W H I T E PA P E R

Benefits Strategy Planning in

Today’s Economic Headwinds

How to rethink your strategy to meet

recruitment and retention goals
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Benefits Strategy Planning in Today’s Economic Headwinds

Employers are facing another year of uncertainty and complexity while also having to manage the threat of a
recession. These headwinds continue to complicate matters for the most seasoned executives and their ability to
plan for and meet operational and growth targets, let alone thrive. And, even with some industries and organizations
engaging in sweeping layoffs, competition for top talent for both staff and executives continues and remains a top
concern for organizations.

Employee benefit and total reward programs are an essential asset within an employer’s recruitment and retention
strategy in the ongoing war for talent. As such, this creates a significant opportunity to offer the right balance of
benefit options to meet the diversity of employee needs today, while ensuring your investment in benefits is on point.
There are operating costs to consider, so it is important to use resources providing those benefits employees care
most about.

The good news is leading organizations are looking beyond headcount

reductions to reduce workforce expense. PWC recently conducted a
pulse survey to track changing executive sentiment and priorities. 42%
Survey results revealed 42% are focused on other cost containment measures
beyond reducing headcount or changing the way they manage the business.
This includes 44% of respondents who look to make strategic investments,
of executives are looking
such as hiring individuals with specific skill sets to achieve their stated goals.
to cut costs without
reducing headcount

Talent Strategy Considerations

Competitive pay and a comprehensive employee benefits program have long been recruitment and retention drivers.
Employees are now seeking a more personalized employment experience; strategic employers are responding by
leveraging benefits to recruit and retain workers and bolster the organization’s employer brand. In today’s modern
workforce, it is important to show employees their full value by offering both compensation and benefits, improving
the way your employees feel about your organization.

While it is impossible to meet every individual’s needs, there are benefit strategies that can provide more choices
to all staff while still allowing employers to manage costs. This holds true for smaller employers, not just those with
deep pockets.

Choice is Key
While employers will continue to offer traditional benefits such as medical, dental, vision, life insurance, disability
coverage, and retirement programs; expanding your benefit portfolio will help meet employee needs within the
new workforce environment. There is a growing acknowledgment that providing market-competitive benefits is not
enough. The one-size-fits-all approach has become less effective due to the diversity of the workforce and increased
expectations from employees.

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Benefits Strategy Planning in Today’s Economic Headwinds
Beyond the Traditional Benefit Program
Understanding employees’ life stages and diversity can accomplish two things—give employees choices in line with
their needs and reduce employer healthcare costs.
High-Deductible Health Plans (HDHP)
A component of the overall rewards or benefits, often
your medical plan coverage is one of the largest and
fastest-trending expenditures, significantly outpacing
regular inflation. A dynamic expected to not only
continue in the near term but accelerate due to several
factors as is forecasted already. Once an employer
has a meaningful enrollment in these plans, they can
save money compared to traditional Preferred Provider
Organization (PPO) plan options. There are also more
aggressive measures, beyond moving towards HDHPs,
for employers in cost-cutting mode.
Employers should know HDHPs are particularly
welcomed by employees with lower medical plan
utilization. Younger generations (i.e., 40 years of
age and under) tend to utilize medical plan services
less and desire minimizing their payroll deductions
by choosing the least expensive health plan option
available — typically the HDHP. Higher paid employees
value these plans as they offer another vehicle for
pre-tax savings. The triple tax-advantaged Health
Savings Account (HSA) enables employees to bank
funds to cover current or future healthcare expenses as
well as vision, dental care, and some over-the-counter
products. HSAs are only available alongside a qualified
HDHP.
While most employers now shy away from a full
replacement HDHP solution, there are ways to engage
employees and gain enrollment in these plans.
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• Providing employer funding into an HSA to offset
out-of-pocket healthcare expenses rather than
“toughing it out” and gives others a jump-start on
saving for future healthcare expenses.
• Utilizing a broader prescription drug list to
encourage medication adherence without worrying
about first satisfying the deductible.
• Regularly communicating reminders on lowest cost-
of-care services and resources such as no-cost
preventive care, telehealth (which can continue at
no-cost through 2024), and Employee Assistance
Programs (EAP).
• Connecting with employees earlier on healthcare
insurance program changes. Clearly spell out both
the benefits and impact of any changes, giving
employees time to ask questions and absorb the
information when not under the open enrollment
deadline crunch.
• Including voluntary programs such as critical illness
insurance, hospital insurance, and accident
insurance. These products provide cash payments to
covered members based on specific diagnoses and
services offsetting out-of-pocket expenses. They can
be employee or employer funded. If funded by the
employer, it shows a desire by the employer to
reduce some of the employees’ cost-sharing.
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Benefits Strategy Planning in Today’s Economic Headwinds

