to obtain insights and develop a branded communication urging participants to remember to enroll. The response rate increased over eight percent from the previous year, with 135 new enrollees. Another employer cited in the research increased participation by 30 percent by keeping the message fun, simple and “cool” to target younger workers.
  • Best Practice 5 – Multicultural: The Four Seasons 401(k) Plan needed to convey an important plan change to an employer profit sharing employer matching contribution. The sponsor obtained feedback from bilingual meeting presenters in designing the campaign, and provided materials tailored to Hispanics and presentations also were created in Spanish designed to be culturally and linguistically accurate. As a result, the average deferral rate of the targeted group rose from 2.9 percent to 5 percent, and significantly increased beneficiary designations.

2. One-on-One or Small Group Meetings 

OneonOneAfter a study by Lincoln Financial found that 66% of participants prefer one-on-one guidance, Lincoln made it a component of its financial education model. They found that the need for individualized information is particularly acute for groups with low participation rates, including women and minorities.  Various studies have shown good enrollment and contribution results when employees request in-person group workshops facilitated by financial experts.

  • Best Practice for One-on-One Meetings:In 2012, MassMutual representatives spoke with 150,000 employees in face-to-face meetings. Forty-six percent of these individuals took action to improve their retirement readiness and, in one-on-one meetings, 75 percent of employees took action.
  • Best Practice for Small Group Meetings: Costs and timing may prevent plan sponsors from providing one-on-one meetings, but small group meetings and audience segmentation have also been successful. The FINRA funded Nurses Investor Education Project had small group meetings for well-educated nurses interested in taking action toward their retirement. They found that generally, the nurses’ lack of basic knowledge, or their perception that they did not know enough to attend these sessions, prevented them from attending their plan sponsor’s meetings. As a result of using small group meetings as a forum, the nurses perceptions changed and attendance at their employer’s retirement plan sessions improved.

3. Immediate “on the spot” Communication 

onthespotThe ability for participants to take action at the time they are thinking about retirement savings is more effective in increasing enrollment. For example, having computers in the room at the time employees are learning about the plan would allow them to sign up and take immediate action.

  • Best Practice: A US Army mandatory financial management course found that providing the enrollment forms for the Thrift Savings Plan during the financial management course resulted in a sizeable increase in participation, with soldiers signing up for the Plan before leaving the classroom.

4. Short, Simple, Focused Communication 

focusedBehavioral studies show that the most effective communications use simple, straightforward language specific to a participant’s personal situation.

  • Best Practice: Time constraints mean that any impediments to action should be identified and mitigated. For example, on a website, any extra step, such as the need to retrieve a PIN, may prevent employees from taking action. Solutions include sending the PIN directly to their email account or a mobile number, or mailing a postcard with the website’s uniform resource locator (URL).

5. Multiple Touches With Various Creative Formats 

profileConsistent, continuous and on-going meaningful communication can be achieved by repeatedly sending out simplified mailings. Social media can help alleviate the cost of additional touch points, and yet, few companies use social media channels for retirement information.

  • Best Practice: The Council’s Professor Madrian cites a company in which the third mailing of a simplified reply form requiring the checking of a box to enroll doubled enrollment from 22 percent to 45 percent of non-participating employees.

6. Cost Effective Technology 

advancement-of-technologyEvery demographic group is now using the Internet as a preferred source of information, via home computer or mobile devices. In addition, electronic media provides the ability to track responses, which is unavailable when the communication is sent through printed materials and regular mail. Another cost effective technological advance is Dynamic Page Publishing,  reviewed at the conclusion of this article.

A Deloitte study in 2012 that found:

  • 93 percent of Americans place Internet access as the most valued household subscription;
  • 54 percent of Americans own smartphones, and the rate is increasing 29 percent annually.
  • One of three Americans over age 50 has downloaded an application to a smartphone, and 28 percent access their bank accounts via smartphone.

Engaging Millennials: Electronic media is the most effective method of communication to engage younger generations in retirement planning, including Generation X (born between 1965 and 1979).  In order to combat inertia caused by competing financial priorities, such as student loan debt, it is important for this group to be engaged through “YouTube” videos, Facebook forums, Twitter, email and mobile delivery, including providing “one click” transactions and incorporating elements of “gamification.”   Millennials also demand simple, personalized, and action-oriented communications, and prefer human contact for complex tasks.

