Flexible benefits are the trendy topic that far-sighted employers can no longer ignore. In fact, this topic must be given high priority in the benefits strategy and in the design of the benefits portfolio. It is no longer just about providing benefits to cover a (financial) emergency situation.
HR managers in companies are aware that benefit strategies must be reviewed regularly, and in some cases also require corresponding adjustments - this has seldom been as obvious as it is now. The strategic focus on more flexibility and choice in the benefits portfolio has gained momentum for employers under the influence of the Corona pandemic and the changing world of work.
The latest Willis Towers Watson Benefit Trends Study 2021 shows that this trend has already arrived at employers: Within the next two years, employers are placing the highest priority on employee experience in the employee benefits transformation process. For 72 percent of the companies surveyed in Switzerland, employee experience is of central importance and is therefore at the top of the agenda. Flexibility and choice in benefits are the core topics in the area of employee experience, along with wellbeing, communication and the associated understanding and appreciation of benefits on the employee side.
The chart shows the different employee benefits (Benefits Portfolio, Employee Experience, Benefits Financing, Administration & Operations and Analytics, Insights and Reporting) and their focus, priorities and measures from the employer's perspective.
The breakdown of employee benefits from the employers' perspective is as follows:
Priorities look like this:
The following measures are planned:
Creating more flexibility and choice in employee benefits is the second most important strategic goal for employers to improve the employee experience. For 50 percent of companies, the issue is of high importance within the next two years. On the priority list, it immediately follows the most important strategic goal in this area, which companies see in the integration of employee wellbeing (52 percent). For 48 percent of those responsible, improving the communication of employee benefits will be essential in the future.
In view of the ongoing shortage of skilled workers, offering benefits that meet employees' needs and using the right HR tools will play an important role in attracting and retaining employees.
As part of the overall compensation package, employee benefits are a lever that can be highly customized. However, benefits only fulfill their purpose if they meet the needs of the employees. Increasingly heterogeneous workforces require tailored solutions.
A precise understanding of employee wishes and needs and the insights that employers derive from this are crucial for analyzing their own benefits portfolio. For 66 percent of the companies, it is the highest priority to base the design of their benefits portfolio on these needs. The needs of the workforce are therefore decisive for the transformation of the benefits offering, followed by benchmarking existing benefits against the market and competition (57 percent) and measuring the effectiveness of the benefits programs (33 percent).
As the study suggests, companies are well aware of the importance of a flexible benefits offering that is geared to employee needs. With an appropriately upgraded benefits program, they want to stand out from the offerings of other companies. More than half of the companies (60 percent) assess the situation in such a way that they are on a par with other employers in terms of the flexibility and diversity of their offering. Only 4 percent of employers believe they are better than other companies in this respect. A good third (35 percent) believe they lag behind the market in this area.
So many employees can look forward to interesting additional benefits as benefits packages undergo a transformation over the next two years. Above all, they will see a broader range of benefits that gives them flexible choices according to their own needs and life situation.
Employers want to set priorities to bring about changes that follow the strategic motives described above. 54 percent of companies see this as the future trend. Even slightly higher in priority are optimizations in the area of employee wellbeing. 60 percent of companies want to make adjustments to their benefits portfolio to support mental health, but employers (49 percent) also see potential in physical fitness to promote a healthier lifestyle for their employees with appropriate additional benefits. Physical fitness has an equally effective influence on mental condition just as effectively and positively.
Broad and flexible benefit programs have always made sense. If you want to maintain a good starting position in the competition for existing and future employees, you have to be flexible. This is all the more true since we are in the midst of a transformation process. The transformation of working environments requires agility in the minds of employees and adaptability. This is also true for employers and HR managers, if not many times more so. Although various studies also show a strong correlation between financial stability and mental health (employees who do not have to worry about their financial security and who have easy and direct access to professional support in the event of unexpected life events are more committed, loyal and productive), only 8 percent of companies currently see a need for adjustment in this area. Thus, there is still some untapped potential in financial wellbeing. In this context, we observe some cultural hurdles that must first be overcome. In the Anglo-Saxon world, for example, the topic is much higher on the agenda.
In order to achieve the strategic objectives and realize the transformation to highly individualized benefit programs, employers place the highest tactical priority on increasing the appreciation of the employee benefits offered, both internally and externally. This is reflected in the statements of almost three quarters of the study participants (71 percent). After all, perception and experience are crucial if benefits are to have an impact: Employees need to know and experience the benefits they receive. This is in the employer's best interest, because the perception of the benefits offered generally improves employee wellbeing and thus contributes to employee loyalty.
The results of the study underscore this: in realizing their tactical goals, half of the companies (48 percent) are taking the approach of increasing their employees' understanding of the benefits costs on which the benefits are based over the next two years. This will help employees recognize the value of benefits programs and better appreciate their importance in the overall compensation package. For one-third of companies (33 percent), this goes hand-in-hand with implementing and improving self-service solutions (online portals, payment portals) for employees.
More information about the Willis Towers Watson 2021 Benefit Trends Survey results can be found here.
