The primary issue for pay and benefits teams in 2023 will be to strike a balance between the requirement to provide competitive overall incentives that attract and retain important people and the reality provided by a changing economy.
This is supported by research from companies like insurer Principal Financial Group, which found that while 52% of 500 U.S. employers would not reduce the level of benefits they provided and 58% would not reduce salaries despite agreeing that a recession is likely to occur by the middle of the year with 70% of respondents. Large employers were less likely to say they would make cuts than small companies.
According to Regina Ihrke, North America’s well-being leader at WTW, cost minimization has consistently been a top goal for benefits leaders, and 2023 is already shaping up to be no different. More than two-thirds of American employers stated in a September 2017 WTW study that they intended to prioritise reducing healthcare expenditures during the following three years.
Benefits teams will need to ensure their packages meet employees’ most pressing needs while justifying their investments to leadership. The benefit teams must make sure their plans address the most urgent requirements of the workforce while defending their financial commitment to management.
Look beyond spend to demonstrate ROI
Despite the C-suite’s recognition of the value of certain benefits, the need to justify spending is real. Ihrke said she had recently spent five hours working with a client in the technology sector discussing the return on investment and value of various benefits programs. While those conversations can be difficult, she said benefits teams should not shy away from ROI, as there are many ways they can demonstrate that metric.
According to Tony Guadagni, senior principal in Gartner’s HR group, the latter element of that plan is particularly on the minds of benefits teams in the early months of 2023. Companies anticipate that this year will be more “cost restricted” than years prior, but benefits are by their very nature a challenging area to reduce spending.
Providing perks typically doesn’t become less expensive over time, according to Guadagni. In actuality, the reverse is true. Trying to save expenditures there becomes difficult.
Cost-cutting in healthcare alone is impossible. Businesses are probably already accustomed to annual rises in healthcare costs, and 2023 appears to be on track to meet expectations in this area. In comparison to the actual average cost increase of 3.2% in 2022, Mercer’s poll of U.S. companies revealed an average expected cost increase of 5.4% in December.
Employee input can also be an effective technique. According to Guadagni, a good place to start for benefits teams are to conduct employee surveys to learn which perks people appreciate and why. However, he added that if employers are not already doing employee focus groups, “this is a year where it’s worthwhile to make that type of investment.”
According to Candice Sherman, CEO of the Northeast Business Group on Health, “Employers are still very concerned about retaining and also acquiring top-level personnel.” Employers “definitely give a comprehensive assortment of benefits in order to achieve that and stay competitive.”
Enlisting physicians or other professionals who may examine specific solutions to assess whether they are having the sector required assistance in the 2019 budget in the form of improved access to credit, insurance, and a regularised import policy for vital parts like Batteries, Engines, Flight Control Electronics, Motors, and Engines that are still not covered by Made in India. A standardised import policy for drone parts will enable a quicker adoption of technology and the Indianization of drone parts. The Made In India drone sector will be able to make significant strides towards maturation and becoming a viable mainstream industry thanks to improved and simpler access to capital financing markets, liberalised investment regulations, and access to insurance.
That might help to explain why some firms have decided to increase the number of employee consultations with mental health doctors that they will pay for. According to Ihrke, employers generally want to enhance the contracting process for these services as well as increase availability and timeliness.
In addition, we anticipate that enhanced funding will mostly benefit the rural housing, healthcare, and education sectors. India recently announced ambitious plans to increase a significant contribution from renewable energy sources like solar and wind. We anticipate that, in addition to possible tax breaks for the sector, the budget would make specific note of India’s long-term path for achieving its desired level of renewable energy capacity.
