In the never-ending push to attract and retain talent, compensation is and will likely always be king. But as many people learn early in their careers, total compensation is not the same as cash; it also includes the value of benefits. Experts say the companies that master this latter piece are setting themselves up for success in an increasingly difficult labor market.
“Benefits packages are an integral part of retaining and attracting the right talent,” said Megan Holland, vice president of distribution and marketing, workplace solutions at Mutual of Omaha. “In an environment where there is still a war for talent, having a diverse and holistic benefits package can be a deciding factor for employees.”
Benefits Rule
The role of benefits in any staffing situation is well-established but statistics show how the right employment perks became even more critical during and since the pandemic. An employee retention study by Mercer, released in 2021, shows just how important benefits are to the average employee — particularly front-line, lower-wage workers.
Asked what factors would cause them to leave their current employer for another, nearly half the workers polled listed insufficient pay and benefits, easily outpacing the second-place cause. At the same time, the report found low-wage workers had on average 14% lower access to a range of benefits than their higher-paid counterparts. Given these realities, it isn’t surprising the study’s authors reclassified the “Great Resignation” as the “Great Reckoning,” describing a situation where government stimulus checks and workplace upheaval caused by COVID-19 gave the average worker more leverage.
“The pandemic has shifted the stressors facing employees and frontline workers have borne the brunt,” the study authors wrote. “Their jobs have become more challenging due to labor shortages, supply chain challenges and new safety rules. Many low-wage earners are asking themselves, ‘Is this job worth it?’”
The study indicated that organizations must address the unique needs of their workforce.
“Medical coverage is the most important employee benefit and having a wide-ranging portfolio of additional supplemental benefits, both employer- and employee-paid, helps provide diversity and soundness of the overall offering,” Holland said. “In the employee benefits space, supplemental health benefits, critical illness, accident and hospital indemnity insurance are on the rise as an additional benefit and sometimes to fulfill a gap with medical coverage.
“Employee-paid benefits continue to be on the rise to help employers control costs yet still offer a benefit to their employees.”
Mike Mandolfo, president of Strategic Benefits, said alongside specific perks offered, the ability of companies to provide choices for their workforce is a key differentiator among competing employers.
“A well-implemented benefits package will have long-lasting improvement on employee morale, new employee recruitment and overall employee retention,” he said. “A popular trend within an employee benefits package is increased employee options. One size does not fit all when it comes to health care needs and many employers have created a buffet-style benefits package where employees can choose among multiple health insurance and benefit options, and even pick their preferred network of doctors.”
Generation Gap
This strategy is even more valid as generational differences continue to bubble to the surface in the workplace. According to Forbes Advisor, three of the top five most-desirable employee benefits overall — employer-covered health care, life insurance and pension and retirement plans, respectively — have remained fairly constant with previous eras. The other two — mandatory paid time off and mental health assistance — have a more contemporary feel.
Drill down a little deeper and generational preferences in benefits come into even sharper view. Forbes reported more than 30% of 18- to 41-year-olds are “most concerned” with having pet insurance as a benefit, while the Harvard Business Review noted 31 million Gen Xers and Baby Boomers are caring for an elderly parent, a reality shaping their demand for senior care benefits at work.
Pulling together a benefits package that meets each end of this spectrum and all the points in between, is a study in complexity, Mandolfo said.
“Building a benefits package from the ground up generally involves the replacement of individually purchased plans,” he said. “A newly implemented benefits package that aims to improve employees’ access to more affordable health care or strategizes to replace existing coverage can be challenging.
“We recommend using employee questionnaires and surveys as a starting point to understand the type of in-force benefit plans employees already have in place and their current premium spend. The goal is always to improve upon existing coverage.”
Compensation as a Culture
Employers are also exercising creativity when it comes to offering benefits to part-time employees, even though there is no statutory rationale for doing so. Mitch Friehe, benefits advisor at UNICO Group, said companies following this strategy send a message about their corporate culture.
“Company culture speaks a lot when you start [offering benefits] to part-timers; it’s creating value for the employee to work for them,” he said. “We have started to put together those nontraditional benefit offerings, usually offered more on a voluntary basis to give some choices and access for those part-time employees.”
Friehe suggested any company looking to get the biggest bang for its benefits buck should deploy a multi-front strategy of gathering employee wants and balancing it against the competitive landscape, communicating regularly and transparently throughout the process.
“Having employee benefit surveys, getting that pulse, learning what’s important from the employees themselves is powerful,” he said. “Benchmarking is also huge for employers, to be able to say, based on industry or geography or size, who they’re competing against for top talent and what’s the benchmark. You can then determine how you want to position yourself in the market.
“Finally, the most overpowering thing you can do is employee communication and engagement. You want to make sure employees truly understand the benefits they’re getting and the value they bring.”
