The Future of Employee Benefits: How Companies Can Adapt to Evolving Workforce Needs
The landscape of work is undergoing rapid transformation as new technologies, generational shifts, and changing employee expectations reshape the workforce. This is driving significant changes in the world of employee benefits as companies adapt their offerings to evolving demands.
Benefits are becoming a key differentiator for employers looking to compete for top talent. With unemployment low and competition for skilled workers high, companies realize they need robust benefits to attract and retain employees. A recent study by MetLife found that 79% of employees say benefits are an important reason they stay with their employer.
Forward-thinking companies are taking a strategic approach to benefits, using them to help build an engaged, productive workforce. The most innovative employers are moving beyond basic health insurance and retirement plans to provide the customized, high-value benefits that employees want.
This article will explore the key trends shaping the future of employee benefits and how companies can adapt their offerings to gain competitive advantage.
Desire for Flexibility and Customization
One of the biggest trends shaping employee benefits is the desire for more flexibility and customization. This has led to the rise of cafeteria-style benefits plans, which allow employees to choose benefits that align with their individual needs and priorities.
With a cafeteria plan, employees are given a set amount of credits or dollars to "spend" on selecting benefits across different categories like health insurance, retirement savings, tuition reimbursement, or wellness programs. This provides more choice compared to the traditional one-size-fits-all benefits package.
According to Group Benefits, cafeteria plans offer the most flexibility, enabling employees to purchase any combination of benefits from a menu of options. Employees can customize a package catered to their circumstances, which leads to higher satisfaction.
There are tradeoffs to balance, as cafeteria plans tend to cost employers more in administration. However, the advantages often outweigh the costs, as employers gain a strategic lever to stand out in recruiting and retaining top talent.
Focus on Financial Wellness
Financial wellness is becoming an increasingly important focus for employee benefits in Canada. Employers are recognizing that providing financial planning resources and retirement savings assistance can greatly benefit employees. According to research from Mercer, over half of Canadian employees are stressed about their finances, impacting their performance and engagement at work.[1]
To address this need, more companies are offering financial planning services and education as part of their benefits packages. These programs provide tools and advice to help employees effectively manage their budgets, pay down debt, save for retirement, and reach other financial goals. Some leading employers are even offering student loan repayment assistance as a creative way to attract younger talent who are burdened with student debt.
By helping employees achieve financial wellness, companies can reduce financial stress and improve productivity. Employees also appreciate companies that demonstrate care for their overall well-being. Focusing on financial benefits is becoming an impactful way for employers to differentiate themselves and build engagement in a tight labor market.
Rising Demand for Health and Wellness Benefits
With a greater focus on overall wellbeing, employees are seeking more comprehensive health and wellness benefits from their employers. According to Group Health, 79% of plan members ranked health and wellness as their top priority benefit.
In particular, there is increasing demand for robust mental health coverage. Many leading companies like Starbucks are now offering expanded counseling, therapy, and other mental health services to provide holistic support. Comprehensive mental health benefits can improve productivity and retention.
Employees also appreciate wellness benefits like gym memberships, nutrition advice, and fitness challenges. Group Health reports that 63% of employers now offer wellness spending accounts. Providing resources for healthy lifestyles demonstrates an employer's commitment to employee wellbeing.
Companies that invest in health and wellness send a strong message about caring for the whole person. By supporting physical and mental health, employers can build engagement, loyalty, and a thriving workforce.
New Voluntary Benefits
In addition to traditional benefits like health insurance and retirement plans, many companies are offering a wider array of voluntary benefits that employees can choose to enroll in. These help round out an employee's benefits package with protection and perks tailored to their needs and priorities.
Pet insurance has emerged as one of the most popular voluntary benefits. With so many employees considering pets as family, companies are helping them cover veterinary costs and care. According to Remote's guide to employee benefits in Canada, over 20% of employers now offer pet insurance.
Identity theft protection is another increasingly common voluntary benefit. This provides access to resources that help safeguard employees' personal information and restore their identity if stolen. Some companies are choosing to cover identity theft protection plans for all staff given rising cybersecurity risks.
Customizable benefit add-ons are also gaining traction. These allow each employee to select from a menu of voluntary benefits and design the exact package that fits their needs. Rather than a one-size-fits-all approach, this model provides more flexibility and personalization.