Flexible Work Arrangements

The data from the ‘Great Resignation’ and its aftermath show
how COVID made flexible work arrangements an expectation.
A global 2021 survey by Ernst & Young revealed more than half
of employees worldwide would consider leaving their job if they
do not have some flexibility in where and when they work.
According to research by the Society for Human Resource
Management (SHRM), 42 percent of organizations who saw
higher or much higher turnover in early 2021 have implemented
new or additional remote work or flexibility options to reduce
turnover.

Employers need to determine where remote work can help

productivity while making clear the specific expectations and
benefits of in-person collaboration. They also need to determine
what roles are best suited to flexible arrangements. If some roles
must be in office, they could be made more equitable by offering
those staff flex hours, 10-hour workdays (four days on, three days
off), or additional personal time off.

Physical, Mental, and Financial Wellbeing

Employers enhanced or introduced wellbeing programs, particularly around mental health support, during the
pandemic. This led to more openness for employees to seek help and discuss the challenges and strain the
pandemic put on them. Providing solutions to the growing mental health epidemic allows employers to improve
employee wellbeing and lower absenteeism, both of which contribute to a more engaged workforce with higher
productivity.

Employees appreciate and desire wellbeing to be part of their benefits package, and not just for mental health.
Paychex conducted a survey that showed 62% of respondents strongly agree or agree employee wellbeing support
and benefits are a top priority when considering a new job. This survey also revealed financial health as a top
concern, followed by physical and emotional wellbeing.

Employers can support financial wellbeing through expert-led webinars and communications. Programs can include
building and managing credit, alongside employee paid programs such as ID theft protection, legal services, and
others. These low-cost programs within your health and welfare or retirement portfolio are a way to stand out to
employees of all ages and can take many forms (e.g., telehealth, app-based programs, workshops).

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Benefits Strategy Planning in Today’s Economic Headwinds

Volunteer Time
Employees appreciate paid time off to do volunteer work. Coming out of Covid, people are looking to contribute and
make a difference. When their employer provides a certain number of hours or an organization-wide “Volunteer Day,”
employees appreciate the investment in their interests outside of work. These initiatives also lead to great fodder for
internal communications and social media stories.

Diversity, Equity & Inclusion (DEI) Initiatives

With heightened awareness of disparities in DEI, employers
cannot afford to pay lip service to these initiatives. Employee
benefits are a tangible expression of how seriously employers
take DEI. These are a few of the ways organizations demonstrate
their commitment:

• Floating holidays show employers recognize the diversity of

cultural and religious observances.

• G
 enerous parental leave makes return to work easier for
parents and increases the likelihood they can strike a
balance. Additional leave solutions that provide time off for
childcare or elder care emergencies are other benefits that
can resonate with employees.

• F
 amily planning and fertility coverage supports all
employees, including the LGBTQ+ population, in their desire
to have a family.

Striking the right balance through regular analysis and planning

While broader choice is directionally appropriate for most organizations, this does not mean offering a plethora
of options is right for your business or for your employees. The ‘Great Resignation’ and changing workforce
expectations and demographics mean most employers need to consider how those dynamics impact their ability
to staff at all levels and keep those staff engaged. Long-term benefits planning and a regular check-and-adjust is
critical to that end.

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Benefits Strategy Planning in Today’s Economic Headwinds

Benefits planning and strategy should be based on four strategic pillars: a framework, measurable goals, regular
review and oversight, and program management and governance.

Pillar 1: Benefits Framework

Develop a strategy reflecting your business strategy, culture, employee values and preferences, as well as any
aspirations specific to diversity, equity, and inclusion (DEI).
A benefits framework enables employers to clearly articulate their benefits strategy and approach. This framework
ensures the program aligns with your organizational goals, including your talent strategy. It allows for a thoughtful
annual review versus a reactive approach based on the rising costs of benefits such as medical coverage or in a
knee-jerk response to what your competition may be doing.
Where the employee makeup is diverse, then the framework may need to focus on the critical workforce segments
— a group, role, or family of jobs that drive a disproportionate value or impact within the organization’s value chain.
Analysis will help uncover those critical workforce segments.
Once your organization understands the makeup of the critical workforce segments, then it needs to identify what
benefits resonate with those groups, how they stack up against the competition (remembering competition could
well be outside of your industry), and how to transition over time to more meaningful benefits for these employees.

