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The biggest challenges identified by mostly large U.S. employers in a recent survey were the need to control benefits costs while attracting and retaining a competitive workforce.
In excess of 1,800 U.S.-based organizations participated in insurance brokerage Arthur J. Gallagher & Co.'s 2014 Benefits Strategy & Benchmarking Survey. Most respondents (61 percent) had more than 100 full-time employees, and 25 percent employed 500 or more full-time employees.
When asked to identify their organization’s greatest overall challenge, respondents said (in the following order):
1. Controlling benefit costs.
2. Attracting and retaining a competitive workforce.
3. Revenue and sales growth.
4. Government regulation.
5. Managing profit margins.
When asked to identify their greatest overall HR challenge, respondents said:
1. Controlling health care expenses.
2. Keeping up-to-date on health care reform and other regulations.
3. Increasing employee job satisfaction.
4. Compensation expenses.
5. Retaining employees.
“Survey respondents ranked controlling benefit costs as the largest overall challenge, and identified controlling health care expenses as the top human resources challenge. Together, these issues underscore a common and pressing need for organizations of all sizes and structures to contain medical costs,” the survey report states.
Some of the leading strategies identified by the participants for containing benefits costs included:
•Increasing employee plan contributions (54 percent of respondents).
• Increasing deductibles (43 percent).
• Increasing out-of-pocket maximums (36 percent).
• Increasing co-payments (30 percent).
Among other survey findings were the following:
• Retirement plans continue to shift toward a defined contribution model, with 64 percent of respondents offering a 401(k) plan. Of those, 70 percent match employee contributions.
• Employers continued to gravitate toward wellness programs, with 44 percent of participants offering a program to their employees. However, even with the increase in the number of employers offering a wellness program, most programs (61 percent) have a budget of less than $10,000.
• Although employees are often interested in long-term care as a voluntary benefit option, 82 percent of employers do not offer this benefit.
Only 31 percent of employers had quantified the cost impact of health care reform on their organizations. And just 10 percent had a written total rewards or strategic benefits plan with measurable objectives.
“There's no doubt that the changing benefits landscape will present organizations with complex challenges for years to come," said James W. Durkin Jr., president of Gallagher & Co.’s employee benefit consulting and brokerage practice. “A holistic, innovative, data-driven employee benefits strategy is needed to strike the optimal balance in managing the best interests of employees and employers. This approach allows organizations to respond to change with agility, helping them to minimize risk, maximize rewards and drive growth.”
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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