Other voluntary benefits like tuition assistance, student loan repayment, legal services, and home internet stipends empower employees to get additional support tailored to their life stage.
Leveraging Technology
Companies are increasingly leveraging technology to deliver personalized and streamlined benefits to employees. Digital benefits platforms allow employers to provide employees with self-service access to view and manage all their benefits information in one place. According to research from Hub International, over 50% of employers now use an HR or benefits administration technology platform.
These digital systems give employees the ability to select customized benefit options to meet their individual needs. Rather than the traditional "one-size-fits-all" approach, employees can build flexible packages based on life stage, family status, and personal priorities. Leading platforms use data analytics to recommend optimal benefits selections tailored to each employee. According to Mercer's benefits trends report, 87% of employers say benefits personalization is an important goal.
Other capabilities of digital benefits platforms include streamlined enrollment, mobile access, benefits education, and real-time updates. These technologies allow HR teams to efficiently administer benefits programs and provide employees with a seamless, transparent experience. As benefits packages become more complex, leveraging technology will be key for employers to deliver and manage next-generation benefit offerings.
More Flexible Work Options
Companies are increasingly offering more flexible work arrangements to accommodate diverse workforce needs and preferences. According to a Government of Canada report, many employees desire flexibility in when and where they work. Remote work and flexible scheduling have become particularly popular options.
Remote or hybrid arrangements allow employees to work from home or other locations outside the office for all or part of the week. Studies show that remote workers tend to have higher engagement and productivity. According to Statistics Canada, nearly 40% of Canadian employees worked from home at least some of the time in 2022.
Flexible scheduling provides employees control over their start and end times. Options like compressed work weeks or shift swapping allow companies to accommodate diverse needs. Research shows schedule flexibility improves work-life balance and reduces absenteeism and turnover.
Forward-thinking employers are embracing flexibility to create positive employee experiences. They are providing employees autonomy while ensuring collaborative teamwork thrives.
Benefits for Alternative Workers
With the rise of the gig economy and contracting work, employers are needing to adapt their benefits offerings for alternative worker types beyond full-time employees. According to the Government of Canada, the gig economy refers to short-term contracts, freelance work, and temporary arrangements, offering workers increased flexibility and freedom.1 However, gig workers and contractors often lack access to traditional employee benefits.
Forward-thinking companies are finding ways to provide some benefits to their non-full-time workers. For example, extending access to mental health resources, retirement savings plans, and professional development funds for contractors and gig workers. According to research, the top benefits gig workers desire are flexibility, fair pay, and healthcare coverage.2 Offering even basic benefits can give companies a competitive edge in attracting talented alternative workers.
Innovative Company Examples
Leading Canadian companies are pioneering next-generation benefits to meet changing workforce needs. Here are some examples of innovative benefits programs:
Shopify offers employees customized benefit packages through a "flexible spending account" where each employee receives an allowance to select the benefits most relevant to them. This includes benefits like education reimbursement, fitness memberships, and eldercare support.
Microsoft Canada provides employees access to on-demand emotional health resources through an app, including self-care tools, counseling, and cognitive behavioral therapy. This demonstrates a focus on mental wellness.
TELUS offers furry family benefits including pet bereavement leave and discounts on pet insurance, showing how companies are expanding into new voluntary benefits. TELUS also provides fertility funding up to $10,000.
Key Considerations for Employers
Employers looking to adapt their benefits offerings should take a strategic approach by surveying employees, modeling different packages, tracking ROI, and communicating offerings effectively.
Conducting employee surveys can provide valuable insights into evolving workforce needs and preferences. As the 2022 Aon Employee Benefits study notes, "listening to employees has become more important than ever in benefit design.”. Surveys can gather data on which benefits employees value most, where they see gaps, and their priorities for new offerings. This direct feedback allows employers to tailor packages to employee wants and needs.
In addition to surveys, benefits modeling through analytics and simulations can aid decision making. Companies can work with benefits providers to forecast the costs and ROI of different packages and offerings. This data-driven approach allows employers to optimize benefits investments and quantify the impact on attraction and retention. According to research, 43% of employees would stay longer with a company if they had flexible benefits plans.
Once new benefits plans are implemented, continued tracking of engagement and ROI is key. Ongoing employee feedback and participation rates can gauge utilization and satisfaction. Meanwhile, monitoring metrics like turnover, absenteeism, and productivity can quantify the business impact of benefits investments.