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Benefits September 10, 2021
Changing the Employee Benefit Strategy
Diversity, equity and inclusion efforts, as well as rising benefits costs, are causing some plan sponsors to reconsider their packages, says Willis Towers Watson.
Reported by Amanda Umpierrez
U.S employers are rethinking their benefits strategies, according to a recent report by Willis Towers Watson.
A heightened focus on diversity, equity and inclusion (DEI) practices—as well as rising benefit costs—is pushing more employers to take another look at the benefits they offer their employees, the firm says. Its “2021 Benefits Trends Survey” found 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 just 23% today.
Additionally, 73% of respondents cite an increased focus on DEI as driving their benefit strategy, followed by tight labor markets (53%) and rising benefit costs (50%).
“Amid the ongoing pandemic, employers are under increasing pressure to manage their benefit costs while at the same time finding new ways to support their employees’ overall well-being,” says Jennifer DeMeo, senior director, retirement, Willis Towers Watson. “Additionally, tight labor markets and a growing emphasis on DEI are causing employers to look at their benefit strategies in a new light. As a result, many are now planning actions to enhance their benefit programs to create a competitive advantage.”
According to the study, only half (51%) of employers believe their benefit programs address the individual needs of their workforce, and only 39% offer significant flexibility and choice in benefits. While eight in 10 employers (81%) say they currently offer competitive benefits overall, only a quarter of respondents (26%) rate their well-being benefits as “market leading” or “better than other organizations.” Less than half (47%) say their core benefits, such as health care and retirement, are better than other employers’ benefits.
More than in years before, employers are also prioritizing employee well-being in their plans. Sixty-nine percent of respondents say integrating employee well-being into the benefit package will be their “top strategic benefit objective” over the next two years. Most employers (86%) cite employee emotional well-being as their top priority over the next two years, followed by physical well-being (68%) and financial well-being (67%).
The survey divided employee well-being into four categories—physical, emotional, financial and social—to understand where most employers are focusing their efforts.
To help with physical health, more than three-quarters of employers (77%), said they have added or enhanced online and virtual medical services, and more than half (53%) plan to add more of those types of services or enhance them in the next two years.
When it comes to emotional health, 73% of employers said they plan to boost their support for mental health, including stress, burnout and depression. To address financial health, 47% plan to add or enhance their support for savings, budgeting, loans and counseling benefits.
Lastly, on social well-being, more than a quarter of employers (29%) said they will add or enhance support for charitable donations, volunteer opportunities and social recognition.
The survey found that more than a quarter (28%) of plan sponsors believe their benefits could increase employee appreciation and engagement, and many are taking steps to boost support and communication. Thirty-four percent say they are planning or considering the use of digital tools and technologies to help employees feel connected or productive, and 52% are planning to use or considering personalized communications.
