Faced with Record-Low Unemployment, More Employers Are Investing in Employee Benefits Rather than Reducing Costs

ROLLING MEADOWS, Ill., November 1, 2018 – Attracting and retaining talent remains the number one operational priority of 60 percent of employers according to the forthcoming 2018 Gallagher Benefits Strategy & Benchmarking Survey. That figure has increased two percentage points from 2017, and is in sharp contrast to the 37 percent of employers who ranked controlling benefit costs as the top priority, a figure that declined six percentage points from 2017. And nearly half (45 percent) of employers chose not to increase employee cost sharing of healthcare benefits.

“While keeping a lid on costs is always important, we are seeing a clear shift in the market as employers are having to compete more aggressively for talent in the face of the lowest unemployment rate in nearly 50 years,” said William F. Ziebell, President, Gallagher Employee Benefits Consulting and Brokerage. “Today’s workforce is comprised of five very different generations, meaning it is no longer good enough to simply offer standard medical coverage and a competitive retirement plan. The 2018 Benefits Strategy & Benchmarking Survey uncovered best practices that address employees’ total wellbeing, which will positively impact organizational retention and recruitment efforts.”

Employers Taking a Holistic View of Employee Wellbeing

The Benefits Strategy & Benchmarking Survey found forward-thinking employers are taking a more holistic view of employee wellbeing and developing strategies that both engage and appeal to their team. For example, more than half of employers (55 percent) now provide a telemedicine component, allowing employees to virtually connect with clinicians. That is an increase of more than 100 percent from 2016, when just 24 percent of employers utilized telemedicine. In addition to saving employees time, telemedicine has been shown to reduce expenses for both employers and employees.

The report also found employers are looking for ways to reduce medical expenses by encouraging their employees to live healthy lifestyles. The most popular physical wellbeing benefits include flu shots, tobacco cessation programs, health risk assessments and biometric screenings.

Because financial stressors can negatively affect productivity, financial wellbeing proved to be another area of interest for employers. More than six out of ten employers (62 percent) now offer employees access to financial advisors and nearly half (47 percent) provide financial-literacy education to help employees make better saving and spending decisions. The research also showed 43 percent of employers are taking steps to gauge employee retirement readiness, compared to previous years (33 percent in 2016).

Identifying and Changing Benefits Based on Employee Preferences

Because the tightening labor market has made it easier for top employees to leave their jobs voluntarily, more employers are tweaking existing benefits or adding new offerings. The goal is to provide employees with more choices that will better fit their own lifestyles and needs. Examples include:

• Health Benefits Choice: More than one in five employers (22 percent) now offer employees three medical insurance plans, and 13 percent offer four or more options.

• Tuition Assistance: Nearly half (46 percent) of employers provide tuition assistance, which is up from 42 percent in 2017. The most common tuition reimbursement amount totaled $5,250 annually per employee.

• Life Insurance: Nine of ten (89 percent) employers said they now offer employees life insurance, which is a five percent increase from 2017.

• Employee Assistance Programs (EAPs): 70 percent of employers provide access to EAPs, which is an 11 percent jump from 2017.

Small Segment of Employers Fully Engage Employees around Workplace Benefits

Given many employee rosters include a multigenerational workforce, it has become increasingly important for employers to offer benefits that appeal to each segment of their workforce. Surprisingly, just 13 percent of employers said they have a comprehensive communication strategy to guide how they collect and share benefits information with employees, and most (74 percent) noted they have a communication strategy for just some of their benefits and wellbeing offerings.

“More than half of employers (59 percent) expect to increase their headcount over the next two years. That will be a challenge considering there are currently more job openings than individuals to fill those positions,” Ziebell said. “As a result, employers must get smarter about working within their budgets to offer benefits and compensation packages that engage their teams. At the same time, it will be imperative for organizations to clearly communicate the offerings and measure their effectiveness. The days of ‘set it and forget it’ in regards to compensation and benefits are over.”

For more information about the 2018 Benefits Strategy & Benchmarking Survey, visit: www.ajg.com/NBS-2018.

###

ABOUT GALLAGHER
Arthur J. Gallagher & Co. (NYSE: AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. The company has operations in 34 countries and offers client service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.

