A variety of factors are influencing and changing the landscape of compensation and benefits today. With the uncertain economic outlook, employers continue to be asked to do more with less and continue to look for new ways to contain labor costs. The millennial generation, are very worried about running out of money in retirement and they are focused on their long term financial security. Boomers are working beyond the age of 65 and appreciate the benefits that their employers provide – even at a higher cost. Employees today are less loyal then in the past, impacting employee retention and organizational competitiveness.
Since the economic crisis began in 2008, salary increases fell to historic lows and still remain low. Many organizations have reduced overtime and cut staff to levels where any further reductions to payroll expenses are largely exhausted. Employers are looking more toward employee benefits for future cost cutting. As for compensation, current base salary increases still hover around 3 percent. Though the number continues to drop, there are still a few organizations implementing salary freezes. Overall employers are now trying to finding a balance between cost containment and employee retention. Many employers are shifting to pay-for-performance to drive compensation decisions. There is also a stronger focus on employee retention. Employers are offering additional retirement and benefit choices and restructuring their salary scales adding more differentiation between grades in an effort to motivate employees. Incentive compensation continues to be important and organizations rate this among the top factors impacting total compensation decisions.
The face of employee benefits is also changing impacted by the same factors as compensation but also significantly impacted by the Affordable Care Act. Employers are implementing more wellness benefits in hopes of reducing costs and boosting productivity. High Deductible Health Plans (HDHPs) are increasing in popularity, driven by the need to manage increasing financial obligations. Preferred Provider Organization (PPO) plans are still the most common option but HDHPs are now the second most prevalent plan ahead of Health Maintenance Organizations (HMOs). Other core welfare benefits including dental, life, short and long term disability and vision insurance remain strong.
Defined contribution (DC) plans continue to be the dominant retirement savings program and automatic enrollment continues to gain popularity. Defined Benefit Pensions are slowly disappearing. Most employers continue to offer matching contributions in their DC plans.
Recent surveys show the following benefits and perks are significantly down and some have almost disappeared:
- Company Sports teams
- Take your kid to work day
- Temporary relocation benefits
- Tickets to sporting and other events
- Floating holidays
- Long-term care
The following are becoming more popular:
- Wellness incentives
- Onsite fitness classes and/or health and life coaching
- Coverage for mental health, laser vision, and acupuncture
- Same Sex Domestic Partner Benefits
- On site mothers/lactation room
- Paid time off plans
- Employee referral bonus plans
- Retirement and individual investment advice
- Traditional voluntary benefit plans such as supplemental life
- Non-traditional voluntary benefits such as group legal plans
Maintaining a competitive advantage and being able to retain key employees is increasingly important. At WageWatch our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online .