US Employers to Rethink Employee Benefit Strategy, Willis Towers Watson Survey Finds
The war for talent; heightened focus on diversity, equity and inclusion (DEI); and rising benefit costs are fueling a surge in companies planning to revamp their employee benefit strategy. Their goals are to differentiate themselves, personalize the employee experience and manage the costs of their benefit programs. That’s according to a new survey by Willis Towers Watson, a leading global advisory, broking and solutions company.
The 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. Nearly three in four respondents (73%) 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 wellbeing,” said 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.”
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Indeed, 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 (health care and retirement) to be better than other employers’ benefits.
Growing emphasis on integrating employee wellbeing
More than two-thirds of respondents (69%) say integrating employee wellbeing into the benefit 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%).
According to the survey, employers are taking steps to support their employees’ health and wellbeing in four main areas:
- Physical: Over three in four employers (77%) have added or enhanced online and virtual medical services, and over half (53%) plan to add more or enhance them in the next two years.
- Emotional: 73% of employers plan to boost their support for mental health (stress, burnout and depression).
- Financial: Nearly half of employers (47%) plan to add or enhance their support for financial wellbeing (savings, budgeting, loans and counseling).
- Social: More than a quarter of employers (29%) plan to add or enhance support for social wellbeing (charitable donations, volunteer opportunities and social recognition).
The survey also revealed less than three in 10 employers (28%) believe their benefit programs enhance employee appreciation of the employment deal, and many are taking steps to boost support and communication. Over one-third (34%) are planning or considering the use of digital tools and technology to help employees feel connected and be productive; over half (52%) are planning or considering the use of personalized communication to specific segments of the workforce.
“Fostering employee wellbeing and resilience will remain a top employer priority for the foreseeable future,” said Julie Stone, managing director, Health and Benefits, Willis Towers Watson. “Employers would be wise to start with a review of Total Rewards strategies. Their challenge will be to develop an equitable approach that meets the needs of all workforce segments while aligning benefits, culture and other rewards with new ways of working and an enhanced employee experience. This will be critically important for employers to be able to manage benefit costs and optimize their investment in benefits.”