Health+Benefits Vital Signs the June 2023 issue

Employers Cutting Benefits, Retaining Family Care

Q&A with Virag Khara, Head of Care for Business, Care.com
By Tammy Worth Posted on May 28, 2023

Khara discusses Care.com’s 2023 Future of Benefits survey of 500 U.S.-based corporate and human resource leaders. According to the report, a vast majority of employers plan to recalibrate benefits in 2023, with almost half expecting cuts.

Q
In this year’s survey, only 9% of respondents reported planning to increase their benefit offerings. How many are expected to be cutting and where?
A
Forty-seven percent said they would be cutting their benefits. The economic environment is shifting, and human resources professionals have to sharpen their pencils. It is not surprising to some extent that employers are really focused on making sure they are prioritizing benefits that improve ROI. That’s the underlying message I take away from this survey: if a benefit has a strong ROI and measurable impact on key metrics like retention of talent, those are the benefits employers will prioritize. If there are benefits that don’t, that is where you will see trimming taking place.
Q
It looks like cuts are being made much more heavily in sectors like food and hospitality, retail, manufacturing and construction. Is that common?
A
That is fairly typical, unfortunately. It’s the lower-margin industries that don’t have a lot of room to operate financially. Those are usually the first ones to pull back on things like benefits, especially when the economy shifts downward.
Q
Employers reported the main objectives of their benefit plans are to increase productivity (53%) and retain employees (49%). This was the same in 2022, correct?
A

Yes, most executives really focus on productivity with their benefit plans. They want to know how to do more with less.

And with retention, there is such a cost when you have to replace people. Attrition is one of the big drivers of increased costs because, when you have turnover, you have to hire someone new and onboard them. Anything employers can do to reduce turnover has a material impact on a business. That’s especially true among employees who have the most expertise, the most institutional knowledge of a company and the most senior positions. That’s where the real costs of attrition are. It costs about 20% of a worker’s salary to replace that person, and for a manager it can be up to 150%. It’s not just the direct cost, but that’s factoring in time to bring someone on and train them and all of those hidden costs.

That’s the underlying message I take away from this survey: if a benefit has a strong ROI and measurable impact on key metrics like retention of talent, those are the benefits employers will prioritize. If there are benefits that don’t, that is where you will see trimming taking place.”
Q
When asked whom their benefits packages were designed to serve, employers seem to be focused more on salaried corporate employees (60%) than hourly employees (24%). Do you think this is a good idea since, according to the report, more than half of U.S. workers are nonexempt.
A
From our standpoint, employers are making benefits available to the whole workforce; that’s what we are seeing in our customer base. Many of our largest customers have a lot of hourly workers. Healthcare systems, in particular, are one of our core industries. Nurses are in short supply across the country and generally tend to be women, and women tend to be caregivers. What happens if a nurse can’t come to work because of a caregiving responsibility? There is a real business impact to a healthcare system having to cover overtime or pay travelling nurses or delay procedures. Healthcare systems get this intuitively and understand the need for benefits among all populations. We see that same kind of thing play out for airlines, retail, manufacturing—many industries have that same type of dynamic—and we are seeing employers get it and extend benefits to their full workforce as a result of that.
Q
Nearly one third of the employers surveyed said they planned to cut mental health benefits. Was this surprising after so many increased them during the pandemic?
A

Yes, especially post COVID. The two categories of benefits many employers were prioritizing the most during COVID were family and mental health.

One possibility is that, for many employers, COVID was an acute time in our collective lives. So many aspects of our lives were changed, and the focus was definitely on mental health during that time. But that seems to be receding, and maybe employers assume things are going back to normal now so those behavioral health benefits are not necessarily needed anymore.

But in family care benefits, that hasn’t been the case. Part of the reason is because, in general, childcare has continued being difficult for many families. Childcare centers that closed during COVID haven’t reopened. And there is a massive shortage of caregiving in this country; it is fundamentally broken today. Employers recognize that and understand that family care benefits are important because these issues are taxing on their employees.

Family care benefits are no longer a nice-to-have but are a must-have. It’s interesting to see that trend continue post COVID. Many employers are still wanting to use these benefits to retain their best workers.

Q
Why do you think family care continues to be popular when other benefits are getting cut?
A

They appear to be surviving some cuts that are taking place more broadly. I think that is because their ROI has been proven again and again. Family care benefits have a very clearly measurable impact on key business priorities. Our research, and some that others have done, shows that employers are losing billions when people can’t participate in the workforce and that is often due to people taking time off to be caregivers. A study by Marshall Plan for Moms found that 69% of female job seekers would be more likely to choose an employer who offered on-site childcare or childcare benefits. And 83% said that benefit would help them decide whether to stay or change employers.

When you look at the category as a whole, it is clear that, for most employers, family care benefits are a critical must-have. In the industry, we think of healthcare and dental as must-haves, and then there are a whole bunch of nice-to-haves like commuter benefits, work from home, food assistance and family care. Those are lumped together. But over time, especially during COVID, I think some of the latter ones are becoming required. There is a recalibration taking place on how employers are spending on benefits and childcare. Senior care, especially, is in high demand, and employers are investing in it.

Q
What kinds of benefits might employers offer as part of a senior care package?
A

These benefits are very similar to childcare benefits. It’s about providing options that enable employees to take care of the seniors in their lives. An example would be, like for children, you have backup childcare. You could offer backup adult care. If someone is taking care of an aging person and their regular caregiver has fallen through the cracks, some employers provide a subsidy to find backup care for that senior.

One of the other things we see an increasing interest in is helping employees navigate the senior care landscape, if you will. If you have an aging parent and you’re not quite sure what comes next—should they go to a nursing home, stay in their own home or move in with you—there is a high-tech concierge type of service that employers and employees both really value. It helps understand the pros and cons, costs and benefits, and which facilities you should look at.

Q
Another interesting finding from the study is that a lot of Gen Z and millennials in the workforce are caregivers. Should employers be aware that senior care benefits could be important to a broad swath of the workforce?
A

For the first time in U.S. history, we have four generations in the workforce at the same time. We do have companies today that have boomers, Gen X, Gen Z and millennials all at the same time. For those boomers and Gen Xers, they certainly have seniors in their lives that need that care. But we think that, in some instances as well, Gen Z is contributing to that. It’s a combination and dynamic of everyone being in it together, and we are all contributing to the overall focus of family care.

With all of these groups in the workplace, the older generations are the more senior, tenured employees in an organization, so they are the costliest for an employer to lose. These employees have the most experience and knowledge. In the case of senior care benefits, this is where there will be the most need and what will help keep this workforce in place.

With the younger generations, they are having young children or starting families now. That dynamic is contributing to the need to provide family care benefits focusing on childcare assistance and those kinds of benefits. Employers have to understand the entire range of options.

Q
Should all kinds of employers be considering family care benefits?
A
We feel confident in the value proposition because there is a strong ROI. Employers should look for a vendor who works with every customer to monitor their engagement and utilization and to review metrics. We discuss strategies for things that are working well, or not, and create tactical action plans to make sure the benefits are widely utilized. We have marketing campaigns and on-site events. In benefits, as a whole, you want to make sure employees are aware of those that exist and, when the need arises, be able to make that association in their mind. I have this need, I know of a benefit my company has, and I’m going to use it.
Tammy Worth Healthcare Editor Read More

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