Today’s Workforce is Redefining Benefits Package Offerings

Five years ago, most professional employees expected a salary with benefits that included medical insurance, a retirement plan and paid time off, and most employers offered those key benefits. These days, employees want and even expect more.

“In the past five years the wants of employees have changed, driven largely by evolving expectations and demographics,” said Tom Meir, vice president of product development and market solutions for Blue Cross Blue Shield of Michigan. “Employees increasingly value benefits that offer wraparound support services, flexibility, work-life balance, mental health and wellness, and emphasis on financial security.”

Expanded health and wellness programs, fitness stipends, enhanced paid leave, financial counseling, student loan repayment and even pet insurance and streaming services have emerged as attractive benefits to complement — and sometimes even outweigh — financial compensation as employees choose roles.

“For many employees, particularly among millennials and Gen Z, benefits are often weighed as heavily as salary,” Meir noted. “In some cases, robust benefits packages that support a better work-life balance and personal well-being can be more attractive than higher compensation.” Amy Mosher, chief people officer for isolved, which provides human capital management software and human resources consulting, said the definition of benefits is also expanding. “It’s a redefinition of benefits,” she said. “Companies are learning how to market what they offer as a benefit.”

For example, where and how employees work is a benefit, Mosher noted, so flexible work schedules, remote and hybrid work arrangements, and workplace culture fit into the redefinition of workplace benefits.

What does this mean for employers, and what are the emerging trends in benefits? Let’s start by examining the factors that have contributed to changes in the benefits landscape.

A whole new world
Competitive salaries, pension plans, health insurance and maybe even a company car were usually enough to attract and retain traditionalist and baby boomer employees. But Generation X, millennial and Generation Z workers have different perspectives and values, and all these workers are converging in today’s workforce with different desires and expectations for benefits.

For example, “not everyone wants that 401(k) matching; younger generations may value help with student loans,” said Lisa Brown, vice president of client services for HR Collaborative, a Grand Rapids-based company that provides fractional human resources support and consulting.

Amy Mosher is the chief people officer for isolved.

What’s more, she said, “Younger generations are keeping an eye on the market and are less loyal to one employer.” So, if employers want to attract and retain this younger group, they must also monitor the market and competitive benefits specific to industries and roles.

“The Covid pandemic also accelerated changes in benefits, particularly around remote work and mental health support, highlighting the need for flexibility and personal health support in the workplace,” said Meir.

Today’s employees are also more knowledgeable about health care and other benefits, said Brown. “Employees are much more aware of the value of benefits. They’re more educated, and they have options for employment.”

Finally, economic pressures are necessitating more strategic health plan structuring on the part of employers. Health care premiums are at an all-time high, with the average annual premium for employer-sponsored family health coverage hitting $25,572 in 2024, a 7% increase from 2023 and a 24% increase from five years ago (source: Health Affairs, a health policy research journal).

What employees want
The 2024-2025 isolved report entitled “Voice of the Workforce: Balancing Engagement, Burnout and Benefits in a Changing Workforce,” highlighted a majority of employees’ attitudes toward their jobs and benefits.

Lack of employee engagement may have been an issue five years ago, but these days it’s burnout that’s plaguing employees, at least according to the isolved survey of more than 1,100 U.S. employees.

While employees may feel engaged in their work, they are “looking elsewhere for better compensation packages and room for career advancement,” the report said.

The report revealed a highly engaged workforce, with 92% of respondents indicating they’re fully committed to their jobs and company mission. However, 79% said they’ve experienced burnout in the last year. Over half of respondents said burnout has reduced their engagement, and 36% said it has directly impacted their productivity and output. Millennial and Generation Z workers were 10% more likely to indicate burnout than baby boomers.

Job changes also played prominently into the report. Asked whether they plan to change jobs in the next year, 72% of respondents said they were — an increase of nearly 14 percentage points over 2023. Nearly half of respondents had already changed jobs in 2024.

“Of those with intent to explore opportunities, 51% have actually applied for a job,” the report noted. “But employees are finding the grass isn’t always greener. A staggering 93% of those who recently switched positions are already considering moving again!”