  • Best Practice – Email: Thomas Ryan of Fidelity Investments testified to the Council that Fidelity makes all channels of communication accessible, and finds that email communications have generated higher response rates than direct mail.
  • Best Practices for Engaging Millennials – Fidelity: Fidelity has studied the preferences of Generation Y, or “Millennials”  for using electronic communication, and found that this group tends to rely heavily on the Internet to interact with representatives from Fidelity, although they appear to be the least engaged when it comes to the frequency of contact. Millennials serviced by Fidelity have the lowest 401(k) participation rate, at 58 percent, compared to 67 percent for all other populations. Design changes made to simplify online interaction with Millennials resulted in a 40 percent increase in web utilization by this group.
  • Best Practices for Engaging Millennials – Putnam: Lori Lucas of Callan Associates discussed Putnam’s roll out of a plan primarily for Millennials that encouraged participants to bring their tablets to an nteractive meeting to log on to the benefits website. As a result, 40 percent of attendees increased their deferrals within 90 days after attending the meeting.
  • Best Practices for Engaging Millennials – MassMutual:: Offering enrollment and savings increases using iPod Touch devices in group meetings resulted in action rates of 85 – 90 percent among those attending. The use of targeted and tested mail and email campaigns resulted in $150 million in new deposits over three years and a 3.9 percent increase in action rates.

7. Behavioral Economics and “Social Norming” 

choiceThe way certain information is presented can have a resounding impact, including the way choices are presented to the participant, a method referred to as “anchoring”

Presenting options in a different order or with a higher default percentage has increased deferral rates. While communications traditionally list contribution percentages in ascending order from one to five percent, studies have shown that reversing this order so that the first option shown is five percent markedly increases enrollment in the five percent option. This method is referred to as “placement.”

 “Social Norming” reflects the fact that people tend to benchmark themselves against their peers. Statistics from the Bureau of Labor Statistics show that participants tacitly compete against peers in similar socioeconomic conditions.

8. Incentives and “Gamification” 

carrotThe use of games (gamification) is an effective tool in reaching  individuals who may not be easily engaged in retirement decisions (“non-savers”). Gamification can be used to reward people if they engage in the correct behaviors. Plan sponsors may also use incentives to provide rewards to participants with who exceed a certain benchmark contribution amount. Other techniques include raffles.

  • Best Practice 1: The NFL’s “Play 60” campaign  incorporates the use of the NFL brand to incentivize children to play a game for at least 60 minutes a day.
  • Best Practice 2: A rug manufacturer in northern Georgia had a series of meetings for people working multiple shifts, giving away lottery tickets to encourage attendance, and experienced standing room only for the meetings.

9. Six Marketing Principles Improve Communications

Communications that are uninspiring and difficult to undmarketing-300x200erstand leave employees confused, bored and unmotivated. The communicator’s “curse of knowledge” is a bias in which the communicator’s knowledgeability makes it difficult to demonstrate it from the perspective of lesser-informed people. The Council highlighted six principles of communication that plan sponsors should consider when drafting documents or presenting to their participants that will inspire action:

1. Show Empathy

empathyTo  determine the relevance of a message to an audience, it is necessary to engage them and ask questions that the content of the presentation or the communication should then be tailored to answer. For example, an energy company developed a program to help consumers understand and lower their energy bills, using this computerized question:

Can I help you with your bill?

  1. Yes, help me understand my bill.
  2. Help me save money.
  3. Both of the Above.
  4. I’m Here for Something Else.

By showing empathy to what the consumer cared about and giving information and tips to help them feel more in control, these questions presented helped raise consumer satisfaction.

2. Use Metaphors and Analogies

analogCommunications also reference a metaphor or visual picture to help the recipient relate to the message. For example, when Ridley Scott presented the screenplay for Alien to his producers he used the popular movie Jaws as a reference, and the metaphor “it’s like Jaws in space,” to frame a concept that the producers easily understood

3. Use Storytelling

icon-storytellingPeople tend to forget facts that are presented but usually remember a story. Stories are easy to absorb when people are overwhelmed with information. They also eliminate extraneous facts to capture the recipient’s interest and relate to him on an emotional level.

4. Use a Conversational Voice

conversationalUsing overly technical information, compliance or legal jargon can loose an audience. For example, it is difficult to convey the benefit of voluntary life insurance individual and spouse buy-up options in which election of coverage for a spouse can equal up to half an individual’s buy-up,  depending on the desired level of coverage. An effective way of communicating this is as follows:

“The company is going to buy life insurance for you. If you want, you can buy extra life insurance. Whatever extra life insurance you buy for yourself, you can also buy up to half that amount for your spouse. Now, depending on how much additional insurance you’d like, one or both of you may need to answer some questions about your health to see if you qualify for it.”

5. Surprise the Recipient

boxing-glove-surpriseUnexpected methods of engaging the recipient get the individual’s attention when a subject is ordinarily challenging and abstract. The use of humor, as shown below, can be considered an example.

