Gallagher 2020 Benefits Strategy & Benchmarking Survey Shows How Organizational Priorities Pivoted from Talent Attraction and Retention to Business Continuity, Safety and Compliance in the Wake of COVID-19
COVID-19 and the economic downturn have forced U.S. employers to examine cuts that were considered unthinkable at the beginning of the year, according to Gallagher 2020 Benefits Strategy & Benchmarking Survey. The study gathered data from 3,921 employers from December 2019 to May 2020, as well as a series of employer pulse surveys conducted between April and July 2020. Together, the data from these reports captures an in-depth overview of the effect the pandemic is having on hiring as well as employee benefits and compensation.
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“Over the last decade, a tightening labor market led employers to offer a robust holistic rewards strategy to win the war for talent, but the pandemic has forced decision-makers to closely examine their benefits and compensation strategies,” said William F. Ziebell, CEO, Gallagher’s Benefits & HR Consulting Division. “Employers are reviewing their benefit offerings to make sure they address employees’ evolving needs and, at the same time, fit within their organizations’ budgets.”
Gallagher’s research found a significant number of employers plan salary freezes for management and executives (43 percent) and non-management personnel (42 percent) to preserve jobs in 2021. In addition, following the viral outbreak, more than 8 in 10 employers (83 percent) have more strongly emphasized the role of specific benefits within total wellbeing, including emotional wellbeing (65 percent), leave policies (47 percent), medical benefits (39 percent) and physical wellbeing (36 percent). The Gallagher report is a tool designed to help employers identify and prioritize a new approach to total wellbeing, as well as effectively communicate significant changes to 2021 benefit programs during this fall’s upcoming open-enrollment period.
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Opportunities Exist for More Effective and Efficient Benefits Strategy
Given the level of economic uncertainty, it’s crucial for employers to evaluate their framework for decision-making to support recovery and strengthen resiliency. This includes examining their benefits and compensation strategies to ensure the total wellbeing of the workforce — employees’ physical, emotional, career and financial wellbeing — is supported at cost structures the organization can sustain. This could mean eliminating underutilized benefits, identifying new offerings and cutting unnecessary expenses to optimize the organization’s investment in its people.
COVID-19 did not force employers to make mid-year adjustments on their coverage. In June 2020, nearly 9 of 10 employers (86 percent) had not reduced health plan benefits and didn’t intend to during the pandemic. Additionally, almost 8 of 10 organizations (79 percent) expected to continue the same health coverage in 2021. By July, 63 percent of employers anticipated their healthcare expenses for 2020 would either align with projections (40 percent) or be lower (23 percent), in large part due to avoidance of elective procedures. However, in many parts of the U.S, the pandemic is spreading and it’s not yet clear whether health insurers will reduce, maintain or even increase premiums heading into 2021.
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