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Benefits Strategy Planning in Today’s Economic Headwinds

Pillar 2: Develop Measurable Goals

Identify key industry benchmarks and organization-specific metrics (e.g., turnover) from which to measure and
review progress regularly against your business strategy.
It is important to look at the entire benefits program through both a short- and long-term business strategy lens.
Short-term benefits strategies must consider the impact of any acquisitions, divestitures, or large layoffs. The long-
term strategy should specify the goal of the benefits program and how it needs to evolve with business objectives.
Part of the business analysis should be evaluating how critical the benefits program is to recruitment and retention,
as well as what the organization can afford practically. Best-in-class may need to be the strategy for those operating
where talent is specialized or in high demand, while middle of the road may be appropriate for others. Organizations
can have a starting point with milestones, if reached in future years, and allow for an expansion of their program.
Measuring the benefit program’s effectiveness at recruitment and retention can be done in a few ways. Pulse
surveys, employee satisfaction surveys, onboarding interviews, and exit interviews can all provide data on the
role of the benefits program in recruiting and retention. In addition to those qualitative measures, companies use
quantifiable measures such as year-over-year cost trends and participation trends from open enrollment and new
employee opt-ins.

Pillar 3: Regular Review and Ongoing Oversight

Track the performance of programs to ensure value capture due to changing workforce and economic conditions.
Organizations who manage benefits strategically think about the program early in the year and then review at least
annually. If a particular benefit is not feasible or a priority in a given year, they should revisit those ideas as changing
business and workforce dynamics may change prioritization in the future.
Most organizations want to understand how their benefits program stacks up against their competition, but often do
not understand what benchmarking data is available and how to use it strategically. As an example, it is usually not
advisable to look too granularly at it for several reasons. First, it lowers the number of participants which lowers the
statistic validity of the data. Second, the best data is not necessarily gleaned from comparing to a specific industry
in a particular region. Instead, the best statistical data can come from looking at comparisons such as white collar
versus blue or grey collar jobs and cross-geography data. However, some organizations may need more focused
benchmarking, e.g., non-governmental organizations, healthcare systems, higher education, where there may be
other trade-offs in total compensation or the need for hyper-specialized talent.
Strategic employers also use benchmarking to gauge the prevalence and effectiveness of cost containment
measures. While benchmarking is a key component in this process, it is not the final word. You must dig deeper to
determine what your employees and desired talent value and need. Therefore, it’s important to conduct your own
research. Ask your employees. It is important to regularly solicit employee feedback as an additional datapoint in
decision-making.

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Benefits Strategy Planning in Today’s Economic Headwinds

Pillar 4: Program Management and Governance

Establish protocols to execute initiatives and proactively manage any gaps in performance.
Program management and governance requires a regular review of your benefits strategy throughout the year and
broadening the time horizon beyond the end of the year to “see the forest through the trees,” and ensure ongoing
alignment between the benefits strategy, retention and recruitment strategy, and the overall business strategy.
Active management of these programs necessitates a periodic review of your benefits or total rewards program
against measurable goals such as plan effectiveness (e.g., turnover), and/or cost efficiencies (i.e., actual cost vs.
budgeted).
Managing a benefits strategy is a journey, not a sprint. Changes need to be thoughtful, as it leaves a sour taste if
benefits are introduced and later removed because they did not make sense for your business. Even stopping “free
bagel Wednesdays” can impact morale, let alone removing a valued mental health benefit. Sometimes perception
matters more than who needs the benefit. People value employers who show they care for all employees and this is
often reflected in employee reviews on talent scouting sites such as Glassdoor, Indeed, and others.

While benefits planning and strategy based on these four strategic pillars may sound intensive, the alternative on a
broader scale is even less desirable.

Get to know us. With more than 7,000 clients managed across our National Employee Benefits Practice,
Risk Strategies delivers the high-quality, cost-effective, and compliant benefit programs
and solutions employers need and employees value.

Visit riskstrategies.com for the latest observations in employee benefits or contact us at

benefits@risk-strategies.com.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no
representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information
contained herein. Any recommendations contained herein are intended to provide insight based on currently available
information for consideration and should be vetted against legal and business needs before application.

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