National brokers stress need for employee feedback
“Most companies standardize their offerings to force-fit
bundles to meet generalized employee populations.
AI and technology hold the promise of true personalization.”
—Gordon Frost
Global Rewards Leader
Mercer
By Thomas A. McCoy, CLU
Higher wages are the strongest incentive for most workers to stay with their current employer or join a new one. So, business owners try to stay attuned to the direct compensation trends in their industry, especially the practices of direct competitors. Over the last few years that’s been especially important, as the post-pandemic employment market tightened and general inflation rose.
Across all industries and geographies, Willis Towers Watson (WTW) completed a study in June which found that employers worldwide are projecting their direct compensation costs to rise by 3.9% in 2025. The data includes responses from 1,888 U.S. employers.
A 3.9% compensation increase in ’25 would represent a slight drop from the overall median pay raise of 2024 (4.1%) and a further decline in the median pay raise from 2023 (4.5%), according to WTW’s Salary Budget Planning Report. The current study also found that 38% of employers reported having trouble attracting and retaining talent in 2024 compared to 57% in 2022.
Lauren Mason, partner and U.S. workforce solutions leader at Mercer, told a recent Mercer webinar audience, “The labor market is still strong and the labor shortage is likely to persist, partly due to the large number of baby boomers retiring.” The bottom line, she said, is that it’s a “normal job market, comparable to 2019.”
Yet, even as the overall supply of job openings and applicants becomes more balanced, workers today may have altered their view of what they value in their compensation package. Benefits executives at WTW and Mercer stress the importance of surveying employees about their benefits preferences.
In an essay at the Mercer website, Gordon Frost, global rewards leader at Mercer, said, “Many companies go straight to benchmarking when reviewing their rewards program, focusing on whether their retirement plans, health and wellness benefits and compensation are competitive with what other companies offer. But they skip the process of tuning in and listening to employees to see what part of the pay programs resonate most with them (or which parts are not as highly valued).
“They will invest in the external analysis, but won’t balance it with the internal analysis of what matters most to the people they are trying to attract and retain,” he said.
Tuning in to what employees say about their compensation and work practices can provide valuable insights, Frost said. He pointed to an example of a large retail organization experiencing high turnover among its predominantly immigrant employees working at a distribution center. The company assumed the turnover was due to working conditions at the facility.
By listening to employee feedback, the employer found that what they wanted was more overtime opportunities. Existing union agreements favored senior employees for overtime, leaving new hires without access. “Through contract negotiations and increased flexibility in overtime allocation, the employer was able to improve its retention without escalating total rewards spending.”
Frost suggested the following tools employers can use to gain a better understanding of what matters most to employees: workforce analytics, employee engagement data, focus groups, conjoint surveys, employee preference analytics, and benefits plan enrollment and usage data.
WTW’s report confirms that employers are doing this kind of research. Lesli Jennings, WTW’s North America leader of Work, Rewards and Careers, noted that 51% of companies in their Salary Budget Planning Report that made changes to compensation programs or workplace flexibility have undertaken a compensation review for specific groups.
“In light of cost management concerns, employers are taking more of a holistic approach to their reward programs, factoring in bonuses, long-term incentives, and health and wellness benefits,” Jennings stated at the broker’s website. “However, a more targeted review of specific employee groups could allow for greater support for those with in-demand skills or those lower salary ranges.”
Mercer’s webinar included a presentation from Mike Galat, vice president of employee services for Big Y Foods, a family-owned supermarket chain with 10,000 employees, operating 75 stores in Massachusetts and Connecticut. He explained why, coming out of the pandemic, it was particularly important for management to determine that their compensation program was aligned with their employees’ needs.
“We were considered essential workers during the pandemic. Our employees were tired, and we were short-staffed at times. It was a challenging two-plus years. Our employees range from 16 to 85 years old, so meeting the needs of all of them isn’t easy.
“We did an ‘unmet needs’ survey two years ago. What we found was that their three top concerns were financial well-being, mental health challenges, and work-life balance. So, we had to try to figure out ways to address those needs.
“Looking at the financial well-being needs, we were able to raise the pay of 70% of our frontline workers. Further, although we maintain a 401(k) plan with a generous match, we decided we needed to do more,” Galat explained. “So, we introduced a personalized financial solution for employees, giving them one-on-one coaching on a variety of topics.
“In the first two months since we offered the financial solution, 120 employees registered for it, which resulted in 63 conversations with a financial assistant; and 100% of those who have used it said they would recommend it.”
Big Y responded to the employees’ mental health concerns by enhancing its Employee Assistance Program (EAP).
“We found out one other thing from our survey,” Galat continued. “We have always had a great connection between our support center and our stores.
But we lost some of that during the pandemic. So, we really focused on getting our leadership team, including the CEO, COO and vice presidents, into the stores to meet with employees on a regular basis to hear about their concerns and discuss how we can address them.”
Finally, Galat emphasized, “Em-ployees need to know about and un- derstand their benefits, which isn’t always easy for them. One way we convey the features of our benefits to employees is through our internal communication platform. On Wednesdays we highlight one of the benefits we offer (we call it ‘We care Wednesday’), and it lists online everything about the benefit, so all our employees can access it.
“By regularly keeping these benefits in front of them, we encourage employees to be aware of what they have and questions about those benefits.”
Humana recently undertook a reexamination of its total rewards program, which included a survey of its more than 65,000 employees. Devann Steele, vice president, enterprise compensation, Humana explained to the Mercer webinar audience, “We wanted to find out what they valued most. More than 30,000 employees responded to the survey.”
Humana also surveyed the leaders of its management teams, the individuals reporting to the CEO, to find out what their primary concerns are about total rewards—compensation, benefits and employee well-being.
“We have a wide range of business segments—including Medicare, Medicaid, primary care, home health care, and pharmacy. Each of these has different needs and competitors, so we had to be mindful of those differences. So, we implemented some tweaks to our rewards programs based on these differences.
“We also talked about our ‘cornerstone benefits’—something everyone in the organization should have at the same level, such as bereavement leave. And what other programs should everyone have, but the level could change—such as our PTO program.”
Among the actions Humana took as a result of the feedback from employees were enhanced parental leave, reinstatement of service awards and adding Juneteenth as a holiday in 2025.
Frost of Mercer pointed out that within any workforce there are different employee segments with different needs and priorities. Tuning into those needs and priorities can help employers find the right mix of rewards for their population.
Yet, he said, “Most companies standardize their offerings to force-fit bundles to meet generalized employee populations. AI and technology hold the promise of true personalization. Imagine being able to genuinely offer each person a customized, targeted and meaningful total rewards package supported by predictive AI tools to help them make the most of what’s available and sustain them through specific periods of their lives.”
The author
Thomas A. McCoy, CLU, is an Indiana-based freelance insurance writer.
