Balancing benefits and costs: a struggle for employers

Employers are walking a tightrope as they try to provide attractive benefits packages as inflation remains stubborn.

“Employers cautiously navigate the balance between cost containment and maintaining employee satisfaction,” according to the 2023-2024 Alfac WorkForces Report. “More than half of employees surveyed in 2023 report they’re at least somewhat likely to accept a job offer that included slightly lower compensation but a more robust benefits package. Consequently, employers are feeling the pressure to remain steadfast in offering competitive employee benefits to avoid a talent exodus.”

The report noted several benefits trends:

• Although employers are deploying a variety of tactics to cope with the rising costs of health care, increasing employee deductibles and the amount they contribute to premiums and copays are the most popular. Nearly half of all employers who are experiencing increased benefits costs indicate they increased the amount of their employee deductibles or increased the share they required employees to pay to offset the rising cost of health care.
• Employers are placing far more emphasis on the importance of a benefits provider’s reputation than they ever have before. Cost, although still near the top of the list, has been declining in importance since 2021, during the height of the COVID-19 pandemic. Rising in importance are elements associated with a provider’s renown, such as brand reputation, longevity and claims payment reputation.
• Employees are interested in a variety of nontraditional perks. Given the impact of inflation on employees’ overall financial stress and financial stability, it is not surprising that 40% are interested in having access to a financial wellness program. Other key areas of interest for workers where employers may be missing the mark today are access to personal wellness programs with gym discounts; identity fraud protection; and access to financial and legal resources through their employers

Related: Small employers are underserved by the employee benefits industry, time for change

• Mental health care remains a top concern, with stress and burnout affecting employees’ overall wellbeing and productivity. Employers have an opportunity to address these challenges by offering robust mental health resources, flexible work schedules and personalized support, and by enhancing job satisfaction and retention in today’s competitive work environment.
• There is a 19 percentage point gap between employers’ perceptions of employee satisfaction with their benefits and actual lived experiences, which has widened since 2021. With many organizations planning to make changes to their benefits contributions, it is critical to help close this gap and gain a clear picture of their employees’ benefits needs and expectations.

“Employers should work toward understanding their employees’ needs, offering comprehensive support of mental health and financial wellbeing and leveraging innovative technology to shape a more resilient and employee-centric future,” the report concluded. “By doing so, organizations can help attract and retain top talent and foster a workplace that prioritizes the wellbeing of its workforce.”