From the July2011 issue of Benefits Selling:

As companies battle strained budgets during the recession,more and more are offering innovative perks to keep employeesengaged, particularly as traditional employee benefit costscontinue to rise.

Take this example: A number of employers in Kansas City aregiving their workers debit cards that can be used to covereducational expenses upfront — not only for tuition, but also forsupplies for trade school courses and even certification exams andprofessional conferences.

Nurses at St. Luke’s Health System in Kansas City have used thedebit cards to pay for certification classes for specialtypractices such as critical care, says Dawn Murphy, senior vicepresident of human resources. Other hospital professionals haveused the cards to pay for occupational therapy conferences.

Murphy says the debit card program fosters employee engagement,which is better than just focusing on employee satisfaction.“Engaged employees are those who come to work with their heads andtheir hearts fully engaged — they use energy and discretionaryeffort, while satisfied employees might just sit in theircubicles,” Murphy says.

“We want engaged employees who are going above and beyond forour patients, which makes a world of difference for the care weprovide.” The trend of offering non-traditional employee benefitsis increasing as employers struggle with tight budgets,particularly as the costs for tablestakes such as medical, dentaland disability insurance continue to rise.

According to the Society for Human Resource Management’s 2009Employee Benefits Survey Report, 60 percent of organizations saytheir benefits offerings have been affected either to a largeextent or some extent by the challenges to the U.S. and globaleconomy. As a result, more are turning to innovative perks tosweeten the pot for employees, so they’ll not only stay at theorganization longer, but they’ll also work more productively.

In the 7th Annual MetLife Study of Employee Benefits Trends, 40percent of employees surveyed said they wanted a wider array ofvoluntary benefits. “Sometimes employees lose sight of the benefitsof 401(k)s, medical and dental, so non-traditional benefits have astronger emotional appeal,” says Patrick Carragher, vice presidentand director of benefits at CheckPoint HR, a human resourcesadministrative service and consultant firm in Edison, N.J.

“Many of the offerings are fun and people can benefitimmediately in a tangible way, and they are good, solid moraleboosters.” The types of non-traditional benefits can vary widely —from cutting-edge educational programs that use debit cards toprofessional chefs in the office and Wiis in the breakroom toofferings that augment traditional benefits, so employees can covertheir mortgage payments while recovering from a heart attack.

St. Luke’s educational accounts is part of a pilot project bythe Kansas City-based The Learning Group, which uses debit cardsand an online site to administer “lifelong learning accounts” foremployees of participating companies, says Suzy Makalous, thegroup’s director of innovation. Employees who choose to takeadvantage of the program elect to have a certain amount of moneydeducted from their payroll checks and deposited into the account,with their employers matching all or a portion of that amount.



When enough is saved to pay for educational expenses, employeesrequest their debit card to be loaded using The Learning Group’sonline administrative site. Makalous says the program is a win-winfor everyone. “It empowers employees to take charge of theircareer, it builds loyalty for an organization, it increasesproductivity for those people who are involved in it, it forwardsthe idea of competitive advantage and innovation, and it frees uptime for HR,” she says.

The pilot was part of an initiative by the U.S. Department ofLabor, which also matched employee contributions in The LearningGroup’s initial demonstration project from June 2008 to June 2010.Twenty companies with 159 participating employees took part of theinitial project, in which 56 new college degrees and 31 newcertifications were earned.

Currently 65 employees from 10 companies are involved in theprogram. Ron Borst, chief executive officer of Clay and BaileyManufacturing Company in Kansas City, said that he personally usedthe program to pay for a welding class and supplies, and several ofhis employees have used it to pursue bachelor’s degrees inunrelated studies — something traditional tuition reimbursementprograms typically wouldn’t cover.

“This is something you want so all of your employees continue toadvance their education,” Borst says. “In this day and age, thingsare happening so fast that if they don’t continue to learn, theydon’t keep up.” The Learning Group contracted with PhillipsResource Network Inc. in Overland Park, Kan. to administer theprogram, which in turn worked with Evolution Benefits in Avon,Conn. to set up the debit card and online administrative site.

Cristy Rewenko, assistant vice president at Evolution Benefits,said her firm typically sets up similar programs for companies toadminister traditional benefits such as flexible spending accountsand health savings accounts. However, due to the success of theKansas City project, Evolution Benefits is now consideringexpanding its marketing efforts to brokers, to get more companiesusing its services for educational accounts. Other “out-of-the box”benefits include bringing into the office hair stylists, chairmasseuses and even professional chefs to cook employees omelets toorder, Carragher says.

Some companies give their employees-of-the-month giftcertificates for household appliances up to $1,500, and Carragherknows of at least one firm that rewarded one of itsemployees-of-the year with a helicopter skiing trip in Colorado.Art Brooks of BeneTrac in San Diego, which offers tools for onlineenrollment and benefits management, said that some companies arenow offering employees group home and auto insurance, 529 collegesavings plans and deferred compensation programs.

Other perks include legal benefits, including identity theftprotection, flexible spending accounts for transportation costs —even for the purchase of a bicycle — and no-interest loansfor major appliances in which monthly payments are deducted fromemployees’ paychecks, says Annmarie Fini, senior vice president ofthe employer business unit at Benefitfocus, a Charleston, S.C. firmthat offers employers an online platform to shop, enroll, manageand exchange benefits.

Many companies are also adding innovative programs to augmenttheir traditional benefits, particularly health care insurance,Fini says. One such voluntary benefit is a critical illness planthat covers expenses not typically covered by health insurance ifthe employee suffers a heart attack, stroke or other criticalillness, she says. “Employees need additional coverage to deal withall the other expenses, such as paying their mortgage andtransportation to and from the hospital, so they can afford tocover the high deductibles of health care plans,” Fini says.

An increasing number of benefits brokers are heavily advocatingthe adoption of such plans, as the new federal health care reformlaw calls for decreased commission fees on traditional medicalplans, she says. Most companies are now offering voluntary wellness programs, in part to lower their health care insurancecosts, including wellness fairs and decreased health care premiumsif employees participate in onsite medical surveys that test forlower blood pressure, lower body mass index ratios and nonsmoking,Brooks says.

Some companies are introducing onsite or pre-arranged lunchprograms that serve healthy meals, in which the cost is deductedfrom employees’ paychecks, he says. Even more innovative wellnessprograms include offering yoga classes onsite, or installing Wiiconsoles in the breakrooms in which employees can play virtualtennis or box, Carragher says.

One of the principle reasons why an increasing number ofcompanies are offering non-traditional benefits is to minimizeemployee turnover, which on average can cost up to 30 percent inadditional costs to recruit, hire, onboard and train a newemployee, than it would to pay an existing employee’s salary, hesays. “Today, the focus isn’t just on decreasing absenteeism, it’sabout increasing presenteeism— making sure people are not just onthe job physically, but emotionally as well,” Carragher says.

“Non-traditional benefits help employees connect to the job andto the company emotionally. If companies can harbor a fun workingenvironment, they can get a lot more from their employees than ifthey did nothing.”