Article
Enhancing total compensation with alternative benefits
May 24, 2023 · Authored by Laura Linehan
No industry is immune to the competitive employment market we are experiencing. Nearly every organization, regardless of size or location, is struggling to hire and hold on to employees right now.
With a limited supply of potential employees, organizations in the private and public sectors are pursuing the same candidates. On top of that, competitors are trying to lure away your current employees. Unfortunately for the public sector, private sector businesses can typically offer better salaries. That means it comes down to the benefit package, and this is where public sector organizations, if they are creative, have an opportunity to compete their private sector counterparts.
Recently, Mercer released the findings of its survey report on health and benefit strategies for 2023, in which it said, “Compensation alone doesn’t build the kind of engagement and sense of belonging that a well-designed benefit program can.” According to the survey, employers are looking to foster a stronger bond with their workforce by offering benefits and resources “their employees will value,” with 70% of all large employers planning to enhance their benefits in 2023 to improve attraction and retention, or “better meet employee needs.”
To do that, employers need to understand what is important to most of their employees. An employee engagement survey is a good way to start that conversation, but organizations can also conduct a needs analysis or use focus groups.
Regardless, the Mercer study revealed five leading trends were:
The trend regarding flexibility is overwhelmingly the benefit most organizations are focusing on in the next year or so. Although it seems employers are pushing for people to come back to the office, 78% are offering or planning to offer employees the option to work from home regularly, but not necessarily every day, with only 9% saying they would do that. In that vein, 66% of respondents are considering flexible work schedules, like offering flex time during the day or a four-day workweek.
Some local governments are resistant to the idea. Unfortunately, this is not a trend that is going away. According to the third edition of McKinsey’s American Opportunity Survey, 87% of respondents would take the opportunity to work remotely if they could. Furthermore, a good number of workers, especially younger ones, are even willing to take a pay cut to have flexibility in their workweeks.
When it comes to family-friendly benefits, offerings are expanding beyond the commonplace (e.g., parental leave and on-site lactation rooms) to such benefits as adoption assistance, financial support for fertility treatment, on-site child care and backup elder care. In fact, more than one-third responded that they will offer or plan to offer caregiver referrals or consultations regarding elder care.
Improving access to behavioral healthcare was one of the top trends in this survey; however, it ranked first in Mercer’s 2022 annual health benefits survey. With that in mind, it is no surprise 67% of respondents have strategies in place or are planning to provide enhanced employee assistance program (EAP) services in 2023, and 62% will provide additional related online resources, including apps, articles and classes.
A typical retention challenge is parents who leave the workforce after having children. To help stem the tide, 37% of organizations offer or are planning to offer “at least one specialized benefit or resource to support reproductive health,” from family planning through menopausal support.
The last trend, which is also the hardest to define, covers a wide range. The most popular among these types of benefits is tuition reimbursement, with 75% of organizations offering or planning to offer it in 2023. Behind that, 63% will give employees the option of supplemental life or individual disability insurance.