COVID-19 and current economic fluctuations have changed the ways that many businesses do business. Unfortunately, economic uncertainty is taking place during a time when many businesses are also short on labor and looking to attract skilled candidates and retain the great employees that they already have. Some companies are considering employee benefit changes to save money. In fact, 95% of employers in a recent survey reported that they have recalibrated their benefits strategy.
What Employee Benefit Changes Should Employers Consider?
When evaluating benefit reductions, prioritize understanding employee value and utilization. Research shows most cost-conscious employers first eliminate adoption/fertility benefits, commuter benefits, and home office stipends. Strategic cuts align with broader workforce strategy, such as return-to-office initiatives.
Any time that you perform employee benefit changes, someone will be impacted. As a result, it’s a good idea to think critically about which benefits are most important to your employees and which are utilized the most. The same survey cited above found that, out of employers who did scale back benefits due to signs of a recession, the most common benefits that were cut included:
- Adoption and fertility benefits
- Commuter benefits and stipends
- Financial education
- Health and fitness discounts and reimbursements
- Home office stipends
- Senior care benefits
Many of these benefits are considered to be niche when weighed against more prevalent benefits, like 401(k) matching and health insurance. As a result, it may be prudent to scale back spending in these categories. For example, if you are encouraging employees to return to the office, removing home office stipends can supplement your efforts to do so.
How Should Employers Evaluate Benefits Before Making Cuts?
Before reducing benefits, employers should compare plan utilization, employee feedback, renewal trends, competitor benchmarks, and high renewal increases that may affect plan strategy. Rather than asking what benefits to cut, ask open questions about workplace challenges. Employees value being heard: communicate survey results and explain organizational decisions, highlighting areas maintained or enhanced.
Don’t let concerns about over-surveying or the optics of not delivering on un-stated promises stop you. Many employers worry that if they conduct a survey, employees will expect changes. This is true but what participants are often looking for is your response. They want to know they were heard and how the organization plans to address the priorities. We often recommend a response that highlights areas that are receiving high marks and how consideration will be put into continuing or enhancing those areas. Then, highlight several areas that received low marks and share how consideration will be put into modifying or improving those specific categories.
Benefits Employees Value During Economic Uncertainty
Some companies forget that training is a benefit, as it gives your employees the opportunity to learn new skills that they can bring with them to another job in the future. When you are thinking about employee benefits changes, remember that there are many free or low-cost things that you can add to your benefits even in times of economic difficulty, like hosting training using employees that you already have.
Need Help Reviewing Your Employee Benefits Strategy?
TriBridge Partners offers benchmarking services and strategic benefits consultation to help employers navigate economic uncertainty. Our advisors conduct cost-benefit analysis, identify optimization opportunities, and develop sustainable benefits strategies aligned with business goals and employee needs.