Employee Benefits in 2023: The Trends You Need to Know
Leaders are caught in a difficult budget dilemma right now.
Budgets are tighter than ever, with many companies forced to perform reductions in force. But the cost of living is still soaring, putting intense pressure on wages. Employees are looking to improve their compensation deals, while job candidates are asking for record starting salaries.
How can you keep everyone happy while still managing your budget?
The solution is to look at the other elements of your Total Rewards strategy, especially benefits. A well-designed benefits package can be a cost-effective way of rewarding your team, leading to better engagement and retention.
The benefits experts at NFP have compiled a detailed report on current trends in employee benefits, based on extensive surveys with both employers and employees. Here are some key highlights from that report.
The state of employee benefits in 2023
One of the main takeaways from the NFP report is this: employers are not offering the best possible benefit plans.
Overall, only 24% of employees say their benefit plans fully meet their needs. Most of the workers surveyed said they don’t even understand their benefits, with younger employees showing a high level of disengagement. Of those aged 18-24:
- Only 22% fully understand their company’s benefit plans
- 35% don’t understand their benefits at all
Benefits can help you attract, engage and retain people—but only if those benefits are useful and relevant. So the big question: what benefits do employees need right now?
5 employee benefits trends in 2023
There’s no such thing as a one-size-fits-all benefits plan. Each employee has different needs, which means that each person is looking for different benefits.
Parents want childcare benefits; younger workers might prefer tuition reimbursement; people thinking about their future might want retirement plans. Some people want more paid time off, while others just want an increased sick leave allowance.
These are personal details that emerge in one-to-one conversations with your employees. On top of this, some broad social trends might impact the kind of employee benefits required by your team.
1. Rising healthcare costs are a major concern
The price of healthcare is a concern for both employers and employees. According to NFP’s research, around half of insured adults in the U.S. say that it’s difficult to afford healthcare and related out-of-pocket costs. On top of this, 48% of people are having trouble with ongoing pharmacy costs.
Employers face a challenge as the overall cost of health insurance keeps rising. To tackle expenses, health insurance plans now come with higher-than-ever deductibles. Look at how the cost to employees has changed in under 20 years:
- 2007: General annual deductible is under $500 for 57% of employees
- 2022: General annual deductible is over $2,000 for 62% of employees
The good news is that some employers have found that they can reduce health insurance costs through technology. Data analytics and digital wellness resources can help deliver more targeted healthcare benefits, leading to lower costs and more generous deductibles.
2. Financial wellness benefits on the rise
These are challenging economic times. Around 95% of employees say they’re concerned about the broader economy, with many living paycheck-to-paycheck. All in all, only 55% of people describe themselves as being financially healthy.
Financial wellbeing is an important part of general wellbeing, which is crucial for avoiding stress and burnout. For a holistic approach to employee wellbeing, you’ll need to look at relevant supports, including:
- Sick leave allowances
- Disability insurance
- Student loan support
- Financial planning services.
Benefits related to money management are also important, including retirement accounts. Most employees (63%) say that they would like their employer to offer life insurance with Long Term Care to help secure their future in later life.
3. Mental Health benefits are more important than ever
Attitudes toward mental health have changed in recent years. People understand the importance of their own mental wellbeing, which means that they’re talking about mental health more and taking steps to care for themselves.
Per-person spending on mental health is on the rise:
- 77% regularly spend money on mental health support
- 38% spend over $1,500 per year
Given how the cost of living crisis has put pressure on personal spending, this shows the importance of mental health to most people.
Employers are lagging behind here, with 72% of companies saying they don’t plan to offer additional mental health benefits. Companies that do offer such benefits (which can include cost-effective initiatives such as Employee Assistance Programs and Stigma Reduction Training) have a big advantage in attracting and retaining talent.
4. Flexible working is still hugely popular
The debate around remote work is still ongoing, with most employers favoring a full return to the office. Employees would prefer more flexibility, with the preferences being:
- 31% prefer hybrid working (alternate between working at home and in the office)
- 27% prefer flexible schedules
- 21% prefer fully remote work
Employers are listening to this feedback. In the past year, 51% of businesses have implemented a new hybrid work scheme, while 23% have started to allow full-remote work. Meanwhile, 21% of companies allow flexible schedules.
5. DEIB is a key element of professional development
One of the most important trends in recent years is the increased focus on Diversity, Equity, Inclusion and Belonging (DEIB). This is part of a bigger nationwide conversation, but employers recognize that they play a crucial role in inclusion.
Professional development is one area where employers can make a real difference. According to NFP’s report:
“Although DEIB is often siloed from the management of upskilling programs, coordinating the two when developing professional development initiatives can help set an organization apart from the pack.”
Professional development is an important element of each employee’s compensation package, as it can influence their earning ability for years to come. By providing development opportunities to everyone, you’ll build a team with strength in diversity—and improve your reputation as an employer that values diversity.
Get your Total Rewards strategy right
Salary and benefits are two key pillars of Total Rewards, along with professional development, recognition, and wellbeing.
Your Total Rewards strategy can help you attract, engage and retain top talent, even when your budget is under pressure. But it involves a lot of careful planning and good communication to create the perfect Total Rewards strategy.
That's why it's a good idea to get expert help. Book a call with a Helios HR consultant and let's talk about building a rewards strategy that will thrill your team.