Everyone is aware of rising prices, especially at the grocery store and the gas station. Our new survey of 4,000 US workers, Inside Employees’ Minds, found that covering monthly expenses is now the #1 concern of workers – moving up from #9 in 2021 – and that current economic conditions are creating financial stress for about two-thirds of employees, regardless of their income level.
This is especially important information for employers still grappling with labor shortages. The survey found that the top three reasons employees would consider leaving their job in 2022 are insufficient pay (54%), burnout (34%) and insufficient healthcare benefits (27%). Given that the best recruiting strategy is a retention strategy, what changes to comp and benefits strategies should employers consider to address the concerns that are weighing so heavily on employees?
Pay raises overshadowed by inflation
Mercer’s 2023 US Compensation Planning Survey, released in September, reveals that compensation budgets and salary projections are expected to lag inflation, which was 7.7% in October. Most organizations were still just in the preliminary stages of determining their 2023 annual total increase budget, but the average budgeted increase was 4.2%. So even workers getting substantial raises in 2023 may find their paychecks still don’t stretch as far.
Pay is getting even more attention as pay transparency laws are enacted in some states (CA, CO,and NY so far) – and it’s important that your pay practices reflect your corporate values and can stand up to scrutiny. But while employees will certainly focus on base salary, now is the time to highlight total rewards, including – perhaps even especially – the competitiveness of your health benefits (more on that later) and your support for long-term financial wellbeing. Retirement income is important, but there is also a benefits opportunity to expand financial wellness offerings that provide assistance with budgeting and debt management, financial coaching, emergency savings and hardship assistance.
Adding value by addressing burnout
Many factors can lead to employee burnout and it is important to address the root causes. Take the time to understand what’s creating unsustainable workloads and then take action: Expanding resourcing pipelines, optimizing the use of talent, and ruthless prioritization of initiatives can all make a difference. Encourage and support healthy work-life boundaries to prevent workers from slipping into ‘quiet quitting’ mode in self-defense.
The pandemic definitely kicked open the door for flexible work arrangements. In a survey last year, 26% of employers said they would continue to offer remote work options indefinitely; this year, the number jumped to 78%, according to Mercer’s Survey on Health and Benefit Strategies for 2023. In addition, 66% of the employers surveyed are allowing flexible work schedules, such as a 4-day work week. But not all employers can offer remote working, and many of those offering hybrid schedules are adding guardrails to ensure employees spend more time in the office than they might choose with no requirements in place. In this type of scenario especially, consider refreshing your time off policies. You don’t necessarily have to spend more money – maybe allow more flexibility and add some categories like time off to volunteer.
Beyond offering flexibility, consider expanding well-being benefits. While much has been done, more is needed. We’re facing a mental health crisis, and employers can provide support to help workers get access to the care and resources they need. In a recent survey, 87% of employers said they had taken action (or planned to take action) to expand behavioral health care in 2023. Specific actions include expanding EAP services (67%) and adding on-line resources to support worker mental health (62%).
Healthcare affordability a key issue for many
Benefits make up about 30% of total compensation according to the Bureau of Labor Statistics, and health insurance is the most costly and the most valued by employees. Still, the Inside Employee Minds survey found that more than two-thirds of workers (68%) of employees feel challenged to get needed healthcare for themselves and their families, with younger workers, caregivers and LGBTQ+ employees the most likely to face challenges. The most common challenge by far was simply being able to afford healthcare costs not covered by insurance – deductibles, co-pays, and co-insurance. These findings are underscored by a Commonwealth Fund study that found 46% of respondents had skipped or delayed care because of the cost, and 42% had problems paying medical bills or were paying off medical debt. Half (49%) said they would be unable to pay for an unexpected $1,000 medical bill within 30 days.
Concerns about affordability had already led employers to avoid using employee cost-shifting as a benefit cost management strategy over the past few years. Today, with inflation adding to financial stress, employers are finding that making healthcare more affordable can be a differentiator in the war for talent. You might not have the budget for richer health care benefits – especially given predictions that health care inflation has not yet peaked -- but addressing health care affordability does not necessarily mean providing a greater subsidy. There are ways to provide more value to employees – to make your health plan “feel richer” -- without spending more money:
New ways to differentiate
Many employers have been taking steps to make their benefit programs more equitable – increasing the value of the benefits to different segments of their populations. By highlighting some key enhancements, you will strengthen your organization’s appeal to diverse populations and demonstrate your core values – an increasingly important factor for employees deciding where they want to work.
Within the current economic environment, ongoing attraction and retention challenges are best met with informed, thoughtful, data-driven strategies. There are many good options – and many shiny objects that are mostly distractions. Focus on what is right for your people, your culture and your business. Doing the best you can to support the needs of your workers will go a long way to show you care and lead to the holy grail of the employment relationship -- loyalty.
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