Benefits, What Benefits?

The top employee was given only a small raise for a great year. But her manager thought she’d be happy with the boost to her benefits, at least. 

If only she knew what they were. 

Despite strong efforts by HR departments to broadcast benefit increases, it turns out that just 29% of executives fully comprehend them, according to the 2024 US Executive Compensation and Benefits Trend Report by NFP, a property broker. For firms, this is problematic, especially in terms of employee retention, because raises have gotten smaller. “If a competitor throws a very attractive base salary at an employee, the current company may be offering more total value, but he’s not making an informed decision,” says Tom McMullen, leader of the North America Total Rewards practice at Korn Ferry.

HR professionals have long fought an uphill battle to make benefits-package information comprehensible to millions of employees. “Most people care once a year, when they get a notice that they have to re-up their benefits,” says David Vied, Korn Ferry’s global sector leader for medical devices and diagnostics. “It’s complex and a nuisance.” He notes that half of the job candidates he speaks with don’t know their total compensation, including base pay and incentives. Generally speaking, he says, most employees don’t pay attention to the majority of their benefits, beyond noting that they have them. 

But while workers tend to share the same benefits, as well as share information about them—such as which doctors are covered under the health plan, or whether to join a gym, or get a Peloton membership, or buy pet insurance—higher-level workers often hold contracts unique to themselves. In some cases, incentive and pay structures are complex and extend over many years.

Yet companies continue to spend an average of 29% of their compensation costs on benefits, according to Bureau of Labor and Statistics data, and employees are unlikely to realize their monetary value. One global company gave its employees, mostly knowledge workers, a quiz about their stock options, and found large knowledge gaps. “These evaluations were disasters,” says organizational strategist Maria Amato, senior client partner at Korn Ferry.

McMullen equally faults employees, who don’t bother to read the benefits booklets presented to them, and HR staffers, for not making the information more consumable. Forty percent of companies have never documented their compensation philosophies, according to Korn Ferry data. 

To avoid benefits-package ignorance, experts advise providing a two-page total rewards statement to employees annually, as well as to new employees. “It’s a lot easier to read two pages than to sift through a twenty- or thirty-page benefit-plan description,” says McMullen. At the end of the day, he follows human nature. “The subject matter is dry, and maybe not interesting for a lot of employees, including executives—but they’ll watch the TikTok version,” he says. 

 Learn more about Korn Ferry’s Total Rewards capabilities. 

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