Some 65% of organizations say they are reevaluating compensation and benefits offerings in light of COVID-19-related challenges, according to Mercer’s latest pandemic survey. We talked to Mercer’s Graham Pearce and Beth Umland to learn how benefits are changing and about the innovations that can help companies attract and retain talent in a tight labor market.


Is this reevaluation of benefits a permanent change, or will companies revert to business as usual?

Graham Pearce: The pandemic made organizations look differently at the risks (health risks and financial risks) inherent in the plans they offer workers. Notably, COVID-19 highlighted the need to be more responsive to the workforce during extreme situations. For example, what would happen to health insurance if people were on furlough? What default pension funds were in place, and were they unduly affected by the market gyrations? What guidance did employees receive about taking a long-term view so they didn’t panic and sell retirement savings at a big loss?


And so we see companies reassessing the benefits landscape through the lens of the company’s values and what the company wants to be known for. Organizations are asking themselves, where do we see our social responsibility start and end concerning workers and their families? Should we be offering a universal core minimum package?


Companies’ approach to benefits also needs to change more profoundly to reflect new ways of working. As virtual teams and remote workers become more commonplace, global delivery of HR services becomes necessary to support global workers. Previously, HR teams benchmarked benefit offerings against the local market. But the pandemic has brought forward the switch to regional centers of excellence — and this is challenging because many companies lack the HR support for centralized benefit design and governance. But it’s also hugely exciting because now HR decisions, like finance decisions, are made centrally. We see HR and finance working much more closely together at the global level, which is absolutely key to driving forward rewards and benefits strategies.


How can employers support workforce health and well-being in the medium to long term?

Beth Umland: Our Health on Demand survey of workers showed that employees who feel their employers provided good support during the pandemic are more likely to stay and feel more energized at work. Yet only 49% of employees globally rated their employer’s support as good or very good, so there is plenty of room for improvement. The good news is that over half of the employers (54%) surveyed this summer say they are enhancing well-being and mental health support with an eye to improving talent acquisition and retention.


The pandemic and its after-effects are far from over. Employers need to focus on ways to support workforce health and well-being over the next few years, including:

  • Behavioral health, including PTSD and substance use disorders. Assessment services and easy referral to help will need to be integrated into other clinical and wellness services. A new openness to virtual therapy will be key to better access. Supervisor and manager training can make a big difference in managing behavioral health issues in the workforce.
  • Post-COVID symptoms. The incidence of “long COVID” is 10%–35% even among mild cases, rising to 80% among the hospitalized. Those providing medical services will need to work with disability carriers to determine when people can return to work safely.
  • Flexibility, especially for caregivers. People appreciated being able to flex to meet family responsibilities or their own health needs. This need for more flexibility will continue post-pandemic. And while 71% of companies are introducing, or planning to introduce, more flexible working arrangements, it will take flexibility and creativity on the part of employers to look at hours and productivity differently.

The bottom line is that fulfilling people’s unmet needs is going to be critical for talent retention. Leading organizations are asking themselves: If open positions place a greater burden on those working, what can we do to provide support? Are our health and well-being benefits of equal value to everyone in the workforce? What can we do to encourage people to get back to preventive care?


What innovations do you see in benefits design and governance?

GP: We are seeing greater use of global partners to verify that minimum benefit standards are being met. One area of focus is the exclusions from risk benefit insurance (for example, medical, death and disability) and whether or not these exclusions stand in the way of companies’ ambitions on people sustainability (being a responsible employer and looking after people’s total well-being). Today, organizations are thinking hard about using their purchasing power to ensure exclusions are not contrary to their values — do our benefits indirectly discriminate against mental health conditions (for instance, self-inflicted injuries)? What about preexisting conditions? Same-sex partners? Firms also face a conundrum in determining where to draw the line: Half of the companies surveyed provide health benefits to their part-time employees, but the question is how to make this less of a cliff edge between being covered versus not covered. Companies did not consider their responsibility remit enough before in the context of benefits, but the pandemic has brought home its importance.


BU: The rise in virtual health services provides a key to meeting many of today’s urgent health needs, particularly as the great majority of those using virtual care for the first time during the pandemic plan to continue using it. The increase is not just in traditional telemedicine services, such as TelaDoc or MDLive. Because of COVID, we see a rapid shift by brick-and-mortar providers to providing a broader spectrum of virtual services. The move to virtual care has led to positive developments, such as less use of emergency departments and improved access to behavioral healthcare, treatment for substance use disorders, chronic condition management, family planning services and much more. 


What will help organizations stay ahead in a tight labor market?  


GP: For me, staying ahead is all about looking closely at total rewards and the environmental, social and governance (ESG) agenda. One clear lesson from COVID is that global coordination and transparency in benefits is crucial to ensuring both people’s health and financial well-being. For instance, greater transparency on ESG compliance will lead to benefits supporting companies’ culture and values and should facilitate more sustainable investments and a more engaging employee experience.


BU: It’s exciting to see employers begin to focus on the intersection of benefits and sustainability. When you look at health benefits through the lens of diversity, equity and inclusion, you see how important it is that people can find care providers they can identify with and that benefits and programs are varied enough to meet different needs and preferences. This is a wholesale move away from generic services to understanding the components of a population — the macro version of individualized medicine. Virtual care will help make this shift possible. Employers that ensure access to quality virtual care offerings for their population will go a long way in providing the equitable, personalized health and well-being support that pays off in a more resilient and loyal workforce.

Graham Pearce
by Graham Pearce

Partner, Mercer

Beth Umland
by Beth Umland

Director of Research, Health, Mercer

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