It’s no secret that HR has evolved from a being a service-oriented management department to a more strategic part of the organization. Modern HR teams are also expected to provide input on and support the organization’s overall business strategy. Given that benefits are one of the top expenses any organization has, it is critical to have a solid strategy – which all starts with understanding what’s working and what isn’t. We’ve all heard the saying, “what gets measured gets done,” meaning that regular measurement and reporting keeps you focused and helps you make more informed decisions. This couldn’t be truer for your benefits strategy, and with the right insights organizations can use their benefits budget more effectively.
There's no doubt that providing employees with the right mix of benefits while staying in budget can be tricky. Looking at your plans from a metrics perspective can help you identify which benefits are valued by employees and which may need to be reevaluated. To gain valuable insights into your benefits package’s health, use the following metrics:
1. Healthcare cost trend
This can be measured by the increase or decrease year-over-year in comparison to national average and industry peers. You can use sources like the Peterson-Kaiser Health System Tracker to understand health spending outside your organization for benchmarking purposes. If you find that your costs are higher than the national average, then you may want to dig a little further and bring it up to your carriers to potentially renegotiate your rates.
2. Cost of benefits
The cost of benefits is measured as a percentage of the total cost of employment across your entire workforce, and is frequently compared with that of competitors in the same industry. You can find some interesting stats on this from the Bureau of Labor Statistics broken down by the cost of benefits and cost of wages. You can use that information for benchmarking against the national average.
3. Program participation
This is where you’ll measure initial adoption and ongoing participation of employees in the programs and resources that you offer. If you aren’t seeing the numbers you expect for certain programs, you may want to reinvest the money spent there on other, more beneficial (pun intended) offerings that better serve your employees and your benefits strategy.
4. Well-being program ROI
You’ll want to cross-reference employees that are participating in well-being programs against those who aren’t and compare things like the amount of sick days taken, productivity, medical claim costs, etc. This will provide some hard numbers to give you a sense of the return you’re receiving from your investment in well-being programs.
5. Average health risks per employee
In order to budget and negotiate rates with carriers, you’ll want to get a handle of the average health risks for your employees. You can capture the total number of health risks by looking at the data from biometric screenings and divide that by the total number of employees who participated in the screenings.
6. Metabolic syndrome prevalence
This one may sound like a mouthful, but stick with me. According to the Mayo Clinic, up to one third of adults in the U.S. have a metabolic syndrome, which is defined as “a cluster of conditions that occur together, increasing your risk of heart disease, stroke, and type 2 diabetes. These conditions include increased blood pressure, high blood sugar, excess body fat around the waist, and abnormal cholesterol or triglyceride levels.” Identifying individuals with the right combination of biometric risk factors to put them in the metabolic syndrome category helps you find ideal candidates for any well-being programs you may have in place. Making employees aware of these programs can entice them to join and reap the benefits – which can be a win-win for both of you.
7. Completion of preventative visits
This goes back to the effectiveness of well-being programs. If employees are taking preventative measures to avoid health issues, they're likely to stay healthy for longer. This will help with attendance, can positively affect productivity, and reduces the likelihood that they will be submitting high-cost claims. Which is why you’ll want to track the percentage of individuals who participate in age- and gender-appropriate medical exams.
8. Emergency room utilization
Emergency room visits are expensive, and studies show that about 70% of all emergency room visits are unnecessary. With that said, measuring the number of ER visits to identify patterns and “frequent fliers” will be an important first step in understanding why the ER is being used so frequently. It may be that the visits were warranted and couldn’t be addressed by a doctor’s visit or urgent care visit, but you may also find that those alternatives were viable options and the employees didn’t realize that they had those choices. You may need to do some further education to improve utilization of less-expensive options and reduce cost.
Conclusion: Benefits metrics are your heartbeat for decision-making
Having metrics to look at when making decisions around the direction of your benefits strategy is key to its success. Getting a sense of which benefits employees value and are taking advantage of will help you figure out which benefits to keep and which should be reevaluated. Some metrics will help to reveal opportunities to educate and elevate programs that are a win-win for both you and your employees. If you’d like to up your game when it comes to measuring the health of your benefits packages, check out our Benefits Health Checklist, which gives more detail on the metrics discussed above.