6. Use Humor

humorUsing a little humor in the message will keep the audience engaged and make the message easier for audiences to relate to.


Plan Design Considerationsicon-design

Automatic Enrollment

A study by Brigitte Madrian and Dennis Shea shows that automatic enrollment increases average participation rates from 65 percent to 85 percent. It is particularly helpful for low-income workers with annual wages under $20,000, where participation increased from 27 percent to 82 percent. Average participation for employees under age 30 doubled from 41 percent to 82 percent, and the best improvements have been among the segments that had the lowest participation rates.  This was corroborated in as presented in the testimony of Lori Lucas.

Mandatory Contributions and Automatic Escalation

Defaults that are too low can  impact workers who would otherwise have contributed more. Since studies have shown higher default contribution rates have not increased opt-out rates, employers should consider recommending higher default contribution rates.

One solution is a stretch match (increasing the maximum amount of pay that can be matched and decreasing the percent matched, to keep the employer’s costs flat.

Another way to increase savings is automatic escalation in which sponsors automatically increase a worker’s contribution rate by one to two percent  of salary at each pay anniversary until a cap, such as 12 percent of pay.

Best Practice – TIAA-CREF: David Richardson of TIAA-CREF found that 403(b) plans typically have much higher contribution rates, ranging from 10 percent to 15 percent of pay compared to 5 percent to 7percent for all 401(k) plans, due to mandatory contributions from both employers and employees as a requirement of employment.  The 403(b) plans TIAA-CREF administers experience much higher annuitization rates — 40 percent compared to 4 percent for all 401(k) plans.

 Conclusions and Implications

red pencilThe Council found that continuous, simplified, personalized communication using multiple channels, connected with humor and empathy, are effective ways to communicate with plan participants to encourage participant engagement.

Benefit Program Marketers seeking to increase employee plan participation need to be more flexible, customizable and responsive than ever to introduce, present, promote and clarify the particular offerings and choices the employer has agreed to sponsor. Dynamic Publishing platforms are becoming a key tool in executing this strategy DPP is a way of designing publications in which layout templates are created which can contain different content in different publications. In cases where the same content is being used in multiple layouts, the same layout is being used for several different sets of content, or both, dynamic page publishing can offer significant advantages of efficiency over a traditional system of page-by-page design. Future articles will explore Dynamic Publishing in greater depth.

Related Blog Article:


A Brave New World Of Health Insurance Choices

Christopher Goldsmith of Sibson Consulting’s provocative article written for the Society for Human Resource Management (SHRM) explores how behavioral economics can help guide decision making with the complex choices consumers face in selecting better health plan options. This article summarizes that information.

The Problem: Choice and Complexity

Health care reform means more choices for consumers and a more complex decision process than before. Senior citizens will now need to make choices each and every year regarding their Medicare coverages: whether to enroll in traditional Medicare, supplement it with a Medicare supplement policy and a Part D prescription drug plan, or enroll in a comprehensive Medicare Advantage plan instead.

Health insurance marketers face the challenge of guiding consumers through a fundamentally more complex decision process in a way that helps them make more informed and better choices. The most important questions marketers face are:

  1. How to help simplify a complex decision process for the consumer.
  2. How to empower the consumer to make the best choices.
  3. How to differentiate your company in a field of similar products.

Behavioral economics—the study of how people make choices, drawing on insights from psychology and economics—can be useful in designing and communicating employee health plans.

Rational vs Emotional Decision Factors

Decisions regarding health often involve irrational, or emotional elements, where behavioral biases cloud rational judgment. For example:

• Unhealthy Habits: Despite numerous public health messages, many young adults nonetheless choose to become substance abusers or overweight.

• Not Taking Advantage of Preventative Services: Even if they understand the value of preventive health care and preventive care services offered under their plans without deductibles, co-payments or co-insurance, many still fail to take advantage of free health screenings or physical exams available to them.

• Lack of Interest in Health Care Research: When making decisions about hospitals and surgeons, few consumers research data about hospital costs, mortality, readmission and hospital-acquired infection rates.

• Failure to Plan: When enrolling in Medicare, many consumers fail to research the options available to them that would assist them in making an informed decision.

Behavioral Economics and Open Enrollment

Understanding these behavioral tendencies enables organizations to create more effective communications and incentives to make better decisions that produce better outcomes. This is particularly important during the open enrollment process, to steer employees toward cost-effective health plan options. Organizations increasingly want employees to migrate from more expensive PPOs to consumer-directed health plans (CDHP), which have lower costs in exchange for greater employee cost sharing. However, Goldsmith points to three behavioral biases that impede this goal:

• Loss-aversion bias. People tend to overvalue the prospect of losing something of value and to undervalue the prospect of gaining something of value.

