The second year of the pandemic was challenging for many, but for those in the compensation and benefits field, the situation was not entirely bleak—according to sources interviewed by HR Dive.

With employee turnover rates at historic highs, compensation has become a central topic in recruitment discussions; a recent Grant Thornton report shows that68% of HR leaderssaid they increased the number of employees eligible for cash bonuses in 2021. Large organizations—especially companies employing large numbers of frontline workers—have expanded non-salary employee benefits in tandem with competitors.

"It's a great time to be a total rewards professional," said David Giesman, Vice President of Global Total Rewards at fashion retailer Designer Brands, Inc. "Your entire playbook is open for you to consider different approaches. It's an opportunity to be creative."

Whether the trends of late 2021 continue or not, for those responsible for benefits, certain focal points remain somewhat unchanged. HR teams still need to provide benefits that meet employees' individualized needs and integrate these benefits directly into the overall talent strategy.

The ongoing impact of the Great Resignation

Finding skilled talent is not easy for employers, and in some respects, retaining existing talent can be even more difficult.

According to data from the U.S. Bureau of Labor Statistics, the U.S. labor forcequit rate reached 3% in November 2021, matching September and setting a series high since December 2000. The agency found that quit rates were particularly high in accommodation and food services, healthcare and social assistance, and transportation, warehousing, and utilities industries.

Lauren Mason, career business leader and senior consultant at HR consulting firm Mercer, said these types of frontline labor market pressures should persist. She added that the continued surge of the omicron variant suggests the situation could worsen.

This has prompted employers to increase compensation budgets, but Mason noted that many increases remain limited compared to the labor market. She added that a priority for compensation professionals is ensuring investments target roles where the organization faces the greatest pressure and turnover. This means hourly wage increases for frontline workers this year, as well as increased bonuses for professional and salaried employees.

Moreover, raising wages doesn't satisfy everyone. "When you look at total rewards and the elements that have the greatest impact on recruitment... you find that what is most direct and tangible for people is another set of things," Giesman noted. Time off and similar benefits may be particularly attractive to new talent. "But for retention, these might rank at the bottom of the list."

Giesman said Designer Brands has instead turned to increasing bonus eligibility and trying other benefits to attract existing employees, such as paying for a year of health insurance premiums after an employee completes one year of service. HR teams should hold managers accountable in this area, for example, by ensuring employees have opportunities for self-development during their tenure, including access to promotions.

"We conduct talent reviews so that management and above focus on assessing potential," Giesman said. "Promotions are much easier."

Focus on delayed healthcare

In late 2020,observers viewed delayed healthcareas a potential problem trend. Because care centers were closed or hindered due to COVID-19, employees were unable to access certain forms ofpreventive and elective healthcare。

during the pandemic, especially in its early stages. This situation persists in 2022. Mercer's recent National Survey of Employer-Sponsored Health Plans noted that health costs in 2021increased by 6.3%, higher than normal, and delayed healthcare may be the biggest driver of rising costs, said Kate Brown, head of the company's Center for Health Innovation.

Brown said delayed preventive care can lead to diseases not being detected early, thereby driving up subsequent treatment costs, although other factors may also contribute to overall cost increases. She added that employers are "cautiously optimistic," expecting healthcare cost increases to be closer to average.

However, like talent availability, the omicron variant—and other potential variants—bring their own uncertainty, Brown said.

Family care takes center stage

Children learning from home interrupt video calls. Caregiving responsibilities increasingly weave into employees' daily workflows. Scenarios like these have prompted employee benefits professionals to seek ways to support employees in maintaining work while caring for loved ones.

Giesman highlighted some of Designer Brands' efforts in this area. The company launched a free employee subscription service, Sitter City, which allows employees to find providers for childcare as well as elder care and pet care. "We rolled it out quickly in 2020, paid for it, and offered it free to employees," Giesman said.

Meanwhile, the company has its affinity groups focus on important topics such as diversity, equity, inclusion, and sustainability, while also working to make certain benefits options more inclusive. For example, Designer Brands modified its bereavement leave policy, which previously limited employee leave to "immediate family," and it now extends to a broader range of relationships.

Mason said employers may need to decide whether other structural adjustments to existing benefits plans are necessary to address pandemic-driven disruptions. For example, changes in U.S. Centers for Disease Control and Prevention guidelines could be a reason to reassess the structure of an organization's paid time off plans. If employees have dependents such as children who are sick and need to quarantine, additional scheduling flexibility may be needed.

Giesman noted that different occupational groups may have different benefits preferences. He said Designer Brands' corporate employees tend to highly value remote work, while those working in stores and distribution centers place more importance on time off, schedule consistency, and access to desired hours.

The ongoing evolution of mental health

Mental health has long been a hot topic for HR professionals, and it became an urgent discussion during the pandemic. Research continues to find that employee benefits plans have prioritized mental health over the past year. A recent survey of 151 business leaders by consulting firm West Monroe Partners found that 44% of respondents said their companies are addressing mental health issues, but could do more.

Eric Freshour, director at West Monroe Partners, said the report's findings indicate that mental health has undergone rapid evolution in the workplace context over the past few years. But in the report's findings, "what I see emphasized is the wide variety of services people are offering," he said in an interview.

Common strategies mentioned by respondents included additional time off and personal days, flexible scheduling, engagement and well-being surveys, as well as employee assistance programs and employee resource groups. But leaders in the survey also pointed to solutions that can help move forward, such as technology that can help reduce workloads and fill staffing gaps, or arranging "no-meeting days" and company-wide mental health days.

Mason said smaller initiatives, such as discouraging employees from sending emails outside of work hours and instead encouraging them to prioritize work and personal time to complete daily tasks—whether work-related or not—can also make an impact.

Freshour said he is skeptical about organizations' ability to sustain mental health programs and initiatives, as some of these efforts were created in response to pandemic-related stress. "However, my hope is that what arose out of necessity is now gradually becoming part of the organizational structure," he continued.

Questions about sustained momentum

Similarly, Freshour added that while sustained long-term investment in well-being may seem challenging, such strategies are not necessarily high-cost drivers. Even just giving employees an extra day off or offering wellness classes, "there's a lot to consider in terms of return on investment," he said. "There are other factors or benefits to consider that aren't additional in terms of cost."

Freshour continued that organizations are also becoming smarter about how they gather employee feedback on benefits, and he suggested employers use focus groups and surveys. "What I've always explained is that people really want their voices and opinions to be heard. You just need to prove that you are putting these mechanisms into action."

Total rewards professionals have the opportunity to help employers navigate the challenges of the Great Resignation, but to do so, they need to closely monitor well-being metrics, Mason said; "Monitor these issues and make investment recommendations promptly when the market is strong for these specific issues."

Even if the winds of the labor market do shift, employee benefits professionals can work to demonstrate how their efforts impact productivity, quality, and other business metrics, Freshour said. "This might be a reasonable item for some to cut, but I think it's important to broaden the perspective on the return on investment of these things."