Since the 2008 recession, corporations have tried to reduce costs and offer headline-grabbing perks with respect to benefits strategies. Not anymore. Companies are switching their benefits strategies for 2023 to attracting and retaining employees and helping them deal with costs and stress.
This comes even as high inflation, 8.5 percent year-over-year in July (9.1 percent in June) according to the US Bureau of Labor Statistics, wreaks havoc with household budgets and dwarfs 2022’s large salary increases (between four and six percent). Inflation and an unstable US Stock Market are also raising employee concerns about retirement savings. The average 401k balance dropped to $103,800 in the quarter, down 20 percent from a year ago when it was $129,300, according to Fidelity.
Mercer Survey: Attracting and Retaining Employees
Human Resources firm Mercer found in a recent survey that two-thirds of US employers are looking to enhance health and benefits offerings in 2023 in order to attract and retain employees. US employers expect health benefit costs to rise 5.6 percent on average in 2023, according to the employers who responded to Mercer’s National Survey of Employer-Sponsored Health Plans2022.
You can see Mercer’s chart below.
Despite rising costs, most employers will not take cost-saving measures — such as raising deductibles or copays — that shift healthcare expenses to employees. Mercer found that only 36% of survey respondents are making cost-cutting changes in 2023, down from 40% in 2022 and 47% in 2021.
According to the Mercer survey, 70 percent of surveyed employers are currently offering or planning to offer paid parental leave in 2023, and 53 percent are providing or planning to provide paid adoption leave. In addition, almost 10 percent of large employers said they either already provide on-site childcare or will provide it by 2023. Twenty-two percent said they would give access to backup childcare services.
In addition, Mercer identified four areas of focus:
The first area is behavioral health, Mercer found. Nearly three-fourths of large respondents (74 percent) say improving access to behavioral health care will be a priority over the next few years. Examples of benefit enhancements include expanding EAP services and adding virtual behavioral health care options.
The second area focuses on hourly and low-income workers. Employers are looking to create a stronger bond with this workforce by offering health and well-being benefits and resources that their employees will value.
The third area addresses health disparities and benefits gaps for LGBTQ+ and under-represented workers. Almost one-third of large employers said they plan to expand their benefits to offer fertility treatment coverage, adoption, and surrogacy benefits by 2023. Another third of large employers said they are still considering such additions. To help close gaps for racial and ethnic groups, a third of respondents offer advanced search functions to help plan members find health care providers or multilingual communications.
The fourth area relates to family-friendly benefits and supporting women’s reproductive health, including preconception family planning and menopause support.
Mercer’s study will generate much scrutiny on the best course of action for 2022. However, another study found a wide discrepancy between what employees want and what their employers believe they want. It is a big gap. While companies are switching their benefits strategies for 2023, they are missing the boat on employee priorities such as life insurance and cash balance pension plans.
Minding the Gap
A survey from the Transamerica Institute and its Transamerica Center for Retirement Studies, released in August 2022, finds significant gaps between the percentage of employers that offer particular benefits and the percentage of workers who say those benefits are important.
The organization surveyed more than 1,800 employers and then compared the results to its most recent survey of workers, finding significant discrepancies in all kinds of benefits.
For instance, the need for health insurance was rated as necessary by 93 percent of workers, but only 56 percent of employers offered it. And 89 percent of workers say a 401(k)-retirement plan is essential, although it’s only offered by 55 percent of employers.
Other benefit discrepancies, according to the survey, are:
- Life insurance: important to 83 percent of employees, but offered by 36 percent of employers
- Employee assistance programs: important to 71 percent of employees, but provided by 30 percent of employers
- Workplace wellness program: important to 69 percent of employees, but offered by 29 percent of employers
- Financial wellness program: important to 73 percent of employees, but offered by 28 percent of employers
- Cash balance pension plan: important to 74 percent of employees, but provided by 16 percent of employers
- Pet insurance: important to 39 percent of employees, but offered by 5 percent of employers
Companies are switching their benefits strategies for 2023. Cost cutting is taking a back seat to offering benefits that help attract and retain employees, especially with women’s reproductive health, and taking steps to help hourly workers. While companies are switching their benefits strategies for 2023, they are missing the boat on employee priorities such as offering life insurance and cash balance pension plans and improving benefit experiences for LGBTQ+ and under-represented workers.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.