ABOUT THE BENEFITS STRATEGY & BENCHMARKING SURVEY
Gallagher Benefit Services, Inc., the employee benefits consulting and brokerage operation of Arthur J. Gallagher & Co., developed the Benefits Strategy & Benchmarking Survey to provide employers with insights into how their peers are addressing benefit and human capital challenges. The 2018 survey, conducted from January to April of this year, aggregates responses from 4,241 organizations across the U.S. Additional survey results can be found at www.ajg.com/NBS-2018.

Key Strategies for Recruiting and Retaining Top Talent in a Tightening Labor Market

A new survey by Arthur J. Gallagher & Co. shows that a growing number of employers are revamping their benefits strategies to outmaneuver competitors and become destination employers.

As the U.S. unemployment rate drops, the battle to recruit and retain top talent has only intensified. Becoming a destination employer is not only crucial for the competitiveness of individual organizations, it also impacts the economy. According to the U.S. Department of Labor, there are currently 5.7 million job openings. If all of those positions were filled, the nation’s GDP growth rate could significantly increase.

The heightened need for strong benefits and compensation packages is a resonating theme throughout the 2017 Arthur J. Gallagher & Co. (Gallagher) Benefits Strategy & Benchmarking Survey, which collected data from 4,226 organizations across the U.S. In its fifth year, the survey examined how employers were using benefits and compensation to differentiate their organization in the war for talent. Notable findings from this year’s research show a growing emphasis on addressing the needs of the whole employee, integrating emotional, financial, social and career wellbeing with physical health.

Shift in Employer Thinking from Wellness to Wellbeing

Historically, wellness programs have focused on improving physical health as an extension of medical benefits. While reducing healthcare costs remains the main driver for offering a wellness program (60 percent), employers also cite investing in the organization’s culture (43 percent) and improving employees’ work experience and satisfaction (37 percent) as other top motivators. This broader, more holistic approach is also demonstrated by the increase in programs now covering financial wellbeing (34 percent), volunteer opportunities (28 percent) and community engagement (27 percent).

“This shift in thinking is one of the reasons we expect 70 percent of organizations will offer wellness programs by 2019,” said William F. Ziebell, President, Gallagher Employee Benefits Consulting and Brokerage. “When employers rebalance their priorities to include benefits like professional development and a workplace culture that promotes employee engagement and total wellbeing, they differentiate themselves in the talent marketplace.”

Leave Policies Play a Role in Employee Attraction and Retention

The need to appeal to younger workers with parental leave policies has prompted a discussion about supporting the total wellbeing of employees as they try to solve the work-life equation. Despite headlines showcasing generous maternity and paternity leave policies, a vast majority (64 percent) of organizations do not offer paid parental leave apart from short-term disability. In fact, only 22 percent offer this benefit to both mothers and fathers.

Retirement Readiness is Key to Higher Productivity and Engagement

Retirement benefits better equip employees for their financial future and give them peace of mind in the present. While it is encouraging that nearly half (48 percent) of employers use auto-enrollment in retirement plans to help employees improve savings, only 37 percent are measuring retirement readiness.
“During every life stage, employees encounter financial obstacles like paying student loans, buying a home, or paying for daycare,” Ziebell said. “These impact retirement savings and can result in employees needing to stay on the job longer than they’d like. An aging population often has higher healthcare costs and limits opportunities for younger employees to advance. So when organizations help their employees identify and manage these financial stressors, it often results in higher productivity and engagement.”

Survey Shows Importance of Taking a 360-Degree View

The 2017 Benefits Strategy & Benchmarking Survey underscores the importance of taking a 360-degree view of an organization’s benefits and compensation strategy, specifically through the lens of employee attraction and retention. Micro and macro-economic factors, such as the tightening labor market and shrinking candidate pool, make it even more imperative. As employers gain a deeper understanding of how these different elements work together, they can see more clearly how to align human resource and organizational strategies to drive better business results.


ABOUT THE BENEFITS STRATEGY & BENCHMARKING SURVEY

Gallagher Benefit Services, Inc., the employee benefits consulting and brokerage operation of Arthur J. Gallagher & Co., developed the Benefits Strategy & Benchmarking Survey to provide employers with insights into how their peers are addressing benefit and human capital challenges. The 2017 survey, conducted from January to March of this year, aggregates responses from 4,226 organizations across the U.S. Additional survey results can be found at www.ajg.com/NBS2017.

ABOUT ARTHUR J. GALLAGHER & CO.

Arthur J. Gallagher & Co. (NYSE: AJG), an international insurance brokerage and risk management services firm, is headquartered in Rolling Meadows, Illinois, has operations in 33 countries and offers client-service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.