Before the pandemic, companies had spent years increasing benefits and compensation and even adding extra perks in a bid to win the war for talent. Now, the focus is on business continuity, and cost-cutting measures such as salary freezes and reduced benefits are becoming the norm, according to a new report from Gallagher.
Gallagher’s annual Benefits Strategy & Benchmarking Survey gathered data from 3,921 employers from December 2019 to May 2020, as well as a series of employer pulse surveys between April and July 2020.
As of July, more than half of employers surveyed had either furloughed (29 percent) or laid off (29 percent) employees. In an effort to save jobs in 2021, more than 40 percent of employer respondents said they plan to freeze wages for both management and non-management employees.
Work-from-home and flexible scheduling are here to stay. Telecommuting surged this year, going from 26 percent before the pandemic to 77 percent by June. The vast majority (86 percent) of employers say work-from-home options will continue after the pandemic, while 59 percent plan to continue offering flex scheduling options.
In July, 43 percent of employers had modified or were evaluating their paid-time-off (PTO) policy, and continued modifications are likely in 2021. Gallagher advised employers to consider unlimited PTO policies, which can curb employees’ inclination to use all their allotted days each year as well as eliminate the need to cash out any balance remaining upon retirement.
Since the start of the pandemic, 83 percent of employer respondents said they have more strongly emphasized the role of specific benefits within total rewards, including emotional well-being (65 percent), leave policies (47 percent), medical benefits (39 percent) and physical well-being (36 percent). Gallagher said that another option for boosting the perceived value of medical benefits is offering a variety of health plans. While the majority (79 percent) of employers expect to keep the same health coverage in 2021, many may be forced to increase employees’ cost share to keep the same level of coverage.