Episode 31: Trends in Employee Benefits

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Executive Vice President and General Counsel of the California Chamber of Commerce. Back with us on the podcast today is Vinnie Catalano, Senior Vice President with Gallagher Benefit Services. Vinnie was on the podcast previously to discuss that time of year. We all look forward to that being open enrollment. Vinny is here today to discuss some emerging trends in the world of employee benefits. Vinny, welcome back.

Thanks, Erica. How are you doing today?

Doing great, thanks. When we talk about employee benefits, there's a lot of different ways that employers can work to offer new and different types of benefits outside of the realm of just your traditional health and dental. As we talked about previously when we ended the podcast last time, we were starting to identify some of those other things out there, other creative benefits, so to speak, that employers could offer employees. I thought it would be a good idea just to dive in a little bit deeper, talk about the different types of benefits that are out there that can help employers attract and retain workers in today's competitive job market.

Perfect, Derek. Thanks for the opportunity. Again. Gallagher does an annual employee benefit survey. Basically, I think this last time we had over close to 5,000 employer responses throughout the United States across multitude of industries. We are pinging employers in a very deep way, understand what they're doing in many areas, you know, core benefits, voluntary benefits, non traditional benefits, et cetera. And so we're trying to see, you know, what are the national trends and what are the also the industry trends that are going on by industry. Because then once we survey all these 4,000 plus employers, we then do data cuts by industry. And I think we now have probably close to 15 different industry data cuts that we take the data and divide it amongst. But, you know, a lot of what's going on, as we talked in the last podcast, is that the big challenge of retention, you know, recruiting and retaining employees through multiple generations. You have five generations of people in the workforce, you have people not retiring. Even though we keep talking about this silver tsunami, you know, a lot of them aren't going away, you know, and they're sticking around until their mid to late 60s. And then, you know, you have a younger generation that is looking up saying, you know, what does my career look like? And why don't you all just leave, please, so we can kind of take over. So employers are struggling with how do we create benefit programs that work? You know, one of the things that came out, this was probably three, four or five years ago, five years ago, probably when they started, was the notion of this private exchange, Right. Let's give employees a defined contribution of money. Okay, I'm going to give you 500 bucks a month for a single person, or say 1,000 for a family. And now I'm going to give you as an employer a choice of a multitude of things. I'm going to give you three or four health plans to choose from different levels. Some may be very traditional rich benefits, some may be high deductible plans. We may offer different levels of dental, vision, life, disability, any number of voluntary benefits, and you can shop for your own plans. And now, I thought back then this was brilliant. This was the most amazing thing ever. We can create structure via technology, via communications to create a program that was viable for anybody to pick what they wanted. I just read this the other day about. Okay, organizations want to customize benefits based upon generations and there's no real good vehicles to do that anymore. I mean, there were, there's technology, but now employers need to get back to looking at that.

When we talk about these varying generations and of course, the things that are important to one generation is no longer important to another. We heard so much about the millennials and now we have the next generation coming in. Of course, there's always adaptations that need to happen. And I think that you made a very good point where we have such a vast spectrum of employees, from the 60 plus year olds to the new ones coming in out of college, 20 year olds, and what they want, what they need, and what their view of the workplace is is a little bit different. I know one of the things we were talking about is the fact that there's a higher turnover than there used to be. There's more mobility than there used to be. And of course, this is a real challenge for employers who are training their employees, planning out succession plans, and who's going to move to the next level. What are some things that we're seeing or that you're seeing, far as trends are concerned? And how can employers try and retain some of these employees? Or is it more of we've got to change a little bit about how we're viewing employee turnover.

Right, exactly. So 10 years ago, we started talking about wellness. Okay. And how will wellness affect the workplace? And how do we use wellness as a vehicle to lower costs? Well, let's just say that didn't work out so well. Organizations have always struggled with using the wellness vehicle as a way to curtail healthcare costs. Now that has evolved into the word well being. And so wellbeing now not just applies to physical, well Being, we're talking about emotional well being, career well being, financial well being. So we're trying to look at employees now from a more holistic perspective because younger generations are worried about their financial health. I mean they have student loan debt to worry about. They want to be able to set aside money for retirement. And they are the largest participants, oddly enough, in 401k plans. I mean younger people are putting money away because they were raised in the financial crisis.

