From the grocery store to the gas pump, prices are soaring.
As an employer, you’re probably worrying, waiting, or even witnessing as the costs of employee benefits rise, wondering how you will be able to manage the expense of these sky-high increases.
For years, our benefits experts here at Combined have helped businesses build cost-effective and competitive employee benefits packages through unexpected economic changes. We are here to help you navigate assembling the best benefits for your business in today’s economic landscape.
In this article, we will discuss the climbing costs of employee benefits and 5 proactive measures you can take to effectively manage them.
These statistics prove that employee benefits are unarguably a cornerstone of employment. Acting as an incentive for potential employees, they not only help in the recruiting and hiring processes but also play a critical role in employee retention.
Can employers afford the rising costs of employee benefits?
It’s not surprising that, with the costs of these benefits continuing to rise, employers are double-checking their benefits strategy, reviewing their compensation budgets, and questioning whether employee benefits really are worth the price.
With this in mind, here are a few of the employee benefits challenges employers are realizing, all of which also contribute to increasing costs:
Healthcare inflation: Medical costs, especially in the U.S., have been rising steadily over the years.
Evolving workforce demographics: As the workforce ages, different benefits become more critical and potentially more expensive.
Increased regulation: Changes in national and regional policies can impact benefit costs.
Given these challenges, how can employers adapt without compromising the quality of benefits or overburdening their financial resources?
5 ways employers can manage the rising costs of employee benefits
Having already qualified the overwhelming importance of employee benefits, the answer to the aforementioned question “Can employers afford the rising costs of employee benefits?” should, without hesitation, be “YES.”
And it can be.
With the right strategies and mindset, employers can effectively find actionable measures to take that will make these rising costs more manageable.
Here are 5 proactive measures you can take to effectively manage the current costs associated with employee benefits.
1. Transparency wins
In an age where information is at everyone's fingertips, dodging the topic or obscuring truths can lead to distrust. Here are a few strategies to combat this:
Open Dialogue: Organize regular town hall meetings or informational sessions. This helps in setting the right expectations and quelling any rumors or misconceptions.
Leverage Expertise: Collaborate with your benefits broker or consultant. Their expertise can clarify the reasons for cost changes, ensuring the information relayed to employees is both accurate and comprehensive.
2. Share the load
It might be tempting to pass on the full brunt of increased costs to employees. However, this could be counterproductive in the long run. Instead, consider the following:
Reevaluate Contribution Strategies: A slight increase in the employer's contribution can ease the burden on employees. It's an investment in employee satisfaction and can significantly impact retention.
Tiered Systems: Consider introducing a tiered contribution system where employees can choose between different levels of benefits based on their needs. Having only one plan selection limits the employees’ options. You can add basic to rich benefits plans which have different cost options that may be more affordable to the employee.
3. Boost the benefits
Sometimes, the perception of value can be enhanced without a significant financial outlay. You can add value to your benefits without incurring huge costs using approaches like these:
Life Insurance: Offering a company-paid life insurance policy can be an affordable addition that provides employees with added peace of mind. It also illustrates that you are thinking of a benefit that could go towards their loved ones.
Wellness Programs: Initiatives like gym memberships, mental health support, or even regular health check-ups can make employees feel valued and cared for, contributing to overall well-being and productivity. Many medical plans already have wellness incentives attached to them. Ask your broker what your employees’ options are and share them, so they know they have access to these programs.
4. Reduce excess spending
It's an apt moment to scrutinize the company's expenses to identify areas of potential savings. A few common ways to better budget for benefits include:
Audit Regularly: Periodically review subscriptions, services, and contracts. Are there redundancies or services that no longer provide value?
Competitive Bidding: Regularly invite competitive bids for services like IT, utilities, or even office supplies. Market competition can yield cost savings.
Go Digital: Embrace digital solutions. Automation, for example, can lead to significant cost reductions in administrative tasks. Again, ask your insurance broker if they can provide a digital solution for you. There may be no added cost associated with this.
5. Keep Perspective
In the world of business, challenges come and go. The key is to remain adaptive and forward-thinking. So, be proactive, get creative, and — with the long-term success of your business in mind — focus on the satisfaction of your employees.
Historical Lessons: Economic downturns and market challenges aren't new. Reflect on past challenges and the strategies that worked.
Innovation: Encourage a company culture that values innovative thinking. Sometimes, the best cost-saving strategies can come from employees themselves.
Focus on the Long-Term: Short-term fixes might provide immediate relief but consider the long-term implications of every decision.
Takeaway: The value of employee benefits outweighs the rising costs
Rising employee benefits costs are undeniably challenging. However, with strategic planning, open communication, and a proactive approach, employers can navigate these challenges successfully.
The focus should always remain on providing value to employees, ensuring their well-being, and fostering a culture of trust and collaboration.
Need assistance with your employee benefits? Combined can help!
If you are here, you understand the importance of employee benefits to your business — you want to find a way, despite seemingly insurmountable increases in cost, to offer a benefits plan capable of not only recruiting but also retaining your irreplaceable employees.
But, again, numbers don’t lie and the rising costs of benefits are discouraging.
We are here because we want to help you overcome the financial challenges that the current economic landscape has placed on offering employee benefits.
At Combined, our benefits team has assisted countless employers, just like you, and we are confident that we can find a solution to your employee benefits concerns.
Schedule a meeting with a benefits expert!
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.