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Top 5 employee benefits priorities for 2021

Health and Benefits|Total Rewards
COVID 19 Coronavirus

By Jennifer DeMeo | March 26, 2021

The multiple crises that the COVID-19 pandemic created in 2020 inform the priorities for benefit managers in 2021.

In 2020, the COVID-19 pandemic put a spotlight on the importance of employee benefit programs as a source of employee security and wellbeing. Employers responded swiftly to address the immediate crisis and provide support in a time of uncertainty by offering flexible work arrangements, time off, telemedicine, employee assistance programs and access to retirement savings.

However, the global health, financial and social crisis that the pandemic created also amplified the longstanding challenge of providing flexible, affordable, meaningful benefits that meet diverse employee needs. While companies were already focused on these issues before the pandemic, the crisis has accelerated the need to reimagine and transform health, retirement, time off and other benefit programs to better support changing business and workforce needs.

Based on what we’ve learned as a result of the pandemic, here are five top employee benefits priorities for 2021:

Putting wellbeing at the center

Emotional wellbeing, financial resilience, social connections, and physical health and safety will be at the center of benefit program and Total Rewards strategy. The crisis has accelerated the shift from wellbeing as a series of programs that are “nice to have” to wellbeing as a mindset that leading companies embed in company culture.

Willis Towers Watson research shows that organizations with higher levels of employee wellbeing have superior financial results. Employees who are emotionally well, financially secure, with positive social connections and opportunities to protect and improve physical health are more engaged, committed and productive in their work.

In the current environment we now regularly hear a range of voices talking about the importance of wellbeing — from CEOs and managers, to community leaders, school administrators, health care providers and contacts on social media — everyone seems to be talking about the importance wellbeing. With all the talk, leadership and employees are expecting action.

As a first step, companies will need to evaluate, from an employee wellbeing perspective, program and process changes made during 2020 to determine what worked well and should be expanded or made permanent. Top of the list include:

  • The shift to more agile decision making and implementation
  • An expanded view of what is considered a benefit
  • Increased access to telemedicine, flexible work arrangements and caregiving

Companies will also need to focus on other near-term priorities such as:

  • Continuing to support employees during extended periods of remote work
  • Removing barriers to vaccine access and helping to share accurate, relevant and local vaccination information
  • Providing support to employees and their managers as more workplaces reopen during a period of ongoing uncertainty

Putting wellbeing at the center of benefit and Total Rewards strategy means shifting to a focus on factors driving employees’ physical, social, emotional and financial wellbeing rather than a programmatic focus.

Employees indicate that retirement and financial wellbeing programs are top areas in which they want help from their employers, but from a financial wellbeing perspective these are not areas that can be viewed in isolation. The shift will require a holistic view of employee overall financial wellbeing that is based on:

  • Understanding employees’ current financial state
  • Supporting both short- and long-term financial security
  • Providing tools to build financial resilience

In the past, the focus was simply on pay and retirement savings.

Similarly, the focus on physical and emotional wellbeing will take into consideration healthcare and traditional “wellness” benefits as well as physical safety in the workplace, flexible work, work/life balance and time off.

Encouraging flexibility, equity and resilience

The global health, financial and social crises that the pandemic created highlighted how the unique aspects of each employee’s individual circumstances impacted employees in different ways:

  • Safety concerns for essential workers and employees with chronic conditions
  • Caregiving challenges for working parents
  • The impact of isolation and fewer social connections on employee mental wellbeing
  • Disparity in economic circumstances on financial wellbeing

In 2021, employers are evaluating their programs through the lens of diversity, equity and inclusion to better understand where there are gaps in what is provided and in how employees use their benefits. They are also evaluating their portfolio of benefits and the employee experience to better align with broader company diversity, equity and inclusion objectives. A focus on analytics helps to highlight where there are current engagement, affordability or financial security challenges for different populations so that employers can better provide a more targeted approach to close those gaps.

Transforming the employee experience

Engaging employees with benefits that meet their needs provides one of the biggest opportunities for companies to get more value out of their programs. In many cases there is a disconnect between the cost and effort companies spend on designing and paying for benefits, relative to the focus and effort on engaging employees to help them get the most out of what is offered to them. In 2021 employers are reevaluating the employee experience to improve employee outcomes and to get the most out of their benefits spend. This includes rethinking how benefits are communicated and delivered virtually and leveraging technology to provide a consumer grade experience, help provide better access to benefits tools and offerings, and target messaging to better engage employees and meet individual needs.

Balancing cost management with new investment

Transforming benefit programs to focus on wellbeing while meeting diverse employee needs and addressing vulnerable workforce segments requires investment at a time when companies are also trying to contain benefit costs and risks. Even before the pandemic, companies had indicated by a wide margin that benefit program cost management was their top priority. In the current environment low interest rates have contributed to higher pension costs, and the pandemic has introduced new uncertainty into medical cost projections and the need to redeploy spending to benefits that meet immediate worker health and safety needs.

In 2021, we see companies reevaluating current programs to understand employee needs and preferences, redeploying money from low value programs to new options while continuing to seek high value and cost-effective healthcare and continuing on their pension derisking journey.

Making operational excellence essential work

One of the obstacles companies face when focusing on their strategic benefits priorities is the need to deploy a significant portion of their team’s resources to managing and operating their programs. Willis Towers Watson research indicates that companies focusing on operational excellence report better outcomes, as efficient and compliant processes save time and money over the long term and allow companies to use their increasingly limited internal resources to focus on strategic objectives.

Operational excellence requires:

  • Having the right people, processes and technology in place to ensure the employee benefit programs create value for employees and the company
  • Understanding benefit program costs and risks within the context of a company’s budget and risk tolerance
  • Embracing efficient and compliance administration and operations
  • Identifying employee gaps and needs through data-driven analytics and insights
  • Establishing effective global and local governance

In 2021 companies are focusing on mitigating cyber risk, addressing data clean-up and process changes so that tasks can be automated, investing in technology to reduce future costs while improving the employee experience, and outsourcing administrative, compliance and fiduciary roles that are not core to their businesses so that their internal teams can focus on strategy priorities.

Just as employees have different benefit needs, the priorities and areas of focus for companies will also vary, with the most successful companies ensuring alignment with company purpose and culture in the context of the specific needs of their business and workforce. However, all companies would be wise to review what worked and what didn’t in 2020 to inform future benefits planning.

Author

Senior Director, Retirement

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