• Value system bias. Deeply rooted value systems and selective filters necessitate substantial evidence to the contrary or significant influence to effect behavior changes will change.

• Status quo bias. Inertia, or the tendency not to change, is especially significant when choices are complex.

Optimizing Choice Architecture

Reframing Experiment

Health plan participants considering  the 3 choices below are likely to resist moving from a PPO to a Healthy Living Plan or CDHP because of the potential loss of their current doctor-patient relationship while undervaluing the financial gains or the prospect of improved quality of care available through a rigorous provider selection process.

Original Enrollment Presentation

Choice Architecture

There are also behavioral biases that the organization could leverage in its open enrollment materials to better position the new product offerings that could result in better results. Designing communications in ways that appeal to these biases can put a new perspective on the choice that makes it easier for consumers to consider and evaluate their options.

“Choice architecture” describes how the various options are framed, ordered and explained.  Figure 2 below illustrates how the default option, order of the options, plan names, presentation of decision-making factors, and use of color elements can be used to influence choice:

Reframed Enrollment Presentation:


Preliminary testing with various focus groups show many people who chose the PPO Plan in Figure 1 subsequently chose the Healthy Living Plan or Thrifty Consumer Plan when presented with the design used in Figure 2. The expected result of this presentation of the data is better outcomes for the employees and the organization.

Incentivizing Lifestyle Changes

Sibson Consulting’s Healthy Enterprise Survey

Encouraging Wellness Program Participation: One increasingly popular way to promote more healthful lifestyle changes is by using incentives to increase participation in the organization’s wellness programs, as shown in the chart above from Sibson Consulting’s Healthy Enterprise Survey.  Studies have shown that, compared to a control group:

  • Sustained tobacco use quit rates are 3X as high among participants receiving incentives.
  • Obese participants tend to regain their weight when they stop receiving incentive payments.

Designing Effective Incentives: Sibson’s research finds that participation in an organization’s health risk assessment activities increases as the as the incentive value increases, but incentives must be well designed to achieve desired outcomes:

• Too low incentives fail to motivate behavior change.

• Too high incentives can create a “choking” effect that impedes performance.

• Too distant incentives lead people to devalue the reward.

 Too long a qualifying period encourages procrastination, and, as the deadline nears, the perceived cost of change magnifies resulting in lower participation.

 Misguided incentives cause the reward potential to crowd out the intrinsic motivation to focus on health.

• Too many incentive elements makes the complexity is overwhelming.

Using Behavioral Economics to Effect Change

In the preceding experiment, we examined how reframing the enrollment choices aided consumers in evaluating their plan choices.  In that example, two behavioral biases were considered in designing the enrollment material:

• Clue-seeking bias. When faced with complex decisions, people look for clues, which they hope will be relevant to rational decision-making.

The revised enrollment chart provided relevant clues like “thrifty” and “elite standards” to show how the plans would actually work for the customer: Providing discrete columns for the major benefits of each plan (ie. “Your annual payroll deduction,” “Company Deposit into your Account, ” etc.) allows the consumer to quickly pick up cues about the benefits offered.

• Framing bias. Because people make decisions within a larger context, they look to their experiences and the environment to establish a frame of reference.  Therefore, how choices are presented has a substantial influence on the decisions people make.

The original chart, by placing the PPO option at the top, appears to suggest that it is a default option, or a standard-bearer. The revised chart, by placing it at the bottom as a “Legacy Plan” counters some of the intrinsic biases that impede change mentioned above (loss-aversion bias,  value system bias, and status quo bias.)

Countering Behavioral Biases

According to Sibson Consulting:

Some behavioral biases can serve as bridges to better outcomes.

Sibson offers some examples of “countering” behavioral biases that can be used to help employees make more informed and considered decisions:

Marketing Applications

Marketers need to bear in mind that the enrollment materials they design have real consequences in terms of workforce behavioral bias, choice making and engagement. Marketers can use principles from behavioral economics to help customers make more rational decisions regarding their health and their health care benefits. This begins with taking a systematic look at those outcomes you’d like to effect, and the consumer choices that would enable them. The ordering of options, highlighting of decision factors, naming of programs, structuring of incentives and selection of defaults can impact the outcome of the enrollment choices that consumers make.


The further up the pyramid, the greater the need for values based (consultative) selling

Consultative Transactional Quotient

Consultative salespeople are different in their behaviour from Transactional salespeople. It is important to analyse and determine what type of sales approach better fits your business – a transactional sales approach for one-off, commodity type sales, or a consultative approach for your more complex, longer-lead time sales?

