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Employers look to strengthen employee relationships through 2023 benefits strategies

Consider the trends involved that are taking hold into 2023.

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As 2023 looms, the affordability factor is taking a front-and-center role among employers as they weigh their benefits strategies during a period of unprecedented turmoil in the labor market.

The reality is that affordability continues to be a major concern. Healthcare costs overall are expected to climb 6.5%, hitting a whopping $13,800 per employee. Pharmaceutical costs alone are projected to shoot up by 10%.

But conversely, employers can’t afford to cut back. The threat of recession hasn’t made it easier to fill jobs or stem quit rates , now 35% higher than the national long-term average. They can’t risk losing more when it costs so much more to bring on a new employee than to keep one.

To deal effectively with these pressures will require employers to rethink their relationships with employees, and the kind of experience will support and advance their position as employers of choice. To a significant extent, that spans more than just “benefits” but work cultures more broadly.

Consider the trends involved that are taking hold into 2023.

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1. Flexibility benefits organizations and employees alike.
The COVID-19 pandemic was alarming enough to make people reprioritize their lives, and the impact continues to reverberate. Their emotional health increasingly trumps work demands, especially if they see no significant returns from the time and energy they’ve put into their jobs. It’s resulted in lower productivity and engagement.

Flexibility will pay off for everyone.

Remote work continues to be an important solution; by 2025, 22% of the workforce will do so. Nearly one-quarter of employees surveyed say they’re happier and more productive if allowed to work from home at least once a month and are almost twice as likely to stay at their job when they’re satisfied with their work flexibility and work-life balance.

That also applies to leave policies, due for a re-evaluation in the pandemic’s aftermath. For example, over 82% of employers cite paid family leave as “very important.” Even so, only 31% have a made it a feature of their benefits package.

2. The pivot to personalized, quality employee experiences
Organizations striving to improve their resiliency are starting to understand the need for longer term solutions to labor shortages and high turnover. One is to adopt the employee perspective and relationship with benefits and respond accordingly.

Doing so has created new norms: expanded policies for remote work, paid and unpaid leave, and an improved response to burgeoning mental health issues among employees are proof. But employers increasingly understand that personalized benefits that anticipate and respond to where individuals are at in their work and personal lives make a difference. They create quality employee experiences that set an organization far above the competitors, whatever the size or industry.

Personalized benefits serve individual priorities, which are understood through data analytics tools, like HUB’s Workforce Persona Analysis . Some findings: half of Gen Z and 48% of Millennials say that financial planning services are a “must have” as a condition of employment, but only 40% of Gen X employees and 28% of Baby Boomers said the same.

Using such insights can result in resources being reallocated toward benefits employees most value – but don’t necessarily increase overall benefits costs.

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3. Preparedness is increasingly a priority
There’s a lot to be said for preparedness, as the world learned from the pandemic. It’s something that employers should take to heart as we move forward. They also need to help their workforce do the same.

As they look to personalized benefits and factors driving their value, they also need to consider bigger trends to be factored into their planning.

Consider, for example, our aging population : by 2024, 25% of the workforce will be over 55, and a third, 65 or older. Many have to stay on the job for reasons like inadequate retirement savings. The expertise and institutional knowledge retained can be offset by blocked opportunities for the next generations.

It makes employee retirement preparedness an important priority in 2023. The focus should be on plan enhancements, like improving the employer match and adding advisory services. It also should be solidly integrated into an overall financial well-being strategy. Because it’s not just graying employees that can benefit. Financial well-being initiatives are essential to – and valued by – younger generations, too.

About the authors

Linda Keller is the National COO and Employee Benefits Practice Leader for top 5 insurance brokerage Hub International . She has nearly thirty years of experience in the design and implementation of strategic health and benefits programs. She is a certified Healthcare Reform Specialist by the Healthcare Reform Center & Policy Institute. She also earned a Global Benefits Associate certification from the International Foundation of Employee Benefit Plans.

Jeff Faber is the Chief Strategy Officer for Hub’s Employee Benefits Practice. He is responsible for the development and execution of cutting edge cost-containment, risk-reduction and employment-enhancing initiatives. He leverages data into information and information into action to help clients realize their objectives and find new frontiers.

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