Jan 31, 2008

A marketing research approach can be used for different purposes. Most often it is selected as a way to determine two things:

1. How funds should be allocated to new types of benefits

2. How funds should be used to improve current benefits

This can be for a one-time change in a firm's benefit plan or for changes that are implemented over time. In addition, a marketing research approach can help an employer determine what alternative provisions employees would prefer regarding a specific type of benefit. For example, a firm that allocates additional funds to a long-term disability plan could determine whether employees would prefer a shorter waiting period or an increase in the size of the monthly benefit.

Marketing research techniques must be used with caution. They can have a negative effect on employee morale unless the employer is committed to using their results in benefit decision making. Therefore, this approach should not be undertaken unless the employer intends to base expenditures for benefits on satisfying what employees perceive as their needs. In addition, employees must be made aware that changes in an overall benefit program will be subject to financial constraints and, possibly, trade-offs among benefits.

Although a variety of marketing research techniques can be used in benefit planning, those most commonly chosen fall into three major categories:

1. Personal interviews

2. Simplified questionnaires

3. Sophisticated research methods

Personal Interviews. Personal interviews with employees either alone or in small groups probably constitute the most effective marketing research technique for a small firm or for a benefit program that is limited to a small number of employees. On this scale, it is also the least expensive technique. An advantage of personal interviewing is that it can be used to collect the same type of information as do both simplified questionnaires and sophisticated research techniques. It is important in personal interviewing that the employees feel they can speak candidly. For this reason, it may be desirable to have the interviews conducted by someone outside the firm and to hold group interviews without the supervisor's presence.

Simplified Questionnaires. A simplified questionnaire often has two major parts: one determines benefit preferences, the other determines demographic data, such as age, sex, marital status, years of service, and salary range. The questionnaire is called simplified because employees are basically asked only to indicate and/or rank their preferences. However, the actual analysis of the data that are gathered may be a complex task, and unless a firm is small, it probably will require the use of a computer. It is important to use a clear, brief questionnaire that is not annoying to employees. Consequently, it is best that the questionnaire initially be given to only a few employees in order to test their reactions.

Note that the questionnaire is essentially a structured one and is not open-ended. Employees are requested only to rank their preferences, and they are not given the opportunity to state whether each benefit is important or whether it should be improved. They are also required to make their preferences known regarding possible trade-offs between benefits and pay. Even though the questionnaire is structured, employees are still given the opportunity to make general comments. Such a feature should be incorporated into any questionnaire as a way of letting employees know that their opinions will be heard. It also may result in useful, and sometimes surprising, information for the employer.

Sophisticated Research Methods. One difficulty with simplified questionnaires, and to some extent personal interviews, is that they fail to measure the intensity of employees' preferences. Consequently, some firms have used more sophisticated marketing research techniques in an attempt to measure the degree of importance that employees place on various benefit alternatives. These more sophisticated research techniques are typically used only when specific alternatives have been formulated by the employer. Therefore, they are often used as a follow-up to personal interviews and simplified questionnaires; they frequently also involve additional interviews and/or questionnaires.

Life-Cycle Benefits
The design of employee benefit plans traditionally focused solely on providing active employees with protection against the financial consequences of illness, disability, retirement, and death. Over time, other types of benefits began to be offered, but plan design tended to focus on the employee's being part of a traditional family. Over the last two decades, the demographic makeup of the workforce has changed dramatically. As a result, many employers are frequently taking a life-cycle approach to benefit planning. While the traditional benefits are still part of the core of most overall employee benefit plans, employers are increasingly designing benefit plans with the realization that benefit needs may differ for males and females, and may differ when employees are single, when they have and raise children, when they care for elderly parents, and when they retire.

Intuition would lead one to believe that a life-cycle benefit plan would increase costs because it would tend to provide benefits that would be used by all categories of employees. To some extent this may be true. However, many employers who have taken this approach feel that additional costs are minimal and/or result in offsetting cost savings. For example, flexible work schedules that allow employees to better take care of dependents may cost little or nothing. Other benefits may result in significant cost savings due to less absenteeism and lower employee turnover. In addition, an employer may pass the majority of the cost of some benefits on to the employees who use them. For example, an employer may establish a day care center but charge a fee for its use to offset some of its operating costs. An employer may also make a voluntary long-term care insurance plan available on a payroll-deduction basis. Finally, employees may not automatically have all benefits; they might have to elect the benefits they want with a predetermined amount of employer funds under a cafeteria plan.

Many of the benefits employees want at various stages in their lives are probably fairly obvious. However, many employers use questionnaires and personal interviews to determine these varying needs. One employer, in designing its life-cycle benefit plan, used the life-cycle stages shown in Table 2-1 and found the benefits indicated to be some of those of particular value to persons in that category.

Work/Life Benefits

Employers are increasingly taking a work/life approach to benefit planning. They have realized that employees, particularly in the tight labor market of recent years, are looking for employers that recognize that their employees have lives outside the office. Many of the benefits that appeal to this group of employees are those that have already been mentioned, such as flexible work schedules, child-care plans, eldercare benefits, family leave, and adoption assistance. All of these benefits have seen some growth in prevalence over the past decade.

Employers are also increasingly making on-site personal services available. Some of the more common services are ATMs and other banking activities, access to postal services, travel agencies, and dry-cleaning pickup. Less common are medical and dental clinics, pharmacies, convenience stores, automobile pickup and delivery for oil changes and state inspections, and take-home meals. In some cases, it's merely a matter of providing space for these types of service providers to rent; in other cases, some rental subsidy might be necessary. In a few cases, these services can be provided by the employer. For example, take-home meals might be prepared by the company cafeteria.


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