Charting a Steady Course

Transcription

1 BENEFITS STRATEGY & BENCHMARKING SURVEY INDUSTRY ADDENDUM FINANCIAL SERVICES Charting a Steady Course

2 Survey Overview Gallagher s 2016 Benefits Strategy & Benchmarking Survey provides insights into how benefit and human capital challenges are addressed by over 3,000 organizations nationwide. This addendum highlights key findings and implications based on data from 194 financial services employers that participated in this year s research. Compliance is a huge undertaking in the highly regulated environment of financial services. For many, in-house administration of Family and Medical Leave Act (FMLA) programs and the implications of the Americans with Disabilities Act (ADA) add to this burden. An expanding number of products and services offered for some industry employers, such as credit unions, can complicate the demands even more. Full-time employees (FTEs) domestic 1 UNDER to % 4 % 39 % 1 Due to rounding, percentages do not total 100% 46 % 500 to 999 1,000 OR MORE Financial services organizations differentiate themselves in the marketplace through their services and new technology. While a knowledgeable, high-performing workforce will help them strengthen their position, attracting and retaining these employees requires a solid, competitive benefits package. Employers in the industry tend to offer robust paternalistic benefits, and should make the most of this investment by helping employees get the most from their plans and programs. Communicating the value of benefits and providing information, decision tools and other support resources goes a long way toward meeting this objective. Ownership structure 77 % FOR PROFIT 23 % NONPROFIT Region 14 % 22 % 20 % 33 % 11% BENEFITS STRATEGY & BENCHMARKING SURVEY Industry Addendum

3 Human Capital Strategy Top priorities align and focus on attracting and retaining talent Top operational priority 63 % 53 % Attracting and retaining a competitive workforce Top HR priority Retaining talent 59 % Report annual turnover of 10% or greater The complex operations of financial services organizations demand a highly knowledgeable, dedicated workforce. And attracting and retaining high-performing employees requires a comprehensive, competitive and cost-effective benefits package. Most industry employers plan their benefits and compensation year to year, which often puts them at a disadvantage. A near-term focus can lead to reactive approaches, but long-term benefits and compensation planning allows employers to be more deliberate and comprehensive. They have the opportunity to use data analytics, and to prioritize data-driven process improvements that help manage benefits cost and sustainability challenges. The first step in making strategic improvements to healthcare cost management is completing an objective self-assessment of current programs and related processes. Based on the findings, setting realistic goals for process improvement should follow. Retirement, engagement and wellbeing are areas where a data-driven process increases the potential to yield key insights and quick wins. Most rely on near-term planning with few data inputs Manage year to year based on costs Manage year to year with adjustments as needed 76 % BENEFITS 7 % COMPENSATION 69 % 13 % Plan multi-year with multi-data inputs Plan multi-year with multi-data inputs Arthur J. Gallagher & Co. AJG.COM 3

4 Medical Benefits Consumerism Healthcare cost transparency tools Healthcare decision support Telemedicine Nonsmoker discount on premiums Reference-based pricing for healthcare services Currently 39 % offer a CDHP Another 15% plan to provide this option by 2018 Innovation projections by % 40 % 33 % 19 % 70 % Medical benefits cost sharing on the part of financial services employers is comparable to other industries. However, the adoption of cost sharing, consumerism and innovative cost-control tactics is expected to increase within two years. Consumer-directed health plans (CDHPs) have caught on as a tool for reducing the impact of healthcare cost trends and motivating healthy behavior changes. To incentivize and accelerate CDHP enrollment, premium reductions or health savings account contributions are often effective. Some innovative approaches to cost control that minimize employees additional financial burden include healthcare cost-transparency tools and decision support, telemedicine, a nonsmoker premium discount, reference-based pricing, private exchanges and narrow networks. Pharmacy Type of pharmacy coverage Another 11% plan to carve out coverage by % Part of health plan 4% Carved out % Moved all specialty/biologic medication coverage from the medical to the pharmacy benefit Financial services employers tend to carve in the pharmacy benefit and rely on their health plan for pharmacy benefits management. A vendor change or an altogether novel approach may offer a better value, so carve-ins should be assessed. In addition, analytics can reduce costs by identifying gaps such as contracting inconsistencies. Data helps make the pharmacy benefit manager (PBM) selection process competitive by allowing a view into costs and terms for multiple PBMs. Specialty and biologic medications are drawing more attention due to their high costs and rapidly expanding utilization and pipelines. Because of the increased potential for spending on these costly treatments, they should be closely managed. Self-insured employers can maximize value by encouraging appropriate access and adherence through specialty pharmacy benefit management tactics and design BENEFITS STRATEGY & BENCHMARKING SURVEY Industry Addendum

5 Employee Communications 58 % Strongly agree or agree employee communications are successful Most lack a comprehensive strategy 1 *Safety, wellness, benefits enrollment, etc. 1 Due to rounding, percentages do not total 100% 66% Program-specific coverage* 22% Comprehensive strategy 11% No strategy Effective financial services communications drive the success not only of operations, but also benefit and compensation programs. Although it s important to understand employees priorities when making tough benefit decisions, 42% of industry employers see plenty of room for improvement in their workforce communications. To build a concept of total rewards and empower employees to make informed choices, employers should raise awareness of the scale and scope of available benefits. Indicators of a communication gap include issues related to employees lack of understanding or appreciation for their benefits and compensation. Low engagement in wellness programs and limited participation in 401(k) or 403(b) matching programs are other possible signs. Financial services employers that want to boost the success of their communications should consider developing a comprehensive communication strategy. As a first step, conducting research such as surveys, interviews and focus groups will provide insight into employee needs and preferences. Top employee outcomes targeted through communications 71 % Understand the full value of compensation and benefits 51 % Well-informed and up to date on benefit choices Arthur J. Gallagher & Co. AJG.COM 5

