Create meaningful benefits.

The right package can improve recruitment and retention

JUST A FEW MONTHS INTO MY TENURE AS DIRECTOR OF HUMAN resources for Westminster-Canterbury, a CCRC in Richmond, Va., I was told Susan, a physical therapy aide, needed to talk with me. She had been with our organization for more than 15 years. Battling cancer for the past year, she reported to work in between chemotherapy treatments. But now the treatments and the ravages of the disease had weakened her to the point where she could no longer work.

Despite a big build-up of paid sick time, she had exhausted all of it. She asked about long-term disability insurance. Our plan does not kick in until six months after an employee is completely disabled from work. If Susan had not been such a loyal employee, if she had not kept working during those weeks of chemotherapy, she would have met that requirement.

When I related her story to our new CEO, Tom Cunningham, he was appalled and responded with just two words: "Fix it."

Secure your safety net

It was clear Westminster-Canterbury employees needed a safety net, something based on the needs and motivational theories of Drs. Abraham Maslow and Morris Massey: in other words, something to help our people enjoy the security and quality of life they need and want for themselves and their families.

Short-term disability was first on our list of considerations. The insurance quote to change from a six-month eligibility to a 90-day eligibility on our long-term policy was very high--to $0.66 per $100 of salary from $0.47. I knew if we self-funded a short-term policy, we could move to a 30-day eligibility and save premium dollars. Today, our average cost for this self-funded, 30-day, short-term disability program is $4,200 annually. Meanwhile, by putting our long-term disability insurance out for competitive bidding, we were able to keep the same benefit and reduce premiums to $0.34 from $0.47 per $100 of salary.

We also put our life insurance contract out for competitive bidding, and identified a provider who was willing to increase coverage to two times annual salary while reducing the premium from $0.31 to $0.18 per $1,000.

To complete the safety net, we enhanced our health and dental programs and added an employee assistance program (EAP). Our health insurance was a bare-bones HMO costing $107 per employee per month. We self-funded an indemnity plan with a $100 deductible for $97 per employee. Our dental plan cost $10.59 per employee per month and we self-funded an indemnity plan with a $25 deductible for $7.50 per employee, and were able to hold that rate for three years.

Go right to the source

Based on Dr. Massey's theory that the significant events that occur during your imprinting years form the value judgments you have as an adult, we set out to examine our worker demographics (see box) to learn what benefits were meaningful to them.

Our turnover rate actually was not bad compared with an industry average of 85 percent or more. What really concerned me was our average sick time usage (more than eight days per person), which was terrible. Clearly, our system of time--off--two weeks vacation, six holidays, and 13 days of sick time-was not working. Many employees would call in "sick" right before their shift. If their vacation time was used up, they would feign illness to care for a sick child. The contract labor to fill such last-minute staffing gaps reached $200,000 a year.

It became obvious that our staffers wanted more paid time off. Needed is more like it, what with so many employees juggling the demands of career and home. Clearly, our vacation policy needed to change.

Consider a paid-time-off plan

We implemented a paid days off plan that is more in sync with our employees needs. Full time employees receive an annual "deposit" of 26 days of paid time off in a flex-leave bank. These days include vacation time, all holidays, bereavement leave, and the first few days of sick time--every type of time off except jury duty. The plan rewards healthy workers with more time off. Here's how:

* Seven days of sick time are put in each employee's "sick bank" for use from the fourth day of illness. At the end of the year, unused flex leave goes into the employees' sick bank. This bank can build to 30 days, which takes them to the beginning of short-term disability,

* If an employee has leftover flex leave and the sick bank already has a balance of 30 days, the leftover time is put in a third bank, called "reserve vacation." Vacation bank time can be "sold" back--a safety net for the employee in times of financial crisis.

* Each year another paid day off is added until the flex-leave bank builds to a maximum of 35 days. It did not seem reasonable to require employees to wait the traditional five years to receive an additional five vacation days, especially with our turnover being highest during the first two years.

The system works

After the first year under the new plan, sick time usage fell from an average of eight and a half days to six days. Contract labor costs also dropped and have remained level at about $80,000. Nurses began calling the night before their shifts to inform us of their children's illnesses, allowing supervisors to schedule in part-time staff.

Other benefits

We have found other ways to address the changing desires of our employees as well. We have added flexible work hours and job sharing where possible. We have a funded G.E.D. program and one of our graduates received a certificate in management at the local community college last year, also with tuition reimbursement. When it became clear that many employees no longer valued a service pin as recognition for tenure, we began allowing employees to choose their recognition awards from a catalog of gifts. It is much less costly for us and more highly valued by the staff.

Employee compensation and benefits programs can have a measurable impact on improving recruitment and retention of employees at homes for the aging. Retaining employees solves the problem of recruiting in a challenging labor market. Consider that for the past several years the overall turnover rate at Westminster-Canterbury Richmond has remained between 12 and 15 percent annually. In the surrounding area, CNA turnover in 1998 was 130 percent. During the same period our CNA turnover was 14.7 percent.

Many HR directors and CEOs have not looked at which benefits are meaningful to their employees. If you think you can't afford to offer some of these benefits, think again. You may not be able to afford not to offer them.

                           Sizing up your staff
Average age         early 40s
Married                46%
Female                 87%
Average hourly wage   $7.50
Annual turnover        65%

Clara Fraser San Soucie is director of human resources for Westminster-Canterbury.