An overwhelming number of employers are planning to revamp their benefits strategy, new research finds, a change fueled by a hot job market, rising benefits costs, diversity efforts and the continuing pandemic.
Consulting firm Willis Towers Watson found in its new, annual benefits trends survey that more than two-thirds of employers (69%) plan to differentiate and customize their benefit programs over the next two years, a sharp increase from 23% today. Nearly three in four respondents (73%) cite an increased focus on DEI as driving their benefits strategy, followed by tight labor markets (53%) and rising benefit costs (50%). Results of the survey are based on responses from a total of 3,642 employers globally, including 359 U.S. employers with five million employees.
“The events of the past year have accelerated many changes already underway,” says Jennifer DeMeo, senior director, retirement, Willis Towers Watson. “The pandemic and economic uncertainty highlighted the importance of emotional wellbeing and financial resilience and the connection to worker engagement, as well as the benefits of flexible offerings, virtual care and online tools and resources. Employers plan to revamp and customize their offerings to better align with business and worker needs and have indicated there is no turning back.”
Eagerness to change benefits strategies also comes as employers admittedly say many of their offerings fall short. The Willis Towers Watson study finds that only half (51%) of employers believe their benefit programs address the individual needs of their workforce, and even fewer (39%) offer significant flexibility and choice in benefits. Additionally, while eight in 10 employers (81%) say they currently offer competitive benefits overall, only a quarter of respondents (26%) rate their wellbeing benefits as market-leading or better than other organizations. Less than half (47%) consider their core benefits (healthcare and retirement) to be better than other employers’ benefits.
Of the changes, more than two-thirds of respondents (69%) say integrating employee wellbeing into the benefits package will be the top strategic benefit objective over the next two years. Most employers (86%) cite employee emotional wellbeing as their top priority over the next two years, followed by physical wellbeing (68%) and financial wellbeing (67%).
Mental health has been perhaps the biggest focus in benefits strategy over the past year, with employers turning to additions and enhancements in programs and resources to help employees as they struggle with stress, anxiety and other issues in light of the COVID-19 pandemic.
“There is far more recognition of the importance of overall employee wellbeing, with mental health and emotional wellbeing at the top of the priority list,” says Julie Stone, managing director, health & benefits, Willis Towers Watson.
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Additionally, Stone says, with an increase in hybrid models, employers are revisiting their benefits priorities and considering approaches that meet employees where they are–like lifestyle accounts to support healthy meals at home (versus an on-site cafeteria), home fitness equipment and more.
The Willis Towers Watson findings are in line with recent findings from Gallagher, which found that, with HR and talent managers anticipating a sharp increase in voluntary exits as the economy improves, there’s a sense of urgency to ensure benefit and compensation offerings appeal to the needs of current and prospective employees. Specifically, Gallagher’s research found that 71% of the nearly 4,000 employers surveyed see medical and pharmacy benefits as key assets to combat what Gallagher calls the “talent tsunami.” And 41% of surveyed employers said they’ve added more or different voluntary benefits to meet recruitment and retention objectives this year.
Related: Can benefits help combat the ‘talent tsunami’?
“This is one of the most complex labor markets in history,” says William Ziebell, CEO of Gallagher’s benefits and HR consulting division. “Our economy is growing, yet organizations are having trouble filling positions, thus putting employees in the driver’s seat. Decision-makers who base their comprehensive benefits and HR offerings on data and analytics and effectively communicate their benefits and compensation strategies will ultimately set their organizations up for success today and into the future.”
Stone agrees. “Employers are recognizing that the suite of benefits and how employees engage can be a competitive differentiator from a talent attraction and retention perspective,” she says.
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