Report: Benefits and overall vision must be well matched with the interests of employees
Employee retention has become the number one priority for business operations (51%) and HR departments (66%), says Gallagher’s ‘2023 US Organizational Wellbeing Report.’ This ranking comes as more employers are experiencing higher turnover rates. The Gallagher report says 51% of employers are experienced a turnover rate of at least 15% in 2022, up three points from 48% of employers in 2021. Other data shows that number is even higher, with the ‘Gartner Employee Retention Survey 2022’ showing the median annual turnover rate in 2022 at 17.8% globally. On top of that, Gartner predicts a 20% turnover for the foreseeable future.
“An organization's ability to retain employees ultimately impacts its bottom line because hiring and training a new employee usually costs much more than retaining someone who is already on the payroll,” says William F. Ziebell, CEO of Gallagher's benefits and HR consulting division. “Workforce makeup and employee needs are evolving at a rapid rate. As a result, employers have to consider more comprehensive benefits and compensation offerings that can enhance the overall employee experience."
Total rewards for employee experience
In 2023, the employee experience is in the spotlight, with employers betting big on total rewards. To do so, more than three in four employers (78%) enhanced existing employees’ base salaries and another 40% enhanced variable compensation. As well, 39% of employers invested in expanded medical benefits and 38% upgraded their wellbeing initiatives – both up six points from 2022.
Despite the overwhelming focus on improving retention efforts, most employers anticipate growth in both revenue and headcount by 2024. Nearly two in three employers (63%) project a revenue increase and more than half (57%) predict a rise in headcount.
While many employers expanded medical benefits in 2023, more than half (53%) also increased cost sharing. The Gallagher report says this is likely because nearly four in five employers anticipate a moderate (68%) or significant (10%) rise in healthcare costs. These factors, which have rippled through the carrier base, are starting to affect employer-sponsored healthcare, showing up as increased health plan premiums. The median at the most recent renewal was 5% to 5.9%, up from 4% to 4.9% last year.
Employers are looking to telemedicine, healthcare decision support, and cost-transparency tools to help offset these growing expenses for their workers. For example, telemedicine saw significant growth among cost-management options, up five points to 63% when compared to 2022. There was also an increase in the number of employers that supply their employees with cost-transparency tools (30%, up six points) and provide healthcare decision support (29%, up two points).
DEI oversight shifts to leaders
While most DEI (diversity, equity, and inclusion) initiatives are managed by HR, leaders sometimes share the responsibility since they set the tone and vision for policies and practices in the organization. In fact, more than two in five employers (41%) include DEI oversight as a leadership accountability measure. When leaders’ behaviours and communication styles show that diversity, empathy, and resilience are top priorities, they invite organizational transformation and advance goals for attraction and retention, says Ziebell.
He adds that demonstrating integrity through genuine, consistent, and sustained communications around DEI initiatives can positively impact culture change and create the environment for an optimal employee experience.
Conversation about intent to stay
Gartner recommends utilizing a ‘stay conversation’ to identify and improve what influences engagement and detect an employee’s overall desire to either stay at or leave the organization. A stay conversation is a semi-structured, one-on-one conversation between an employee and their manager or a member of HR.
These conversations can give HR more time to address retention issues as they are identified before an employee decides to leave. They can lessen employee emotions because they ideally occur before the employee has decided to leave the organization. In addition, they can give employees the feeling of value and an improved employee experience. They also provide employees the opportunity to share positive and poor experiences and offer a place to discuss and/or resolve them. HR professionals can use the information to identify actionable takeaways.
“Now, more than ever, it's important for organizations to ensure their benefits and overall vision are well matched with the interests of employees,” says Ziebell. “While diverse benefits may come with more complexity, providing a people-first framework helps to address differing employee needs and interests.”
Rewards, communication, and employee incentive programs are essential to the success of any organization. A well-rounded incentive plan can drive employee engagement, boost morale, and increase productivity.