The report went on to say that engagement obviously isn’t keeping employees in jobs. “This revolving door of turnover suggests that engagement alone isn’t enough to retain employees. Companies must address the gaps in their benefits, stabilize the workforce, and provide clear communication and pathways for career progression to maximize retention.”

The top reason employees gave for switching jobs was, “I wanted better benefits.” A quarter of respondents gave this reason. Other top reasons given included a better salary (18%), more growth opportunities (17%), not liking their boss or leadership (16%) and the desire for a more flexible work environment (9%).
Flexibility is key, according to the survey, which had half of respondents favoring hybrid and remote work arrangements, and one in 10 seeking new jobs specifically for more flexibility.

“One in 10 employees would look for a new job just to gain more flexibility in their work environment and another 16% say a flexible work environment is the most influential factor keeping them at their current employer,” the report noted.

Most survey respondents (90%) said they compare benefits plans when considering job changes. That number was even higher, at 94%, among millennials.
Which benefits do employees favor? It depends on their generation, according to the report. Asked which benefits they prefer among those not already offered, baby boomers wanted 401(k) plans (52%), childcare reimbursement (27%) and equity (25%) the most. Generation X workers wanted 401(k) plans (34%), childcare reimbursement (22%) and equity (22%) the most. Millennials favored childcare reimbursement (33%), 401(k) plans (29%) and equity (27%) the most. Generation Z employees wanted childcare reimbursement (36%), equity (31%) and 401(k) plans (29%) the most.

Other notable desired benefits were a four-day work week (18% of boomers and 22% of Generation Xers), eldercare services (8% of boomers and 17% of millennials), paid mental health days (15% of Generation Xers) and family planning support (23% of Generation Z workers).

Trends in benefits
The 2024 SHRM Employee Benefits Survey, conducted from January through March 2024 and involving more than 4,500 U.S.-based professional SHRM members, provides a roadmap for the types of benefits companies are offering.

First off, the employers surveyed ranked benefits in order of importance. It’s no surprise that health care benefits topped the list, with 88% of respondents indicating health benefits were important or very important, followed by leave and retirement benefits, which tied for second at 81%.

It’s notable that flexible work benefits (70%), family care benefits (67%) and professional and career development (65%) were also among employers’ top priorities. “These categories are notable because they suggest employers’ desire to meet employee wants and needs in a tight labor market where many workers continue to value flexibility and professional development,” the report stated.

Health care, the most expensive of the benefits, is on many employers’ minds. The majority of SHRM survey respondents (82%) said they offer preferred provider organization (PPO) plans, followed by high-deductible plans (63%) linked to health savings or flexible spending accounts, or health reimbursement arrangements.

Meir, who oversees product development for BCBSM, echoed the survey’s findings.

Lisa Brown is vice president of client services for HR Collaborative.

“There is a shift toward more cost-sharing measures, where employees might be paying more out-of-pocket initially until they meet their deductible,” he said. “To help with those costs, we are seeing more employers and members fund health savings accounts, which help offset tax burdens and help members save and invest for the future.”

Also notable in health care benefits is the high prevalence of vision and dental coverage, with 99% of respondents offering dental and 96% offering vision. These benefits have increasingly become standard and expected.

Ninety-one percent of employers surveyed said they offered telehealth and telemedicine, and 90% indicated they offer mental health coverage. The survey suggests that these percentages rose in previous years and have stabilized, which seems to indicate they are becoming standard benefits.

Retirement and leave
Retirement benefits have shifted over the last decade from pension plans, which guarantee a specific monthly amount after retirement, to 401(k), which are investment accounts.

Mosher pointed out that 2022 Bureau of Labor and Statistics data indicates only 15% of private industry employees are getting pensions. “These hold much less value these days,” she said, noting that people are overall savvier about investing and managing their money.

In the SHRM survey, traditional 401(k) plans were most prevalent, with 94% of respondents offering them and 84% contributing a percentage match of funds. Roth 401(k) plans were also popular, with 73% indicating they offered them and 75% offering matching funds.

Leave benefits, including paid vacation, holidays and sick time, were nearly universal among survey respondents, with 94% indicating they offered them. Sixty-eight percent of survey respondents said they combine vacation and sick leave and paid time off, a number that’s down two percentage points from the 2023 survey. Unlimited leave is offered by 7% of respondents, down from 8% in 2023.

