As they struggle to achieve overall wellbeing, employees are increasingly expecting employers to support them in finding balance, improving their physical health, strengthening their finances and living their lives with purpose. Seeking to compete in the ongoing War for Talent, employers have responded by ramping up their wellbeing benefits investments across the four pillars of mind, body, wallet and life. This increased investment was sparked by the pandemic, but continues to this day, with employers remaining steadfastly committed to employee wellbeing.
All too often, however, these hefty investments in employee benefits yield disappointing results. In large part, that’s due to what we call “Benefits Sprawl” — that is, the proliferation of benefits offerings without a cohesive strategy or efficient administration. There are too many choices, and the result is that employees remain confused about selecting and using their benefits. Ironically, this is the result of employers trying to do right by their workers by increasing the breadth and depth of their benefits offerings in an attempt to meet everyone’s needs. With so many options and providers to choose from, it can be difficult to create a benefits package that meets the unique needs of each employee.
Rather than a suite of benefits that are well understood, used and appreciated, they inadvertently create a Benefits Frankenstein, characterized by siloed offerings, dozens of providers, point solution fatigue and fragmented data.
On average, today’s employers offer 22 different wellbeing programs and many offer greater than 50, according to Alight’s 2023 Hot Topics in Employer Wellbeing Programs report. Navigating this benefits labyrinth leaves employees overwhelmed. They often have difficulty discerning what benefits are even available to them. According to our 2024 Winning with Wellbeing report, just 10% of workers know about all their employer-provided benefits, while another third is only familiar with the benefits they use.
When they do take advantage of their benefits, they often make decisions they come to regret. Nearly three-fifths (58%) of employees say they have regretted a health decision they made in the last year, according to our 2024 Alight International Workforce and Wellbeing Mindset Study. Most often, they regretted taking advice from someone who was not a healthcare professional or jumping into treatment without asking the right questions.
This is truly unfortunate because employers have invested significantly in navigation solutions to provide employees with the guidance and resources they need to make more informed decisions. When the existing system is complex and fragmented, however, workers feel unsupported, which negatively impacts engagement, productivity and retention. Employers are left in a reactive position, as they struggle to improve engagement and productivity while containing costs and achieving ROI from the benefits investment they are making in their employees.
Closing the benefits impact gap
The resulting chasm between benefits offered and their impact on employees and the business creates a benefits impact gap which continues to grow, leaving employers struggling to move the needle. Organizations are forced to make a choice between giving employees a better benefits experience at the expense of budget and cutting costs to increase efficiency at the expense of experience. This perpetually losing proposition is ineffective, unsustainable and will only serve to broaden the benefits impact gap.
Winning with wellbeing
Since the pandemic, our understanding of work has changed, with wellbeing at the forefront of sustaining a robust and dedicated workforce. Adopting a focused employee wellbeing strategy fortifies retention and employee satisfaction.
Employee benefits play a major role in building a thriving, healthy, resilient workforce. When few employees take advantage of benefits offerings, however, employers cannot reap the desired results. Employees feel unappreciated, they flounder in their efforts to improve their wellbeing and the company loses money — not just in the form of the direct investment they’ve made in benefits offerings, but in lost productivity, higher absenteeism and the extraordinary cost of replacing an employee.
Employers need to close the benefits impact gap by reigning in the benefits sprawl and making it easier for employees to understand and use their benefits. This can be accomplished by breaking down the silos between benefits offerings and integrating benefits across the full employee lifecycle, allowing for seamless benefits management, enhanced employee engagement and reduced complexity.
Companies must shift to a new model of benefits management. This model should deliver better experiences that employees will love and the greater efficiency their business needs.
The way forward is to turn a necessary expense into claims-verified savings, increased benefits utilization and an increase in savings per employee household. Those that forge ahead under these conditions will gain a benefits advantage and join the ranks of the industry outperformers.
