Talent crunch boosts benefits
Benchmarking survey shows more companies are tweaking or adding to employee benefit offerings.
Data from a national survey of 4,200-plus employers show historically low unemployment is forcing organizations to spend more on benefit packages to retain and attract top talent.
According to the 2018 Gallagher Benefits Strategy and Benchmarking Survey conducted by Rolling Meadows, Illinois-based Arthur J. Gallagher & Co., attracting and retaining talent remains the No. 1 operational priority of 60 percent of employers, up two percentage points from 2017.
This was in sharp contrast to the 37 percent of employers who ranked controlling benefit costs as the top priority, a figure that declined six percentage points from 2017. And nearly half (45 percent) of employers chose not to increase employee cost-sharing of health care benefits.
Bryan Hirn, Michigan area president for Gallagher’s benefits and HR consulting division, said the need to fill jobs has put upward pressure on wages, as often happens in a period of low unemployment. The crunch will only increase, he said, as 92 percent of Michigan employers expect stability or an increase in revenue over the next two years, and 90 percent expect stability or an increase in headcount over the next two years.
Beyond wage pressure, another impact of the war for talent is the need to increase and diversify benefit offerings, since the workforce currently consists of five generations with an array of different needs.
Hirn said employers have to listen and respond to each generation and their needs because employees are more confident than ever in their ability to find a new job if they don’t like their current workplace. He said in Michigan, 24 percent of employers have turnover rates of 15 percent or more.
To stem that turnover, employers that used to offer one or two benefit plans now offer five or more, either from the same insurance provider or from multiple, Hirn said.
“Not all employees want the same thing when it comes to health care. Younger employees don’t care about a rich health plan because they don’t use it as much and can’t afford the payroll deductions. Older employees use it more and may be willing to pay the higher payroll deductions,” he said.
William Ziebell, president of Gallagher’s employee benefits consulting and brokerage division, described the trend toward benefits diversification as a “clear shift in the market.”
“It is no longer good enough to simply offer standard medical coverage and a competitive retirement plan,” he said. “The (benchmarking survey) uncovered best practices that address employees’ total well-being, which will positively impact organizational retention and recruitment efforts.”
Examples of trends and best practices from the report:
22 percent of employers now offer employees three medical insurance plans, and 13 percent offer four or more options.
46 percent of employers provide tuition assistance, which is up from 42 percent in 2017. The most common tuition reimbursement amount totaled $5,250 annually per employee.
89 percent of employers said they now offer employees life insurance, which is a 5 percent increase from 2017.
70 percent of employers provide access to employee assistance programs (EAPs), an 11 percent jump from 2017.
55 percent of employers now provide a telemedicine component, which is more than a 100 percent increase from 2016 when just 24 percent of employers used telemedicine.
62 percent of employers offer access to financial advisers, and 47 percent provide financial literacy education to help employees make better saving and spending decisions.
Employers are looking for ways to reduce medical expenses by encouraging their employees to live healthy lifestyles: Some popular physical well-being benefits included flu shots, tobacco cessation, health risk assessments and physical activity programs.
Some employers provide debt counseling and student loan forgiveness; voluntary benefits such as critical illness coverage, legal services, identity theft protection and commuter benefits; as well as expanded paid parental leave offerings.
Hirn said whatever a company decides to include in its benefits packages, it has to put effort into its communications strategy so the five generations now in the workplace can learn about what is available in a way that works for them.
“Communicating, whether it’s benefits, health care, the mission of the company — some say, ‘I want a booklet on my desk that spells out the company’s mission, what’s my role and where do I fit.’ Others say, ‘I’ll go to the company’s website and figure it out myself,’ and others say, ‘I want it on social media or an app and I’ll figure it out that way,’” Hirn said.
“Communication has to take place in a variety of mediums.”
More information about the 2018 Gallagher Benefits Strategy & Benchmarking Survey is at ajg.com/lp/us-benefits-strategy-benchmarking-survey.