Value selling, or consultative selling, occurs where the customer doesn’t know precisely what they want to buy but knows what they want to achieve. The sales person’s role is to work with that customer collaboratively (or ‘consultatively’) to create a solution to their problem. Inevitably, this type of selling requires building relationships, sometimes over a long timespan and so that ability to build and nurture customer relationships is a critical skill for the consultative sales person.

Customers who are looking for a solution to their problem are likely to be less price-sensitive than customers who know what they want to buy.

The flip side of value or consultative selling is transactional selling, where the customer knows precisely what they want to buy and therefore the sales person’s role is to communicate the value of the product or service. This is often a shorter sales cycle as it will be made up of a series of transactions and there is less need to build relationships.

The Great Market Potential of Voluntary Benefits

To understand the potential of the voluntary market, consider that, according to a 2011 analysis by McKinsey & Company cited in Benefits Selling magazine:

  • Voluntary premiums are growing as much as 10 times faster than employer-paid premiums.
  • Voluntary benefits are estimated to contribute more to industry profits than employer-paid plans by 2015.
  • Furthermore, according to LIMRA, the marketing research arm of the insurance industry, 30% of U.S. employers are considering adding a voluntary benefit within the next two years.

Given the uncertainty over health care revenues and the economy, more benefits brokers today see sales of voluntary – employee-pay-all – products as key to their future success.

Selling voluntary, however, is new territory for most brokers. According to a survey conducted by Eastbridge Consulting Group in March 2012, over 70% of benefits brokers said voluntary sales account for less than 10% of their total revenues.

Top brokers say that taking a consultative vs. a transactional approach to selling can help.

What is Consultative Selling?

In his book, “Rethinking the Sales Force,” Neil Rackham explains that a fundamental shift has occurred in the marketplace:

As customer choices have increased, both as a result of competition and because products and services are increasingly customized, understanding the customer has become an ever more important element of successful selling.

Rackham describes the three “pillars” of consultative selling:

  • Helping customers understand their problems and opportunities in a new or different way;
  • Showing customers new or better solutions to their problems;
  • Acting as advocates within provider organizations.

Differences Between Product and Solutions Selling

CEB Global’s Corporate Executive Board, 2012 – – has identified Voluntary Sales as a third era in the evolution of selling based on delivering “customer insights.” Here are some identified differences between product selling and solutions (or consultative) selling:

Product Selling Solutions Selling
Nature of the sales conversation Lead with features and benefits Lead with questions
Ideal sales rep profile “Talking brochure” Interrogator
Key stakeholders to engage Decisionmaker Coach/advocates
When to engage When customer assesses options When customer understands needs
Flow of information Customer places order Customer coaches on how they buy

Nelson L. Griswold, one of the benefits industry’s leading authorities on consultative selling and cross-selling voluntary benefits points out that employers are hungry for guidance and direction on benefits and will eagerly engage with a broker who can drive their benefits strategy.

Re-frame the Conversation

Speakers at this year’s Benefits Selling conference offered this advice for brokers:

  • Connect employee needs into one seamless program for the employer – through one carrier or by integrating with a third party administrator.
  • Focus on state-of-the-art benefits administration and enrollment innovation, taking the employer out of the middle.
  • Focus on employees’ overall needs regarding health and wellness, retirement savings and income and protection from catastrophe.
  • Have a broader knowledge of benefits, not a siloed, specialty approach.
  • Expand relationships beyond benefits decision makers to a team of stakeholders (finance, communications, marketing, procurement, etc.) Bring them together for discussions.


Eighth Annual Benefits Selling Expo, May 9-11, 2012.
Griswold, Nelson L., “Are You Driving the Benefits Strategy? Employee Benefit Advisor, August 2011.
Griswold, Nelson L., “Cross-sell Voluntary with a Consultative Approach,” Employee Benefit Advisor, December 2011.
Rackham, Neil & De Vincentis, John, Rethinking the Sales Force, McGraw-Hill, 1999.


A study of nearly highlighted by  on TLNT separates the myth from the reality.

Myth: Over 80% of employers believe that employees leave because of money.

Reality: 88% of employees leave because of things other than money.

A study titled “Retention of Key Talent and the Role of Rewards” by WorldatWorkHay Group and Dow Scott, Ph.D., professor of human resources at Loyola University Chicago, found that the No. 1 reason key talent quits is to earn better pay elsewhere, although other reasons include a lack of promotional opportunities, the perception that pay is unfair and dissatisfaction with job and work responsibilities.