Paid parental leave has been on the rise in previous survey years, but it plateaued in 2024, with 40% of respondents indicating they offered paid parental leave, 39% offering paid maternity leave and 32% offering paid paternity leave.

New and notable benefits for leave include floating holidays (46%), bereavement leave for loss of pregnancy (39%) and leave for the birth or adoption of a grandchild (4%).

It’s notable that, while there are no federal laws requiring private-sector employers to offer paid leave, some states are enacting paid leave laws. As of August 2024, 13 states and the District of Columbia had enacted mandatory paid leave systems. Some states, like Illinois, require private employers to allow employees to use their leave for any reason. Others, like Colorado, mandate paid leave for family and medical reasons.

Family care
Benefits that support employees’ families, including children, elderly parents and even pets, have increased in popularity since the pandemic. The SHRM survey indicated that onsite lactation or mother’s rooms were up 19 percentage points from 2023, at 73%, likely due to a December 2022 that requires employers to provide private spaces and time for lactating mothers to express milk.

Onsite childcare has not kept pace, according to the survey, which showed a 50% reduction in onsite childcare compared to the 2021 survey. Three percent of respondents indicated they offered subsidized onsite childcare, and 2% indicated they offered unsubsidized care.

Pet health insurance offerings, however, are up according to the survey. In a 19% increase from 2023, 22% of respondents said they offer pet health insurance.

Flexible work schedules and career development
The pandemic forced employers to embrace remote and hybrid work arrangements, and those continue to be important in recruiting and retaining employees. The SHRM survey reported that 63% of employers offer hybrid work arrangements, up from 62% in 2023.

In the area of professional and career development, the SHRM survey showed 82% of respondents offering formal training and education to keep skills current and 80% offering upskilling and reskilling, which isn’t surprising considering the introduction of artificial intelligence to many roles.

Other benefits offered by respondents included covering professional license application and renewal fees (77%), and certification and recertification fees (79%). However, only 8% said they offer 529 plan payroll deductions for college, and 46% (the lowest prevalence for this survey in many years) said they offer tuition assistance.

How employers are using benefits strategically
Mosher, of isolved, said employers are becoming more strategic about the benefits they offer and how they market them, and necessarily so. They’re working to meet the diverse needs of a multigenerational workforce while keeping costs in check.

One of the trends Mosher has noticed is that companies are providing employees with options that include some standard benefits plus a set of customizable options.

“What we used to think of as cafeteria plans” are emerging, she said, noting that these allow employers to control costs while offering options.

Brown of HR Collaborative said some companies are switching to higher deductible health plans to cut costs and offering additional paid time off, making family leave more robust (including foster children and care for elderly loved ones) or offering 401(k) contributions for those who want them.

Brown said she’s also seen companies offer paid volunteer time, donation matching for charities, floating holidays so workers can choose their days off, and gym membership discounts or reimbursements.

A 2022 SHRM article cited two large companies’ efforts to attract and retain employees. Goldman Sachs started offering paid leave for pregnancy loss and expanding bereavement leave while also increasing retirement fund contributions. Tyson Foods started offering a $3,000 sign-on bonus for new hires, plus a three-day work week with pay for a fourth day that retained employees’ full-time work status.

Advice for employers
“Flexibility is paying off in dividends for companies,” said Mosher.

Brown agreed: “It’s about addressing the needs of your workforce and having enough options for them. If you don’t know, ask for feedback.”

Meir echoed Brown’s sentiments.

“Employers should be actively listening to the specific needs and preferences of their workforce, which can vary significantly by industry, demographic and company culture,” he said. “For instance, younger employees might prioritize student loan assistance or mental health support, while older employees might value enhanced retirement plans or chronic disease management programs.”

Mosher cautioned against chasing trends. Instead, she said, companies need to find what works for them. “Sometimes it’s about differentiating yourself,” she added.

Education and communication are also important. With health care costs increasing, employers need to shift some costs to employees, but explaining the reasons will result in more buy-in and engagement, said Brown.

“It’s a great time to educate your employees,” she said. “If they understand the why and how, it’s not as shocking to them.”

“It’s crucial to communicate the value of the benefits being offered; employees must understand and appreciate their benefits package to feel truly valued by their employer,” said Meir.