Employee Benefits Strategies

What Benefits Should You Offer?

To maximize the effectiveness of benefit plans, employers must develop a clear understanding of two things: the needs of current and potential employees, and how benefit objectives fit within the overall business strategy. Both employers and employees worry about increasing costs and the need to allocate finite resources toward an expanding set of discretionary costs. Employees look to their employee benefits as a financial safety net for many potential life events.

Employee demographics

Both employers and employees have experienced the dissolution of the old social contract that implied employment for life and provided a sense of stability in the workplace.

Family dynamics are changing as well, and employers seem to be adapting by adjusting benefits packages to accommodate non-traditional families.

With corporate downsizing, outsourcing, buyouts, and shifting demographics, the workplace is not what it used to be and, as such, the source of benefits can be a moving target. It may consist of one's workplace, a spouse or partner, an independent purchase, or some combination thereof. In fact, it has become common for families to ask, "whose benefits should we use?" in today's world.

As a result, the employer-employee relationship is being reshaped. Today's employees are less intimidated by a job change, while employers are becoming more comfortable with nontraditional employment arrangements such as flextime, job-sharing, and working from home.

Baby Boomers. The Baby Boomer generation is getting older, and more and more are retiring. Decisions on benefits and retirement savings have been increasingly put in employees' hands over the last few decades. This responsibility has not made employees feel secure and many believe that they are behind schedule on saving for retirement.

Also, as people grow older, they tend to become concerned about their health. This likely increases the Baby Boomer's desire for generous health care benefits.

With the aging of the population and other demographic changes, the needs of the workforce have grown increasingly diverse.

Diversity. The American workforce is more diverse in racial and ethnic composition today than ever before. Today, different ethnic groups are more likely to retain their cultural heritage and desire different benefits. This has also created a need for flexibility in benefits choices.

American families. In 2025, the percentage of married-couple households was at 47%, reflecting a decline that has been ongoing for decades. At the same time, unmarried partner households have been on the rise according to the U.S. Census Bureau. As a result, more employers are offering domestic partner health benefits.

Other factors. Other external factors impacting benefit plans are the information revolution and the global economy:

• Information revolution. Technology and lifestyle changes have increased demands for flexible schedules and remote work. Societal changes have broadened the definition of "family." The aging of the U.S. work force is placing new demands on employee benefit programs. In this environment, success in strategic benefits planning can be achieved only through personalization, customization, and flexibility of employee benefits.
• Global economy. Employers are becoming more international in scope. This raises a whole new problem for benefit plans: having facilities, and therefore employees, in countries that have laws and expectations different from those in the United States. Our course 91: Multiple Country Compensation Programs, covers this aspect of benefits planning.