WCI, Inc
Aug. 10, 2021

Improving Benefits for Better Recruitment

Increased activity in the U.S. labor market, combined with the new hybrid working environment, has led to employee turnover like never before. According to Gallagher's 2021 Physical & Emotional Wellbeing Report, nearly three-quarters of employers (71 percent) view medical and pharmacy benefits as key assets to attract and retain top talent. Talent managers anticipate a sharp increase in voluntary exits as the economy improves, creating a sense of urgency to ensure benefit and compensation offerings appeal to the needs of current and prospective employees.

"While no one could have anticipated the full impact of the COVID pandemic, organizations with clearly defined benefits and compensation strategies were better positioned to navigate the period of uncertainty," said William F. Ziebell, CEO of Gallagher's Benefits & HR Consulting Division. "This is one of the most complex labor markets in history. 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."

Providing employees with a sense of stability. While employers are feeling a great deal of pressure to get a positive return on their benefits and compensation investment, the 2021 Physical & Emotional Wellbeing Report found few are making wholesale changes. Rather, roughly nine in 10 (88 percent) indicated they're taking a more measured approach in evaluating and adjusting their health care benefits. That's because 2020 was unlike any other year. The underutilization of benefits may have been an anomaly, not a long-term trend.

However, that does not mean employers are maintaining the status quo. The Gallagher study found that many organizations are making subtle benefit changes where employees can easily see the value. For example, the use of telemedicine surged by 12 points since 2019, with 64 percent of employers offering it as a care option. Given the appeal of its convenience and cost savings, more employers are expected to adopt the benefit.

In addition, more than half of employers (52 percent) now offer consumer-directed health plans (CDHPs), up 6 points from the previous year. Organizations bundle CDHPs with health savings accounts (HSAs) or health reimbursement arrangements (HRAs) to control rising health care costs. These programs require employees to take on more financial responsibility and actively engage participants in making educated decisions about medical services. Thus far, more than one in five employees (21 percent) is enrolled in an HSA.

Health care costs increasing. While total health care spend may have dropped in 2020, medical expenses continue to climb. Prescription-drug costs remain the fastest-growing category of overall health care spend. Forty-two percent said the high cost of specialty drugs was one of their top health care cost-management challenges, and one-third (33 percent) felt the same about the high cost of non-specialty prescription drugs.

Employers do have options to keep pharmacy expenses in check. For self-insured organizations, carving out pharmacy benefit manager (PBM) services to a separate vendor is one preference. Many larger employers (1,000 or more full-time employees) are taking this a step further by unbundling and separately contracting specific PBM services, such as a specialty pharmacy. More than nine in 10 employers (91 percent) have pharmacy plans requiring copays, which is the most common cost-sharing mechanism. That said, median copay amounts remained unchanged in 2021.

Employers struggling to balance absence management, employee satisfaction. Following a year of learnings in 2020, the Gallagher study found organizations are applying a renewed strategic vision to planning absence management policies and programs. Half of employers (50 percent) currently have a formalized absence management strategy in place, and that percentage is expected to grow to nearly two-thirds of employers (63 percent) by 2023. The top absence-management concerns included compliance with federal, state and municipal regulations (55 percent); the impact of absence on employees' productivity (40 percent); and educating managers about various leave types (39 percent). Absence management programs can be further complicated by telecommuting and hybrid work schedules, where accurate tracking of employee time off is more difficult.

Additionally, women left the workplace at historic rates in 2020 to care for relatives of all ages. This exposed the limitations of many organizations' family leave policies. With employers in countless industries struggling to fill job openings, the time is right for organizations to consider extending the reach of leave policies. Employers that fail to explore options may ultimately lose top employees and prospects to competitors that better address the physical and emotional wellbeing of their teams.

Employers offering more non-traditional or voluntary benefits. Multipurpose voluntary benefits provide employers with additional levers to both strengthen and differentiate their total rewards. In this complex labor market, organizations are leveraging voluntary benefits to buy the lifestyles their employees have become accustomed to over the past 16 months and entice them back into the office. In 2021, more than four in 10 employers (41 percent) said they have enhanced their voluntary benefit selection to meet recruitment and retention objectives. Accidental death and dismemberment insurance (AD&D) and employee discount programs, provided by 87 percent and 70 percent of employers respectively, remain popular voluntary benefits. Certain non-traditional voluntary benefits, influenced by the pandemic with people spending more time at home, are also gaining momentum. Nearly one in five employers (19 percent) now provide pet insurance. By 2023, Gallagher experts predict an additional 27 percent will add this non-traditional voluntary benefit.

"The pandemic elevated the importance of having health care offerings that appeal to employees, keeping them healthy, productive and engaged," said Ziebell. "Our findings confirm what our consultants are hearing directly from employers: organizations are selectively evolving their approach to traditional and voluntary benefits to improve their recruitment and retention efforts. And when new opportunities arise, decision-makers are closely evaluating the costs, the anticipated outcomes and the likelihood employees will utilize them because this will ultimately give them a competitive advantage."

SOURCE: http://www.ajg.com

NOTE: WCI provides services that address the issues raised in this article. Call us at 828-667-3311.

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