Last month, Bloomberg’s Rebecca Greenfield flagged an analysis showing that higher-paid employees tend to get better benefits as well:
Employers spend a median of 38 cents of each compensation dollar on benefits, according to an analysis by the Pew Charitable Trusts Foundation released on Thursday. But as compensation goes up, so do benefits. For every additional dollar of average hourly pay an employee gets, Pew finds, employers spend an additional 67 cents on benefits. “The data show that in industries where more is spent on benefits generally, employers spend more both in dollars and as a proportion of pay,” the report reads. “This is because establishments in high-spending industries offer many types of benefits and spend generously on them.”
Workers with smaller paychecks, who can’t afford to pay out of pocket for things like extra health care expenses and child care, get less support from their employers to meet those very needs. In the meantime, better-paid people don’t have to dip into their bank accounts for such expenses, and can instead use their salaries to get even richer by investing the money or buying a house or putting it away for retirement. A better-paid person can put more money in a 401(k), a deal that’s even sweeter if the employer matches contributions.
Employers have opportunities to greatly improve the value that their lower-income employees derive from benefits programs, for less spend than you might expect.
CEB’s employee rewards preferences data shows that low-income earners (those who earn less than $50,000 annually) place great importance on wellness programs and “safety net” offerings (e.g., disability insurance) compared to their wealthier coworkers. It’s no surprise that wellness, which drives down health care costs and signals that employers care about their employees’ well-being, is highly regarded among low-income earners. And with less income to save for a rainy day, these employees highly value generous short-term and long-term disability coverage, as well as health insurance plans with low out-of-pocket maximums. So if you want your benefits package to do more for employees at the lower end of the pay scale, consider focusing on these areas to make the greatest possible difference.
(CEB Total Rewards Leadership Council members can read more here about benefits preferences and why they matter.)
In a recent Medium post discussing the challenges of recruiting tech talent, Eric Elliott writes that one successful technique is to assign candidates a sample project and pay them a fair market rate to complete it. At ERE, developer Amir Yasin seconds that opinion. In fact, Yasin claims to have virtually eliminated bad tech hires by paying them to complete small sample assignments, then bringing them in to explain their work afterward:
Paying candidates to work on a simple project and then discuss it with our team has almost single handedly eliminated any bad hiring decisions. Paying a candidate who gives you a terrible solution (or no solution) is far cheaper (both financially and emotionally) than hiring the wrong person, going through a three-month performance improvement plan to try to make them the right person, and eventually firing them.
We have gone from “This candidate is exactly what we need” to “I have serious doubts about working with this candidate long term” and we’ve had candidates change our bad perception of them using this technique. It’s very easy for someone to embellish (to put it generously) their resume, and coding trivia can be memorized, but it’s really hard for someone to fake actual skill.
This sounds great, especially considering the extent to which recruiting is about mitigating or avoiding loss due to bad hiring.
At TLNT, Tom Valenti contends that offering telemedicine services for primary health care won’t actually save employers any money, but rather will lead to a glut of unnecessary tests and over-treatment of common conditions:
First, as Dr. Ashish Jha, practicing physician and prominent healthcare policy researcher at Harvard, says: when you add the total cost up in the end, telemedicine does not save money. Why? “It tends to be an addition,” he explains. “You do the telemedicine; it leads to more tests. It leads to more follow-up visits. And, over time, when you look at the data, it turns out that telemedicine overall is not necessarily a big cost saver.”
Second, according to a 2014 study supported by the 4 largest telemedicine vendors, the most common calls on their systems are for sinusitis and colds (32%): two ailments that require nothing more than “watchful waiting” to cure. Therefore, how many telemedicine calls and unnecessary antibiotics are prescribed for conditions that likely would have gone away on their own without the need for medical intervention? …
Lastly, and this is the most important takeaway, while the convenience of telemedicine is great, this convenience is most beneficial to those that are largely healthy and simply have a one-off, minor ailment. The data shows, 94% of telemedicine patients use the service only once or twice a year. The fact is, those of us who are healthy are not the reason for our high healthcare costs. We are not going to cut US healthcare costs by treating all inexpensive sinusitis and UTIs over the phone!
I have a few objections to Valenti’s argument here.
The Wall Street Journal recently profiled several organizations, including both scrappy startups and larger, well-established firms, that use open salary information to improve pay and performance discussions, eliminate pay inequity, and spark better performance:
SumAll chief executive and co-founder Dane Atkinson says opening up salary information prevents the nasty surprises that happen when pay is kept secret—when an employee discovers by accident that he’s making far less than colleagues, but can’t discuss it because he isn’t supposed to know. Opening the records leads to “more conversation about salary, and a desire to correct salaries along the way,” he says. … Opening up salaries for comparison “can be a great conversation-starter,” equipping employees to ask how they can improve their performance or advance to higher-paying jobs, says Mark Ehrnstein, global vice president for human resources at Whole Foods Market.
Greater pay transparency is looking more and more like the wave of the future. In one of our recent surveys here at CEB, 86 percent of compensation executives said their organizations would expand the amount of information they share about pay within the next five years, and that’s not necessarily a bad thing. With sites like Glassdoor and Payscale making pay information more easily accessible to all employees, organizations should consider getting ahead of potentially negative salary discoveries that could sour employee perceptions of pay fairness. Such perceptions, our data shows, can reduce employees’ intent to stay and the level of discretionary effort they put in.
Negative salary discoveries are not the only risk employers can mitigate through transparency: Organizations can better challenge allegations of gender-based discrimination and nip PR issues in the bud, such as Google’s embarrassment last year when a employees began circulating a salary spreadsheet that revealed inequities in their pay. There’s also positive signal value in increasing pay transparency, which can make organizations more attractive to values-focused Millennial job applicants, customers, and partners.
(CEB Total Rewards Leadership Council members can read more about how to maximize the benefits of pay transparency here.)