With an eye toward better meeting the needs of a workforce that’s growing ever younger, more Fortune 1000 employers are poised to make significant changes to their benefits strategies, design, and delivery this year. All in all, “modernize” and “customize” will be the words to watch as 2017 marches on.
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That’s the message behind a trio of top trend-watching reports that tracked the insights and priorities among Fortune 1000 leaders. Fueling the changes? The shift in focus to Millennials is quite clearly leading the charge.
Of course, the generational pull is undeniable: Millennials (aged 18 to 34) have surpassed Gen X (ages 35 to 50) to become the largest segment of the U.S. workforce at 36 percent and 31 percent, respectively, according to the Bureau of Labor Statistics. By 2020, Millennials will make up 43% of the workforce, compared to Gen Xers at 30% and Baby Boomers at 23%.
The Millennial Mindset
In taking a deeper dive into the Millennial viewpoint on employee benefits, experts say this demographic group values such offerings a little differently than the rest of the crowd.
For example, Millennials have grown up being able to make more personalized choices all along, so they’re less apt to be interested in static, fixed benefit plans, notes MetLife’s latest U.S. Employee Benefit Trends Study. Instead, Millennials strongly favor being able to pick through a menu of benefits options that they can fashion to fit individual needs—ideally with some technology-enhanced ease, the report finds.
So, even as a new administration in the White House sets the stage for potential change in healthcare benefits, companies are keenly aware of the immediate need to work on modernizing the entire benefits arena, notes a new analysis by global advisory firm Willis Towers Watson of proprietary survey data and client insights. The mission: Attract and retain this young talent population by letting choice drive benefit programs and improving the technology to enable it.
Is it a “build it and they will come” strategy? Kind of, says Frank Giampietro, managing director of group exchanges at Willis Towers Watson.
“Another factor driving employers’ efforts to modernize benefits is the availability of a broad range of innovative technologies and tools to help employees select benefits and then build and manage personalized benefit portfolios,” he says. “We expect these efforts to dramatically reshape how benefit programs are designed and delivered in the coming years.”
Custom, Not Cookie-Cutter
Indeed, supporting that direction is another new study by the LIMRA Secure Retirement Institute, the Windsor, Conn.-based insurance and financial services research organization. The study of 2,563 employees, dubbed Employee Benefits Face Off, finds that 73 percent of them would like the ability to customize their workplace benefits to suit their individual needs. This would mean letting them divvy up the monetary equivalent they receive from employers between such things as vacation days, health care, retirement savings, disability insurance or educational programs.
This strategy, popularly known as a “benefits wallet,” gives each employee a certain amount of money annually to allocate toward the benefits they want. In a sense, it’s a bit reminiscent of the old-style cafeteria approach – with modernized offerings and expanded freedom of choice.
“With four generations in the workplace, designing an attractive benefits package for all employees is challenging,” says Michael Ericson, an analyst with LIMRA Secure Retirement Institute. “As a result, employers are considering offering their employees the ability to control how they allocate their allotted money across their benefits.”
Why is this singular focus so important? Millennials rank compensation and benefits as their top priority when considering a new job or staying with their current employer, according to the 2017 MRINetwork Millennial Hiring Trends Study by executive search and recruiting organization Management Recruiters International Inc. So, there are good reasons to reexamine the ways in which you structure your benefits lineup, experts say.
In tomorrow’s Advisor, we’ll outline the three main trends impacting Millennial-specific benefit design.