Not so fast! Contrary to this, an unpublished Saratoga Institute study of 19,500 former employees of 18 organizations, conducted from 1996 to 2003, revealed that 88% of employees say they leave for reasons other than money. By contrast, another survey in that same time period showed that 89% of managers believe that employees mainly stay or leave because of money. (The full Saratoga study is summarized in Leigh Branham’s book The 7 Hidden Reasons Employees Leave).

 The top 10 reasons employees quit are listed as:

  1. Limited career opportunities (16%)
  2. Lack of respect/support from supervisor (13%)
  3. Money (12%)
  4. Lack of interesting/challenging job duties (11%)
  5. Lack of leadership from supervisor (9%)
  6. Bad work hours (6%)
  7. Unavoidable reasons (5 %)
  8. Bad employee relations by supervisor (4%)
  9. Favoritism by supervisor (4%)
  10. Lack of recognition for contributions (4%)

How to Keep Your Employees

Things to key into, according to Mark Toth include:

  • Only 29% of employees are truly engaged (Gallup);
  • Disengaged employees are 5 times more likely to leave (Cornell);
  • Engagement is actually decreasing (Gallup, Conference Board);
  • Pay doesn’t rank among the top four (4) engagement drivers (Right Management).

This confirms what I wrote here – Employees: Recognize Us or Lose Us  – supervisors play a major role in whether employees leave or stay.

According to a Business Week (online) article from Feb.2, 2005, one of the biggest reasons people leave their employers is because of poor relations with their supervisors. Florida-based TalentKeepers has built their retention work on the premise that the most significant reason why employees leave is dissatisfaction with their direct supervisors. Other experts confirm that dissatisfaction with either supervisors or upper management plays a significant role in turnover. Despite this knowledge, managers and supervisors in most companies are still not held accountable for the departure of productive employees.

The Magical Wheel of Engagement

Employees want their leaders to:

  • ENVISION a bold, clear and inspirational future;
  • EMPATHIZE with them to understand their motivations and strengths;
  • ENHANCE their skills through education, exposure and experience;
  • EMPOWER them to do meaningful work;
  • EVALUATE them on a truthful and timely basis;
  • ENCOURAGE them as much as humanly possible

More detail on each spoke in the magical wheel is featured here.

Snap! principle of employee loyalty:

Have a model for engagement. 

Related Article:

Talent Retention Myths

Compensation is Not the Main Driver of Loyalty

My recent post What Exit Interviews Say About Why Employees Leave highlights a PricewaterhouseCoopers study about why employees leave their companies.  Compensation was less important to employees than employers thought. In fact, a Gallup poll shows that “Pay/Benefits” is only about a fifth of the reason that employees leave a company.

Other issues that drive people away are: growth, meaningful work, supervisor skills, workload balance, fairness, and recognition. Significantly,  5 of the 10 reasons are directly related to supervisor skills, including recognition for contributions.

Recognition Is Key

Another survey by Globoforce – the Spring 2012 Mood Tracker Survey shows the importance of workplace recognition:

  • 55% percent of U.S. workers would leave their jobs for employers that practice employee recognition programs.
  • 81% say being recognized increased their satisfaction, up from 73% in the fall of 2011.
  • 51% who have not been recognized in the last 3 months intend to look for new jobs vs.  23% who have been recognized.

More employers are now using recognition programs:

  • 50% report being recognized in the last 3 months, up from 44% in the fall of 2011.
  • 54% say they are happy with their levels of recognition, up from 48% last fall.

Recognition = Job and Supervisor Satisfaction

  • 83% who have been recently recognized are satisfied with their levels of recognition, with 90% saying their managers effectively recognize their efforts.
  • Only 17% who have not been recognized are satisfied with their recognition levels, and only 21% feel their managers effectively acknowledge their efforts.
  • 76% who have been recognized love their jobs vs. only 37% of those never recognized.

Eric Mosley, CEO of Globoforce summarizes the results:

As this survey shows, many fail to connect the one thing that all employees seek: frequent peer-to-peer recognition tied to performance. Taking the bottom-up approach to recognition is changing the way employees are managed. Not only will business leaders know who the flight risks are, they will be able to prevent many from ever becoming flight risks.

The PricewaterhouseCoopers study shows that factors related to dissatisfaction with one’s boss were huge motivators of employee turnover, and recognition is one of those factors.

The Globoforce spring 2012 results now confirm that recognition is in fact a major component of supervisor satisfaction: 83% who have been recently recognized are satisfied with their levels of recognition, with 90% crediting their superiors for recognizing them.

What Can You Do?