That's interesting.

They are finding, you know, they are really participating and want to participate in these financial secure vehicles. And now in the state of California, there's, you know, new law coming in that employers with two or more, by the time, you know, this is now in the early 2000s will have to provide either some type of a retirement plan for employees to participate in or the state will that available to them. So the financial wellness side, the career side is really a mixed bag. Career well being, how do employers provide that person with a path? People want to see a path. They want to see a path to success. And if that employer can provide long term growth and a strategic plan for that employee to say, okay, well you're here today, in three years you'll be here, in five years you'll be there. People want to see a path. And they're also, as you well know, very impatient about that.

Yeah, I think as a society as a whole, we've all become impatient. The phones don't help us. You have instant messages and instantaneous information.

Everything's instant.

I like what you said and it resonated with me. As far as it's no longer about wellness, it's about well being. And is it fair to say that it's no longer about the 10,000 steps that you're going to take every day to more of how much are you putting into your 401k? Are you maxing out what's the employer match? How are there ways to ensure that you are financially secure? Without forgetting, of course, personal well being and health well being, but changing that focus.

Absolutely. And let's layer in emotional well being and mental health. I mean this is a topic that has become more and more important in the workplace. As we've seen, you know, so many things go on across the US People struggle with mental health. And so how do employees leverage things like employee assistance programs? If you are providing an employer paid life and long term disability program, that insurance carrier will provide a free EAP along with that. Or you can actually buy an EAP that would provide a number of Visits like at Gallagher, Interestingly enough, I guess the insurance industry is a stressful one. We have an EAP that gives us 10 face to face free visits with a counselor if we need it. And you know, you tap into those as you need them over time. But at the end of the day, people want to know they have resources to help them access mental health and other areas of their lives. And so career is one. And as I was chatting with HR consultant last week on this topic, you know, we're talking about the workforce, right? And you know, what do we do to provide career well being. And some employers are beginning to reframe, frame this structure of employment and saying, well, I have some employees that I consider long term players, okay, and we can invest in them. And I've got some employees, they're probably going to be here a year or two because I mean, certainly the turnover in the employment world is up as people look for any new opportunity. And so it's almost like employers in some cases should look at their own work as their own gig economy. I know I'm going to bring these people in for a year or two or three. I know I'm going to put them on X number of projects and then if, if at the end of a year or two there's more projects to put them on. Now I have a plan to move them to the next project. But this expectation that I'm going to hire an employee and keep them forever has gone out the window. I mean, that doesn't even exist anymore.

That's a really interesting thought and concept. Right now the economy is doing so well. We've had other guests on our podcast before to talk about ghosting and what's happening in the recruiting area because there's just more jobs out there than there are applicants and recruits. As I'm sitting here listening to you and having this conversation with you, I'm wondering how much the economy is impacting the trends that we're seeing right now and whether that might change as things start to slow down. Because we know at some point it is. We know that this isn't going to continue forever and we have history and cycles that demonstrate that. So I think this is all very interesting for employers and it's a very challenging time. I think there's a lot of unknowns and a lot of things that are very different from the way things were.

No, absolutely. And I want to throw a shout out to all the overworked, overemployed HR professionals out there. Right. Because they are working very hard on so many levels to keep the ship afloat. You've got people coming in the door, you got people going out the door. You've got to manage any sort of compliance complications that come up every year that the state and federal government are throwing at you. And then there's, of course, open enrollment. So that gets layered on the whole fund. Once that period, once there, we talked about previously. So in some ways, it would be wise to take a step back and really almost have a strategic planning session with themselves to look at their own organization and say, really, where is this? We know what's going to happen, or we feel we know what's going to happen in the next three to six months. But how do I engage with a consultant or how do I engage with people who can challenge me to think differently?

