Winning the 2023 talent wars will take a shift in benefits design and management

Human Resources leaders continue to have their work cut out for them when it comes to their human capital.

Finding and keeping talent won’t get easier in 2023. Measuring up to the massive shifts in employee expectations and values since the pandemic is shifting management’s perspective in responding.

It creates the need to take a fresh look at ways to make benefits more relevant against the backdrop of the total employee experience. Importantly, it is making individualized benefits critical to total rewards in 2023 – attuned to where people are at in their work and personal life journeys instead of cookie-cutter packages.

Labor challenges today require pivots for tomorrow

The competition for talent has only intensified, leading more employers than ever to focus on what really matters to their people, and how that influences benefits and workplace policies.

Employees are individuals, and it takes a quality employee experience to appeal to them. What delivers is benefits that are personalized to their specific needs – at work and in their personal lives.

Employers can start by understanding the differing priorities among employees, which can vary dramatically. For example, financial planning services are a “must have” condition of employment among half of Gen Z and Millennial employees, but are less important to older workers.

They also will be increasingly forced to make flexibility the rule, not the exception. Workers are quitting their jobs at a rate 35% higher than the national long-term average and drawing a line in the sand over conditions like over-long hours.

People want the flexibility of working from home and are bucking employers that demand a full-out return to the office. The hybrid model will continue to be the norm; by 2025, 22% of the workforce will work remotely. It’s more than that, though. Leave policies are getting a harder look: 44% of workers don’t even have the option of unpaid leave under the Family and Medical Leave Act.

Organizations that move in these directions with their employees and their benefits in 2023 and beyond will do more than strengthen their employer relationships over time. They will be allocating their resources more effectively to benefits that matter and that are used without adding costs because managing costs are still important.

Here are important trends shaping the employee benefits landscape in the new year.

A bolstering of benefits, despite rising costs

It’s far more expensive to hire a new employee than to keep one. In the face of rising costs (health care, up 6.5%; pharmaceutical, up 10%) employers are unlikely to cut benefits. Instead, they’re taking a hard look at smarter ways to manage them. Some important shifts:

• Zero-deductible health plans. Only 17% of the workforce has these, with fixed out-of-pocket costs. But employers are increasingly putting this option in place, despite the higher premiums. The immediate savings can be an all-around plus, but the plans should be tied to health savings accounts, so employees aren’t caught short with out-of-pocket costs before insurance kicks in.
• Self-funded plans and employee benefits captives. Self-funded health insurance can save employers 10% to 25% on non-claims expenses. Both self-funded plans and benefits captives allow companies more control over their health care services and data.

Related: Next-generational health benefits can attract and retain critical talent

• Financial wellbeing as a big wellness priority. Retirement plans are critical to the long-term financial wellbeing of employees, but inflation and a roiling economy will make financial wellness in general an important focus for 2023. A financially secure workforce will be more productive and loyal, making financial counseling and loan programs critical to the wellness lineup.

Linda Keller is the National COO and Employee Benefits Practice Leader for Hub International.

Jeff Faber is the Chief Strategy Officer for global insurance brokerage HUB ‘s Employee Benefits Practice.