Negotiating Workplace Benefits

Employees’ personal lives can be complicated. Some companies have begun to acknowledge the private challenges of their workforce and understand that benefits that help address these private challenges can help businesses stay competitive in today’s labor market.

Those that go as far as covering fertility costs and shipping breast milk to nursing mothers aren’t the standard. And many fathers still take shorter paternity leave. According to the Department of Labor, 70% of fathers took ten days or paternity or less for the birth or adoption of a child.

Given the benefits available to many workforces today, what are the various ways that benefit negotiations can play out, if the employer is willing to negotiate in the first place? Are most people asking for flexible work hours, extra vacation days, 401(k) contributions, or other benefits during the hiring process? Or do they wait months into the job once rapport has been built? And are employees willing to walk away if their request isn’t met?

To answer these questions and more, Paychex surveyed more than 1,000 employees about the benefit negotiation process. We also polled nearly 300 hiring managers to learn how they handle discussing benefits.

Importance of Benefit Negotiations

Many Americans are struggling financially, and that could be due in part to the rising costs of health care and child care. In January of 2020, wages increased by 2.89% over the past year. But is it enough?

Employers can supplement worker salaries by offering competitive benefits packages. According to our survey, nearly 59% of people said it was extremely or very important that an employer be open to negotiating benefits. Of the 64% of people who negotiated benefits with an employer, 87% did it during the hiring process, but 60% waited until after they had been hired.

There are numerous ways that a prospective or current employee may communicate with an employer, and email is often a go-to during the hiring process. However, is negotiating face-to-face preferred? The majority of employees in our study favored it. In fact, for 76.7% of employees, in-person negotiation was the top tactic.

What Benefits Do Employees Desire?

Which benefits do employees most desire? Nearly 75% of employees in our study wanted a 401(k) match or contribution, making it the most popular request. Prospective employees were more likely to negotiate for a retirement plan during the hiring process (50.3%), but 15.6% negotiated after they had signed the hiring documents.

Flexible work hours (73.1%) and flexible time off (66.1%) followed retirement negotiations, but many people were upfront – they were more likely to discuss work hours and time off at the hiring stage.

The survey results demonstrated that paid maternity or paternity leave fell lower on the list, with only 27.8% saying it was a desired benefit. That may be because more than 1 in 3 employers already offer paid parental leave beyond the amount required by law.

Benefit Requests, by Demographic

When we looked at the demographics in our survey, we found that men reported requesting stock options almost three times more than women, and people ages 50 and older were more likely to request stock options than those in their 20s.  The top benefits women were more likely to request compared to men included flexible work hours and paternity leave.

Older employees were also the most likely to request disability insurance, while employees in their 20s were more likely to request tuition or student loan reimbursement from their employers.

Willingness to Fulfill Benefit Requests

Knowing what the workforce wants is important, but are hiring managers willing to fulfill benefit requests? According to the survey results, the majority of managers were willing to negotiate benefits with their employees. That’s a great sign because, the majority of respondents to our survey reported that it was extremely or very important that employers be willing to negotiate benefits.

When benefit requests are denied, our survey showed that the final decision is often influenced by someone higher up in the company. According to the hiring managers in our survey, in situations where benefits were denied, the decision was often or always influenced by upper management according to 52.6% of employees.

What benefits are companies most likely to grant? Our survey showed that flexible work hours (31.4%) and flexible time off (25.1%) topped the list. And managers reported that the requestor’s seniority had a large effect on granting that flexibility.

When Negotiations Fail

Meeting with a manager might elevate an employee’s blood pressure, but it doesn’t have to be scary. Negotiation tactics can help when communicating a request, but what happens when they’re denied? If you are in the position of manager, what can you expect from an employee with whom you are unable to negotiate benefits?

Some people may consider walking, and not just out of the negotiation room – they’re leaving the company. Forty-eight percent of employees said they were likely to look for a new job after an unsuccessful benefit negotiation, and 17% reported actually leaving a current employer.

Having a request for disability insurance denied was the number 1 reason people would look for a new job after an unsuccessful negotiation. Nearly two-thirds also said they’d leave their current employment if a request for professional development funding was rejected – the job market is competitive, and employees want to grow.

Keep Your Workforce

Our study shows the difference between retaining employees and having them walk away could be impacted by the benefits your company provides. Consider reviewing the benefits that you currently offer to employees and assessing if they are meeting the needs of your workplace. Would offering different options or including something additional impact your ability to recruit and retain top talent?

Companies don’t have to do it alone. Paychex has employee benefits services that can help businesses evaluate, offer, and administer competitive benefits packages for employees. Visit Paychex.com to learn more.

Methodology and Limitations

This project used survey data curated via Amazon Mechanical Turk for Paychex. The survey was conducted from October 7th to the 10th of 2019.  To qualify to take the survey, participants needed to be either employed part or full time and have either attempted to negotiate benefits with a manager/supervisor or have had an employee attempt to negotiate benefits with them.

There were a total of 1,013 participants. 299 had an employee attempt to negotiate benefits.

• 49.4% of participants were men, with a margin of error of 4% using 95% confidence interval testing

• 50.6% were women, with a margin of error of 4% using 95% confidence interval testing

• Participants ranged in age from 18 to 74 with a mean of 41.8 and a standard deviation of 10.6

  • 26.2% were ages 18 to 29, with a margin of error of 6% using 95% confidence interval testing

  • 39.6% were ages 30 to 39, with a margin of error of 5% using 95% confidence interval testing

  • 21.2% were ages 40 to 49, with a margin of error of 7% using 95% confidence interval testing

  • 12.9% were ages 50 to 74, with a margin of error of 9% using 95% confidence interval testing

This project relied on self-reported data, which can introduce issues by participants, such as exaggeration and selective memory.

This project was purely exploratory, and future research could aim to further explore the conversations that take place between employees and employers when it comes to negotiating benefits.