I think that's a very good point because that's what we have to do now. I think that there's a lot of thinking out of the box. When we talked about open enrollment in the previous podcast, as far as what are those other benefits that we can be offering and how to communicate to the employees, they see the investment that the employer is making in them, aside from the paycheck that they take home every two weeks or whatever that cycle. I think this is all extremely helpful. I think that it's extremely good knowledge for HR and employers to know about what the trends are right now and what other offerings that they could be providing to keep employees engaged and happy at work.

Yeah, I think a lot of it just pertains to everything we've talked about. I think you have to tap into what is the culture of your organization, what benefits are going to resonate with employees. But most importantly, frankly, how do we get people understanding what it is they have? Right. I mean, I'd say most employers don't do a great job at communicating what they already have for their employees, let alone layer on 27 more new benefits, you know, but you never know that one thing that may resonate with people again, whether it's a deeper match in the 401k plan, whether it's massages, you know, whether it's a Friday afternoon off, I mean, one of the interesting things that comes out of the MetLife survey, and MetLife also does a great survey every year for employers, and what I always enjoy about that is, you know, what employers think is important is different from what employees think is important every year. I mean, the data just shows that, I mean, you know, what are the have to haves versus the nice to have benefits and we see organizations offering so many different things. Some of the additions that even Gallagher offers us, you know, long term care insurance we can buy because we're a large property and casualty broker as well. Employees can buy, you know, umbrella policies, you know, for themselves through the organization. And they're just launching a new voluntary offering in the area of critical illness and other things. But when I look at it and I say, well, do I really need all that? Does that move my needle? Right? Does that move my needle? As an employee, nothing is going to move the needle unless it's all well communicated and that the employer has a strategy as to why we're doing all these things. Because the last thing the HR person wants to do is administer or do this. And so one of the areas that we work with employers on is developing truly a almost internal marketing communication strategy to help. So I mean, an open enrollment meeting is one thing. All right, but what are we doing all year round to engage the employees on all these factors of well being? How are we training them to be mindful of their financial health? How are we training them to be mindful of their mental health? I mean, I mentioned the, you know, employee assistance programs. They're very low cost, but also one of the least used benefits in an organization you might find on a percentage basis. 2% of the employees accessed the EAP last year. Well, I guarantee you more than 2% of the employees had personal problems and issues they could have used a counselor for.

Right, right.

And so it comes down to how do we educate? Educate, educate, communicate, communicate, communicate in a multitude of channels.

Again, I'm going to go back to your comparison of wellness to well being. I mean, I know a lot of employers out there when they were working on wellness and it was very focused on fitness and nutrition. There were emails, there was communication that went on throughout the year. Do you eat your fruits and vegetables? Did you get your steps in? Did you drink your eight glasses of water? There was a whole host of encouraging messages. And it seems to me that based on what we're talking about, it would behoove employers to flip the thinking. Maybe those periodic emails and messages are about, hey, did you look at your 401k? Are you investing? Are you aware of our EAP program?

Absolutely. And then there's other cool things people, number one, they want to be educated. What are we doing in the area of workforce development? What kind of elearn based tools are we creating for our employees to engage, to sharpen their knives? Okay? And people want that. Is there a tuition reimbursement program or a proper internal program for continuing education in areas that people should desire to improve in. How are we helping people manage their student debt? Right. And I'm not advocating that the employer needs to help forgive or pay off student debt, but there are programs out there that, that allow employers to point their employees to, that can provide them the vehicles to have some of that debt forgiven, some of that debt consolidated. So they're not looking at this bear of college, you know, loans as a way of stifling their ability to buy a home or to participate in their 401k plan or anything else. It's all one big balance sheet. And if you've got this monkey on your back of student debt, you know, how do you get rid of it? So there are some tools out there and organizations that are again, very low cost to the employer, but high value to the employee.

Well, and I think that's a great place to end today. Thank you again, Vinnie, for joining us. It was fabulous. Thanks for joining us at the workplace. Please comment, share and subscribe to Cal chambers podcast@calchamber.com.