Ongoing appraisal

Since feeling isolated invites disengagement, it is key to provide them adequate information, training, support and encouragement. Knowing how well they are doing in a new job is important to them, and it is not good to wait for an annual performance review to give an employee feedback. The coaching and e appraisal process needs to be ongoing during the first few months and for years into their career.

What about the disenchanted employee who has been with the company for many, somewhat unproductive, years? Finding out why the employee feels disengaged is the first question — the answer may well give clues to issues within the organization that should be addressed.

Here are some time-honored tips that really can make a difference:

  1. Management engagement: Invest in the necessary training (and surveys) to ensure that all levels of management, from the tip-top to line supervisors, are fully engaged. This will then cascade down throughout the organization.
  2. Increase communications: Be as open as possible and don’t be afraid to share bad as well as good news. Bes sure that your employees know to come to you if there is a problem so it can be resolved right away rather than linger and grow.
  3. Incentivize performance: Part of leadership is to recognize when someone in the company is working hard and productive. People like to be honored in different ways – some may like public recognition – some do not.  Find out how “they” would like to reward for their positive contribution.
  4. Feedback: Allow people to be part of the future of the organization. Ask people “What do you think?”  You may be pleasantly surprised by some of the input you receive.
  5. Flexibility: No two people are the same or work in exactly the same way. Morale can suffer if employees are required to follow a specific way of working which may not be optimum for them. Determine what programs you can adapt that will help employees get their job done in new and proven ways.


Snap! principle of employer loyalty:

Engagement and recognition enhance job and supervisor satisfaction and loyalty.

The Employee Perspective

 of TLNT summarizes David Witt’s Blanchard LeaderChat blog report on the top 10 reasons employees quit an employer. A PwC study of 19,000+ employees who completed exit interviews with PricewaterhouseCoopers (PwC) clients show that, while employers tend to believe it’s the pay, employees have a different perspective:

People Leave Managers, Not Companies

Better compensation is just a single aspect of why people leave an organization. 

5 of the 10 reasons are directly related to supervisor skills, including recognition for contributions.  In fact, in most cases it is because people want “to work for an organization that is fair, trustworthy, and deserving of an individual’s best efforts. Some of the other issues that drove people away include growth, meaningful work, supervisor skills, workload balance, fairness, and recognition.

Author and consultant Leigh Branham, partnered with PwC to analyze the results, and found that trust, hope, worth, and competence are at the core of most voluntary separations.  When employees are not getting their needs met in these key areas, they begin to look elsewhere.

What Can An Employer Do?

Witt’s advice?

Don’t take your people for granted.  While you may not be able to provide the pay increases you were able to in the past, there is nothing stopping you from showing that you care for your people, are interested in their long term development, and are committed to their careers.”

Blanchard Leader Chat provides some self check questions an employer can ask itself.  Employers should consider how your employees would respond if asked to rate their work environment  in each of the following areas:

  • Am I able to grow and develop my skills on the job and through training?
  • Do I have advancement or career progress opportunities for higher earnings?
  • Does my job makes good use of my talents and is it challenging?
  • Do I receive the necessary training to perform my job capably?
  • Can I see the end results of my work?
  • Do I receive regular constructive feedback on my performance?
  • Am I confident that if I work hard, do my best, demonstrate commitment, and make meaningful contributions, I will be recognized and rewarded accordingly?

Snap! principle of employer loyalty:

Supervisor people management skills trump all other loyalty factors

2011 UBA Health Plan Survey

Plan enrollment jumped 18 percent in 2011

 of LifeHealthPro points to to new analysis from the American Association of Preferred Provider Organizations (AAPPO) that enrollment in consumer-driven health plans is far outpacing other types of health coverage, especially among large employers. Consumer-driven health plan offerings (CDHPs) increased dramatically from 2010 to 2011:

  • An increase from 23% to 32% among employers with 500 or more employees – the biggest one-year increase AAPPO has seen so far.
  • 48% of the largest US employers (20,000 + employees) offered CDHPs in 2011.
  • 54% expect to offer them in 2012.

Even small employers (under 499 employees), which are historically the least likely to offer employees a CDHP option, saw growth from 16% to 20% last year. Altogether, enrollment in CDHPs grew by 18% in 2011, up from 28 million to 33 million over the course of a year.

A Growing Trend

AAPPO says the trend started in 2008 and continued through 2010, the popularity of CDHPs corresponding with a decline for HMOs. The trend shows no sign of abating. Said Karen Greenrose, AAPPO president and CEO:

Our stagnant economy combined with the uncertain fate of the Affordable Care Act has forced employers of all sizes to seek innovative ways to reduce what they spend to cover their employees. Given the cost savings inherent in the consumer-directed model, it’s clear that employers — especially our largest ones — are increasingly looking to CDHPs to do that. In today’s tough environment, CDHPs — which are predominantly built on PPO networks — offer the affordability, choice and access that employers and consumers alike are looking for.”

