Meeting the expectations of a demanding workforce
Employers must reassess and reshape benefits plans to match the new expectations of their employees.
In reassessing their priorities and expectations for work, employees are going on a new career and life journey — and they’re taking employers along with them.
The labor shortage has employers reconsidering the potential recruitment and retention advantages of total rewards
For employers, 2021 was the year of resetting benefits, as workers took a new perspective on work itself, resulting in new working arrangements, more worker flexibility and improved benefits.
However, the labor shortage persists, with 10 million positions unfilled and lost sales of $60 billion a month in the U.S.1 And the shortage is expected to continue until 2024.2
It’s causing employers to make their own reassessments on benefits. They're considering the potential advantages of rethinking total rewards, whether that’s improving their leave policies or giving workers coaching and training to engender loyalty.
Then there’s the influence of benefits on retention, an increasingly important issue when 55% of those in the workforce are likely to be looking for new jobs in the year ahead3 — and when a record 4.3 million people quit their jobs in August 2021. That 4.3 million comprised nearly 3% of the entire U.S. workforce.4
But 2022 will also mean a retrenchment on healthcare costs, as employers will explore other ways of funding healthcare outside of traditional plans. They’ll have to balance cutting costs with keeping employees happy.
1 NPR, “Finding Workers Is Harder Than Ever. The Economic Impact Could be Significant,” August 21, 2021.
2 USA Today, “Breaking down the big US labor shortage,” September 7, 2021.
3 Bankrate, “Survey: 55% of Americans expect to search for a new job over the next 12 months,” August 23, 2021.
4 CNN, “A record number of Americans are quitting their jobs,” October 12, 2021.
Here's what to expect in employee benefits in 2022:
Higher salaries and bonuses aren’t just unsustainable, they don’t help recruiting and retention like they once did
Success means winning employees’ hearts and minds — total rewards packages are central to winning that battle
1. Employee reassessment will equal employer readjustment on benefits
Employees have made it clear that it’s not just about the money anymore.
Increasing salary and bonuses to improve hiring and retention isn’t just unsustainable: It doesn’t work as employees are prioritizing things other than compensation.
As a result, organizations will need to re-evaluate their value propositions and configure them as total rewards — positioning pay to emphasize the entirety of compensation, including salary, benefits, work arrangements and other factors.
Tangible benefits like compensation, health and life insurance, paid and unpaid leave policies always have a role. But so do less-standard benefits like child care, mental health services and leadership coaching, and less tangible yet crucial factors like a company culture that inspires and motivates.
Employers need to adapt their perspective for the times. Successful recruitment and retention is really about winning employees’ hearts and minds, and total rewards packages are central to that battle.
Employees want better leave policies to deal with the new realities of working from home
2. Employers will need to be locked in on absence management and leave
If COVID-19 taught HR leaders anything about the topic, it's that employee leaves matter — and absence management policies need to change.
HUB International research shows that 75% of small and medium-sized employers say the pandemic influenced how they approach leave management as a whole. In addition, 40% of survey respondents feel their leave policies fall short of what's needed to stay competitive, and a quarter have already altered their paid-time-off programs.
One crucial finding from the research: Only 25% of employers offer paid parental leave and an overwhelming majority (84%) don't plan on adding or expanding this benefit.
But employees reassessing their situation want better leave policies to deal with the new realities of working from home. They want more time with family through leave. They're not enamored with strict policies that force them to forfeit time off.
That makes leave policies integral to effective total rewards programs.
As employers try to get a handle on recruiting and retention, leave policies need to be a critical part of a holistic benefits strategy. Adjustments should align with recruitment and retention strategies, support wellness programs, meet statutory requirements and reflect competitive benchmarks.
HUB's Workforce Absence Management Survey
Learn how COVID-19 and workforce challenges are shaping employers' leave practices.
Personalized benefits is about improving how employees engage, access and experience benefits
3. Through analytics, personalized benefits packages will become the norm
Because workers have more opportunities than ever to switch jobs — and because some individuals are prioritizing lifestyle over salary — personalized benefits will be key to differentiate organizations in 2022.
Enterprises that take a total rewards approach with personalized benefits at its core will have a recruiting and retention advantage.
But just what are “personalized benefits”?
Personalized benefits is not simply giving more options to employees. It's about improving how employees engage, access and experience benefits. Personalized benefits requires understanding what benefits will make a difference to specific employee segments.
Building such an employee benefits plan means digging deep into the numbers, beyond typical demographics of an employee base. Enter HR data analytics and workforce persona analysis.
Data analytics provides insight into benefits usage, highlighting gaps that voluntary benefits can bridge and pointing to a sound benefits communications strategy. Likewise, workforce persona analysis gives companies a complex view of different employee segments that's far more in-depth than a typical segmentation exercise.
Data analytics and workforce persona analysis will continue to facilitate personalized benefits, resulting in benefits packages that are relevant and cost-effective.
Employers should approach alternative healthcare plans with an open mind, but also caution
4. More employers will turn to captives and other alternative health insurance plans
As they rethink benefits, employers are rethinking costs — and it’s in their health plan that they are seeing opportunity.
Healthcare plans are a big target given annual premium increases that usually exceed 5% and are often 10% or more.5 It's increasingly leading employers—even small and medium-sized organizations — to migrate to different options.
The more popular alternatives include the following:
- Self-funded health plans: With the high cost of care in many areas of the country, self-funded health plans offer greater cost control and can lower exposure to expensive claims. As of 2018, 13% of small companies and 29% of medium-sized organizations offered at least one self-insured health plan.6
- Employee benefit captives: This type of plan is becoming more popular, as it promises to control claims volatility and improve management of drug costs.
- Individual Coverage Health Reimbursement Arrangements (ICHRAs): ICHRAs enable employers to meet Affordable Care Act (ACA) mandates while giving younger workers who opt out of traditional health plans an option they can afford.
Employers should approach alternative healthcare plans with an open mind, but also with caution: These strategies are complex to implement and, if not handled properly, could have a negative effect among employees who want traditional health insurance. It's important to consult with an expert in health benefits to maintain low costs while improving employee satisfaction.
5 CMS.gov, National Health Expenditure Projections 2018-2027, accessed October 11, 2021.
6 Employee Benefit Research Institute, “Self-Insured Health Plans: Recent Trends by Firm Size, 1996-2018,” August 1, 2019.
Moving forward in 2022
Working with a partner experienced in data analytics, persona analysis, health benefits and designing total rewards packages will be essential for employers trying to navigate the constantly changing environment of employee benefits.
Why? Organizations can take nothing for granted — many have never struggled to attract and keep talent. With such pressure on employers, personalized benefits that fit into a total rewards offering will help them become successful in a labor market unlike any other.