Benefit strategy - 2021 Benefit Trends Survey

Setting high aspirations

Employers are looking to step up their game quickly in benefit strategy. While a third of employers globally (33%) have no clear benefit strategy to date, seven in 10 (72%) expect to have a differentiated and customized benefit strategy in two years (Figure 1).

Figure 1. A majority of employers expect to differentiate and customize their benefit strategy in next two years

How will they get there?

7 in 10 employers globally expect to have a differentiated and customized benefit strategy in two years. Only 2 in 10 do so today.

Understanding the factors shaping priorities and choices around benefit strategy

Internal workforce challenges

Almost three-quarters of employers globally (73%) report that stress, burnout and mental health issues constitute their top workforce challenge (Figure 2). This figure rises sharply in North America and Latin America where over eight in 10 employers share this view.

Figure 2. Employers reporting concern about stress, burnout and mental health
	Global	NA	EMEA	LatAm	APAC
Stress, burnout and mental health issues	73%	86%	65%	84%	66%

Other challenges highlighted relate to unhealthy lifestyles (50%), lack of social interaction (49%) and reduced productivity (43%).

External influences

Figure 3. External influences on benefit strategy in the next two years
	Global	NA	EMEA	LatAm	APAC
Diversity, equity and inclusion	60%	73%	58%	63%	53%
Tight labor markets	59%	52%	61%	64%	57%
Increased remote working	54%	47%	56%	61%	50%
Advances in technology	47%	38%	42%	57%	47%
Increased focus on ESG	41%	28%	47%	38%	44%
Rising costs	39%	50%	30%	36%	44%

Diversity, equity and inclusion. Six in 10 employers globally cite the increased focus on DEI as the top external influence on their benefit strategy, a number that rises to 73% in North America (Figure 3).
The pandemic and global social justice movements elevated the focus on DEI, prompting companies to increase efforts to treat employees fairly and equitably in all aspects of the employment deal, including benefits. At the same time, as more companies prioritize environmental, social and governance (ESG) issues, they recognize that DEI initiatives help them drive social impact and achieve key ESG goals. Moreover, organizations with a diverse, equitable and inclusive workforce are associated with better business outcomes.
A focus on DEI will help employers address the different needs and preferences of today’s diverse workforce and shape a benefit portfolio that meets employees where they are.
Tight labor markets. Competitive labor markets are the second most important external factor affecting benefit strategy, cited by six in 10 employers globally (59%), and the top influence for employers in Europe, Middle East and Africa (EMEA) (61%); Latin America (64%); and Asia Pacific (57%). Benefits play a critical role in helping attract and retain top talent as competition for talent intensifies.
Increased remote working. Over half of employers globally (54%) and over six in 10 in Latin America (61%) regard increased remote working as an important influencing factor. It is essential to understand how benefits may need to shift to support a hybrid work model.
Rising costs. Escalating costs remain a critical factor affecting benefit strategy, primarily for employers in North America.
Increased focus on ESG. Over four in 10 employers globally (41%), including 47% in EMEA and 52% in Western Europe, a part of EMEA, cite the increased focus on ESG as a key external influence on benefit strategy. In contrast, only 28% of employers in North America regard ESG as a major influencing factor.

These internal and external factors are driving a focus on the employee experience, highlighting the importance of engaging employees in their benefits to promote desired behaviors and support improved decision making.

Defining success through a broader lens

Consistent with this focus on the employee experience, employers are moving beyond financial metrics in assessing benefit strategy success. Improved employee wellbeing (62%) and improved employee experience (50%) are the top success measures globally (Figure 4).

More than two-thirds of employers in North America (67%) cite the ability to manage costs and risks effectively as a key success metric. This may reflect the fact that benefits are a larger component of the employment package in this region. But this focus on financial factors doesn’t come at the expense of people-related metrics. In fact, a majority of these employers also regard improved wellbeing (68%) and improved employee experience (60%) as key measures of success.

Figure 4. Key benefit strategy measures
	Global	NA	EMEA	LatAm	APAC
Improved wellbeing	62%	68%	61%	69%	56%
Improved employee experience	50%	60%	44%	46%	51%
Improved retention	40%	20%	43%	48%	42%
Effectively managed costs and risks	40%	67%	34%	27%	43%

Strategic objectives

Employers globally are setting the following strategic objectives for the employee experience:

Integrate wellbeing into the benefit package: 65%
Increase choice and flexibility: 47%
Enhance communication: 47%
Enhance tools and technology: 44%

Our findings reveal employer priorities and the measures organizations are taking or looking to take across the dimensions of the modern benefit program to achieve these objectives.

Key priorities over next two years

Many employers are heightening their focus on wellbeing and the employee experience, continuing a trend from 2019 (Figure 5).

Figure 5. Transforming benefits over the next two years
	Benefit portfolio	Employee experience	Benefit financing	Administration and operations	Analytics
Focus	60%	75%	53%	56%	63%
Priorities	Emotional wellbeing Physical wellbeing	Employees’ understanding of cost and value Recognition of benefits	Healthcare costs Risk benefits costs	Streamline internal operations Review operational policies and procedures	Understand employees’ wants and needs Benchmark benefit programs
Actions	Support for mental health Support for physical health Flexibility and choice	Manager training Single digital hub Mobile app	Care navigation support/tools Condition specific care Manage fees/ premiums	Assess internal operations Vendor assessment Update documentation	Listening strategies Identify at-risk employees Forecast costs and risks

Benefit portfolio

As employee wellbeing is top of mind, more employers are focusing on integrating wellbeing — in particular, initiatives supporting better mental health — into the benefit portfolio. Additionally, they are looking to enhance broader benefits, including expanding flexibility and choice.

Employee experience

The employee experience emerges as the top focus area for employers out of the five dimensions of benefit strategy. Employers recognize the importance of deepening employees’ understanding and appreciation of their benefits through improved use of technology, manager support and enhanced communication.

Benefit financing

The rising cost of benefits — especially healthcare — continues to be an issue. Employers are looking to use a combination of tactics, from care navigation support to managing premiums, to mitigate the impact of cost increases.

Administration and operations

Employers are prioritizing internal efficiency. As a result, they are planning or considering assessing the performance of internal benefit operations as well as vendors and providers.

Analytics

Employers are prioritizing internal efficiency. As a result, they are planning or considering assessing the peTo help ensure that they are offering relevant benefits that meet employees where they are and proactively identifying at-risk employees, such as those experiencing mental health issues, employers are looking to boost their analytics capabilities, especially their listening activities, including surveys and focus groups.

Next section: Transforming benefits – Benefit portfolio

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