Balancing Cost Efficiency With Good Employee Outcomes in Benefits

If investing in benefits could improve employee retention by 40% in a year, how much would that be worth to your company?

That’s what Jon Harold, head of sales and partnership success at SoFi at Work spoke about at From Day One’s Chicago benefits conference. Harold joined three other panelists, who talked about how to offer employee benefits in a cost-effective way. Patricia Garland, adjunct instructor, labor and employment relations at Loyola University, Chicago, and author of 33 Ways Not to Screw Up HR, moderated the session.

SoFi at Work, which provides student debt and financial benefits to over 1,000 companies, knows how to get creative. Section 127, in place since 2020, lets companies contribute tax free to employee student loans up to $5,250. About 31% of companies now offer this, Harold says. 

Prompted by a shortage of healthcare workers, a Tennessee-based health system reached out to SoFi for assistance. “They were having a terrible retention problem with the nurses that they were bringing on,” he said. “Their hypothesis was, these nurses have student loans. Not many other hospitals offer this type of program. Therefore, if we roll out a program where we’re contributing to student debt, and we tier that after years of tenure, that will help with retention.”

SoFi at Work helped them come up with a plan by putting it into real numbers. If they’re leaving after a few years, then the benchmark is six to nine months of that employee’s salary. That’s a quantifiable number. “If you’re able to save, let’s say, 100 employees based on that salary and that replacement cost, what would that be?” The cost of the benefit has to make sense within those parameters.

There’s more to consider in this scenario, Harold says. Their customer success team evaluated employee engagement, and the impact it had on student loans. “How much does it help paying off their student loan? How much are they saving on principal interest, the qualitative feedback, how it makes them feel?” Then of course, they look at actual retention. 

In this particular hospital, retention improved by 40% over 12 months, saving the hospital money and offering the nurses help paying their student loans. Harold expressed that benefits must be customized, and sometimes you have to get creative. It's not a one size fits all approach, because everyone has a unique set of problems. 

“You could be a manufacturing employee who is on the front lines on an hourly salary that is struggling to make ends meet,” Harold said. “Or you could be a lawyer who's working in New York City that has $3,000 a month rent and $1,000 monthly student loan payment. There are different problems to solve.” 

Flexibility Is Key

Most companies are already doing a ton for their employees, according to panelist Sean Hughley is the director of sales at Forma, a flexible benefits platform. They’ve got wellness programs, offer stipends, and much more. But there’s a snag.

“The challenge we run into is typically, there’s less than 30% engagement in those programs, right? So they’re doing a lot, but it’s not actually extremely effective,” he said. Rather than setting a new budget, Hughley says, they can simply repurpose the programs the company has with a more efficient benefit.

“It becomes a much easier conversation with your CFO when we’re saying, ‘I can take our programs that are getting 20% engagement, and I can boost them to about 85% engagement without spending a dollar.’” Not to mention that ROI is better with employee engagement, plus the health benefit of the employee who has something they actually want to use.

Take a gym stipend, for example. A company may provide $50 a month to its employees towards a gym membership. But if only 20% of your employees go to the gym, they’re missing out on 80% of the employee population. It’s time to get flexible, the panelists agreed. 

“You can take that same $50, but now you transform that benefit,” Hughley said. “You provide holistic wellness.” Rather than stipulating what they can spend the money on, give them a choice. Gym. Child care. Clothing. Adoption.”

It’s a consolidated and simplified way to enable organizations to offer more without the administrative headaches, he added. Plus, who doesn’t love choice?

Listen to Employees

At Pitney Bowes, there is a diverse workforce, from hourly workers in mail sorting to corporate workers with specialized degrees. Communicating and providing benefits to such a varied group can be challenging, says Nate Nevas, VP, head of benefits and health services.

Surveys can be helpful tools, but they decided to go a step further in helping their employees get the most out of their benefits. “For our last open enrollment, we went to a lot of our mail sorting facilities, and we helped people enroll one on one,” Nevas said. “We learned a ton about what’s important to them. 

For one thing, their employees typically went with the medical plan that has the lowest payroll contribution, regardless of what the plan design is.

Pitney Bowes offers a flex vacation package, where employees can essentially buy a week of vacation. For a lower income population, you’d think this wouldn’t interest them, Nevas says. But they were very interested.

“They only get about two weeks vacation a year, and a lot of them have family overseas. So, they don’t have enough time to go back home,” he said. “But by buying an extra week’s vacation, that gives them enough time to go back.”

Those are things they learned simply by talking one-on-one with their people. You really need to get on the frontlines and keep your ears to the ground, Nevas says. “I think there’s not one way to hear feedback. You have to just constantly keep your ears to the organization and see what’s going on and talk to a lot of different people.”

Education Equals Engagement

The Aspen Group is a multi-brand retail healthcare company with 23,000, including high-paid professionals (doctors, veterinarians, dentists) and a large group of hourly employees. Over 60 percent of the employees are women.

“Within our largest brand, Aspen Dental, our dentists actually own their own practices. And so that creates its own challenges from the standpoint that we have a multitude of offerings,” said Cory Rose, SVP of people & total rewards.

After inheriting an outdated benefits plan, Rose and her team set out to save money while improving the benefits offerings. First, they set up an association so they could become self-insured. They carved out corporate employees into one group, saving millions in 2024 alone.

Their big focus now, Rose says, is educating employees. Rather than giving them blanket coverage, what do they really need? Rose heard that employees didn’t think the company offered mental health benefits, when in fact they did. So she made sure to educate the population about it.

“We’re constantly looking at plan design, plan cost, and trying to make tradeoffs of what our people need, but also while pushing folks to understand how consumerism of healthcare works,” she said. “What’s interesting is that healthcare folks are usually the least educated about how the healthcare system works.” Rose says that an engaged employee who takes advantage of their health benefits is a healthy employee.

“As a healthcare company, we need to take care of our people so they can take care of you. That’s something that we’ve really tried to ingrain into our plans into our programs, making sure that we’re keeping our folks healthy and safe on the front lines, so that they’re able to bring more care to more people.”

Since their employee population is on the move all day, they don’t have time to read long emails. Instead, Rose said they offer more accessible texts as a way to educate people in a way that makes more sense to them.

Carrie Snider is a Phoenix-based journalist and marketing copywriter.