6 PTO, Leaves & Disability Benefits 38 % Have no strategy for leave administration 13% expect to have a strategy by % Combine sick days with other PTO 36% Allocate annual sick days Administering and managing lost time ranks as a top priority for financial services employers, including implications of the Americans with Disabilities Act (ADA). Despite the importance, many haven t developed an absence management strategy. Accurate tracking of employees before, during and after a period of leave is a key capability of any absence management program. To support this objective employers should consider implementing paid time off (PTO) banks, which limit available days to a pre-defined, quantifiable amount. Vacation, sick time and holidays are combined in one bucket. Formalizing policies for PTO, leaves and disability benefits, and providing clear communications on what is or is not available to employees will help to ensure fairness and mitigate compliance risks. By outsourcing the administration of FMLA, ADA and other government-regulated programs, employers can reduce the ongoing burden of leave management compliance. Top absence management concerns Compliance with government regulations Manager education on leave types, regulatory concerns and compliance Impact of absence on productivity Consistent administration Accurate time-off tracking to meet to regulatory requirements BENEFITS STRATEGY & BENCHMARKING SURVEY Industry Addendum

7 Retirement Benefits Types of plans offered 75 % Have a retirement program 401(k) 96% Defined benefit 15% Profit-sharing 11% 403(b) 6% Cash balance 2% 42 % Gauge employee retirement readiness Many pre-retirees continue working because they re not in a financial position to stop. Retirement benefits are a foundational contribution to employees sense of financial security, and support not only their confidence to retire, but also their health and wellbeing. Financial services employers with defined contribution plans should factor future needs and challenges into the plan structure to make sure it meets their current goals. In addition, many would gain an advantage by assessing their employees retirement readiness. Key insights from a data-driven process will help employers identify workforce needs and design retirement programs to support them. Once there s alignment, they can reduce the health and productivity risks of personal financial uncertainty and distress, especially for pre-retirees. Retirement benefits can be optimized if financial services employers effectively educate their employees on the advantages of retirement planning and participating in available programs. Steps that help increase employee enrollment and plan contributions include employer matching, auto-enrollment and auto-escalation. Steps to increase employee participation in 401(k) and 403(b) plans 50 % Have auto-enrollment 44 % Apply auto-escalation Arthur J. Gallagher & Co. AJG.COM 7

8 Final Remarks The complex operating environment of financial services requires a knowledgeable, high-performing workforce. And a competitive and comprehensive total rewards package clearly communicated, well understood and widely valued is essential to hiring and retaining this talent. Human resources devotes substantial time to administering benefits, which compliance regulations for legislation such as the FMLA and the Americans with Disabilities Act have only extended. As a way of coping with these demands, some organizations are outsourcing these labor-intensive responsibilities. Healthcare accounts for a significant proportion of overall benefits spend, and the high costs of medical services and prescription drugs, especially biologics, are the biggest challenges. Financial services employers are reviewing their benefit strategies and exploring options to improve benefits management and outcomes. By combining innovative approaches, an understanding of workforce makeup and employee priorities, and the use of analytics, they can control costs without shifting an undue burden to employees. This addendum offers you a look at some of the key benefit management issues facing financial service employers. The intent is to provide context and direction that can help you transform your HR and benefit strategies, and in the process, create the engaging employer-of-choice environment your employees need to achieve and sustain success. To learn more, contact Area Vice President, Patti Tuma (patti_tuma@ajg.com), or your local Gallagher consultant. TERMS OF USE The intent of this Survey is to provide you with general information regarding current practice within the employee benefits environment. The data does not constitute recommendations or other advice regarding employee benefit programs, and the user is in no way obligated to accept or implement any information for use within their organization(s). The decision to utilize any information provided rests solely with the user, and application of the data contained does not guarantee compliance with applicable laws or regulations regarding employee benefits. Information provided by the Survey, even if generally applicable, cannot possibly take into account all of the various factors that may affect a specific individual or situation. Additionally, practices described within the Survey should not be construed as, nor are they intended to provide, legal advice. The Web Site and the Content do not constitute accounting, consulting, investment, insurance, legal, tax or any other type of professional advice, and should be used only in conjunction with the services of a Gallagher consultant and any other appropriate professional advisors who have full knowledge of the user s situation. Gallagher does not represent or warrant that the Content will be correct, accurate, timely or otherwise reliable. Gallagher may make changes to the Content at any time. Gallagher assumes no responsibility of any kind, oral or written, express or implied, including but not limited to fitness for a particular purpose, accuracy, omissions and completeness of information. Gallagher shall in no event whatsoever be liable to licensee or any other party for any indirect, special, consequential, incidental, or similar damages, including damages for lost data or economic loss, even if Gallagher has been notified of the possibility of such loss. For the purposes of this section the term Gallagher shall be construed so as to include Gallagher Surveys as a marketing division and/or Gallagher Benefit Services, Inc. and its affiliates Gallagher Benefit Services, Inc. All rights reserved. No part of this book, including the text, data, graphics, interior design and cover design may be reproduced or transmitted in any form, without explicit consent from Arthur J. Gallagher & Co. Gallagher Benefit Services, Inc. 16GBS25075_FS