Today, of the 256 million Americans that the U.S. Census Bureau estimates have private or government health insurance:

  • 204 million are enrolled in PPO-based plans, including point-of-service and consumer-driven plans.
  • HMO enrollees represents the remaining 52 million (19%).

CDHPs Offer Employee Choice, Employer Savings

CDHPs are health benefits plans introduced in 2001 that typically combine high-deductible health insurance with a tax-advantaged account that can be used to pay deductibles. In practice, there is a wide variation in what employers call a consumer-driven health plan.

Advocates say these plans ultimately will help to decrease the number of uninsured, encourage cost-consciousness among consumers and increase the amount of information on the cost and quality of providers. Critics say they do little other than shift costs from employers to workers, and favor wealthy and healthy participants at the expense of those with lower incomes and poorer health. Characteristics of CDHPs include:

  • A three-tier payment structure:
  1. A tax-exempt health account to pay for health expenses up to a certain amount,
  2. A high-deductible health insurance policy that pays for expenses over the deductible.
  3. A gap between those two in which the individual pays any health care expenses out of their own pocket.
  • Individuals have the opportunity to to save money that they do not spend in the current year for health care expenses in future years (in some plans, these amounts can be withdrawn during retirement)
  • Support systems (usually on the internet) to help individuals select good providers, get  reasonable prices, track their health care expenses, and improve their health

Tennessee Representative and chairman of the House Education and Workforce Health Subcommittee, Phil Roe says:

It’s obvious that the CDHP/HSA model is filling a significant void in the marketplace. As a physician, I know that patients are demanding greater personal control over their health care decisions, and their employers want more affordable and manageable costs. CDHPs – and the PPO networks they are built on – are clearly meeting that demand.

The Next Few Years Will Be Pivotal

The latest of three annual surveys released last month by the nonpartisan Employee Benefit Research Institute (EBRI) and the Commonwealth Fund produced mixed results for consumer-driven and high-deductible plans. Among its major findings:

  • Enrollment is still low but growing: Overall, 7.5 million adults ages 21 – 64 with private insurance, representing about 7% of that market, were either in a consumer-driven or a high-deductible health plan in 2007.
  • High-income enrollees: 31% of  adults enrolled in CDHPs last year up from 22% percent in 2005. That compared with just 19% with incomes under $50,000, down from 33% in 2005.
  • Satisfaction rates are lower but increasing: Participants continue to be less satisfied with various aspects of their health plan than those with more comprehensive insurance, but were somewhat more satisfied with their plan in 2007 than in the two previous years.
  • Participants are more cost-conscious: Adults in consumer-driven plans are more cost-conscious in their health-care decision making than those in more comprehensive plans, and more likely to talk to their doctors about treatment options or to ask for a less costly generic drug.
  • More missed care: In all three annual EBRI/Commonwealth surveys, participants were more likely to skimp on needed medical care or medications because of cost than those in more comprehensive plans.
  • Health-care information still not available: No significant gains were reported by plan participants in the amount of information available on provider cost and quality, two keys to making the plans a success. Other research suggests that consumer-driven plans may be doomed if the lack of consumer information and education is not addressed.

No Significant Savings Yet

A new report by Milliman and the National Business Group on Health (NBGH), looking at six employers’ plans with 30,000 workers, found that consumer-directed plans created a “modest” 1.5% savings for employers. The study showed that the savings were due to higher cost-sharing by workers, which discouraged utilization. The results reinforced the need for better consumer information, Milliman and NBGH said. Actual savings are likely to increase when participants have the patient education resources they need to compare and shop for health care based on quality and cost.

Still, They Appeal to Employers

Various studies, including the one cited above, show that employers will continue to expand these offerings and that some consumers will be receptive.

The Center for Studying Health System Change said that its visits to 12 nationally representative communities found that employers have increased the introduction of consumer-driven plans in the past two years. Their study found that consultants on health plans and benefits predict that more employers will offer these products, and that an economic downturn might also prompt them to move in this direction.

Another report this month by Deloitte Consulting concluded that “consumerism is a significant trend” in health care and demand is likely to grow.

So growth of CBHPs seems inevitable as employers continue to look for ways to control their health-care costs, and currently tend to see consumer-driven plans as the vehicle of choice. However, this growth trend could be stalled if these plans fail to show proven savings, or if workers’ dissatisfaction with them increases.

Next Page »