SEE WHERE YOU STAND Benefits Strategy & Benchmarking Survey Manufacturing Industry Addendum

Transcription

1 SEE WHERE YOU STAND 2018 Benefits Strategy & Benchmarking Survey Industry Addendum

2 Survey Overview Gallagher s 2018 Benefits Strategy & Benchmarking Survey asked U.S. employers more than 300 questions across the total rewards spectrum. This addendum highlights select key findings and implications based on responses from 569 employers in the manufacturing sector. Dependent on the effectiveness of skilled and unskilled labor, manufacturing relies on innovation in production processes, new technology and modern customer service tactics to increase revenue and fuel growth. In competing for market share and talent especially as many employees are aging out of the workforce manufacturers need to rethink their approach to compensation and benefits, and how their strategy for these affects employee attraction and retention. FULL-TIME EMPLOYEES (FTES) DOMESTIC 1 36 % 15 % 10 % 40 % Under 100 FTEs 500 to 999 FTEs 100 to 499 FTEs 1,000 or more FTEs 1Due to rounding, percentages do not total 100% Innovation in medical plans, greater use of data and a better understanding of workforce demographics are allowing manufacturers to build sustainable benefits while GEOGRAPHY 2 meeting operational goals. Tools for wellbeing and work-life balance, as well as meaningful use of technology to engage employees, have become key. employers have an opportunity to improve internal HR processes and take a 14 % 47% 14% NORTH CENTRAL SOUTH CENTRAL NORTHEAST more holistic approach in meeting the needs of an increasingly diverse workforce. 13% 11% SOUTHEAST WEST This benchmarking report showcases how multisource, datadriven planning can help address the sector s challenges and identify areas of opportunity for compensation and benefit programs, resulting in better outcomes for both employees and employers. 2Due to rounding, percentages do not total 100% TYPE OF MANUFACTURING ORGANIZATION 3 Fabricated metal products, nontransportation Food processing and beverages 20% 11% Machinery, computer and electronic products 10% Transportation equipment/ automotive supplier 10% Chemical 7% Printing and paper 4% Lumber 2% Textiles, including clothing 2% Other 33% 3Due to rounding, percentages do not total 100% BENEFITS STRATEGY & BENCHMARKING SURVEY INDUSTRY ADDENDUM

3 Human Capital Strategy TOP PRIORITIES FOCUS ON GROWTH AND PEOPLE TOP OPERATIONAL PRIORITY 67% TOP HR PRIORITY 80% Revenue/sales growth Attracting and retaining competitive workforce FEW TAKE A MULTI-YEAR APPROACH TO PLANNING Sales and revenue growth is the top operational priority for manufacturing employers (67%), while the top HR priority is attracting and retaining a competitive workforce (80%). A benefits and compensation strategy supporting these priorities requires data from a range of sources to inform decision making. Benchmarking information and the organization s current and future financial performance are the leading resources used for planning. Understanding the workforce is also essential for optimal benefits and compensation design, but few take a survey of employee preferences to guide planning or take into account workforce characteristics, such as length of service, gender or age. A multi-year strategy for benefits or compensation is also uncommon for manufacturing employers 13% for benefits, and 10% for compensation even though longterm strategies can help align cost controls with employee retention goals. Meanwhile, 30% of manufacturers had turnover of 15% or more in 2017, compared with 13% expecting turnover of that level. More than half (52%) view benefits and compensation as tools to attract and retain talent, the success of which relies on a total compensation package that resonates across the entire workforce. 13% 10% Benefits planning Compensation planning Employee training and development can increase engagement and maximize job performance. But while 42% of employers say training and development is a top HR priority, 62% of manufacturers say they aren t spending enough in this effort. As younger workers are keen for skill and career development, older workers have hard-won experience that could be lost without building institutional knowledge. Taking steps to bridge the generation gap, invest in human capital and build collaboration throughout the organization can play a key role in achieving HR and operational performance goals. TURNOVER RATES HIGHER THAN EXPECTED IN % 30% Anticipated turnover of 15% or more Experienced turnover of 15% or more GALLAGHER AJG.COM 3

4 Medical Benefits FUNDING ARRANGEMENT TYPES OF MEDICAL PLANS OFFERED + 48% 48% 3% Self-insured Fully insured Level funded Manufacturers are as likely to be self-insured as fully insured (48% for each). Deploying a variety of medical coverage options, preferred provider organizations (PPOs) are by far the most popular (80% offer; 59% report as the plan with highest enrollment). Though 38% offer two health plan options, one-third (34%) offer only a single plan and just 28% offer three or more plans. Choice lets employees select a plan that best suits their needs while helping employers construct financially sustainable medical benefits. The right mix of options provides an opportunity to introduce consumerism and increased cost sharing, such as consumer-directed and high-deductible health plans (CDHPs and HDHPs) both currently offered by 24% of manufacturing employers without alienating employees that have historically enjoyed traditional plan designs. Comprehensive communication efforts using a variety of channels can help employees overcome unfamiliarity and accept plans that feature greater consumer responsibility. Preferred provider organization (PPO) 80% Consumer-directed health plan (CDHP) 24% High-deductible health plan (HDHP) 24% Health maintenance organization (HMO) 20% Point of service (POS) 7% Exclusive provider organization (EPO) 4% Indemnity 2% AFFORDABILITY OF PREMIUMS FOR EMPLOYEES 82% 59% INDIVIDUAL COVERAGE FAMILY COVERAGE Sixty-one percent (61%) of manufacturers increased employee cost sharing in Raising health plan premiums is the most common (52%) mechanism to do so; higher deductibles (24%) and out-of-pocket maximum hikes (20%) are less common. And despite the cost of prescription and specialty drugs being top challenges, only about one in 10 manufacturers said employees share of both brand name and specialty drug costs increased in Notably, a majority of employers (82%) believe individual coverage premiums are affordable, but the amount falls to 59% for family coverage premiums. Fewer than six in 10 (59%) say additional expenses like deductibles, copays and coinsurance are affordable. High-value services are a major component of costmanagement strategies. Telemedicine (76% offer it or plan to do so by 2020) is a common tool to reduce access barriers, while cost transparency tools (74%) help employees compare the cost of care. Other innovations include healthcare decision support (61%) and disease management programs (60%) BENEFITS STRATEGY & BENCHMARKING SURVEY INDUSTRY ADDENDUM

5 Employee Wellbeing WELLBEING STRATEGY 55% HAVE A WELLBEING STRATEGY Wellbeing is gaining traction as manufacturing employers start to take a more holistic approach to healthcare benefits. Once considered a quick fix for near-term healthcare costs, employers are increasingly viewing wellbeing as a strategic investment in employee health and productivity. Currently, most manufacturers have a traditional strategy focused on employees physical health (41%). However, 14% have a comprehensive strategy focused on the health of the whole person, including physical, emotional, career and financial aspects. TOP CHALLENGES TO WELLBEING INITIATIVES Among employers without a wellbeing strategy, 35% plan to implement one by The most common reasons for not having a wellbeing strategy are a lack of time and staffing (53%) or perceived lack of employee interest (31%). However, as many young employees are joining the workforce, wellbeing programs are an opportunity to incorporate contemporary concepts of health into the workplace. 67% 32% 30% Participation Cultural shift and reluctance to change Budget Manufacturers cite participation as the top (67%) challenge to wellbeing initiatives. To improve participation, employers are providing employee premium differentials (41%), cash or gifts (41%) and employee recognition (24%). Additional challenges to wellbeing initiatives include cultural shifts and reluctance to change (32%), budget issues (30%), and having multiple shifts and shift workers (29%). To boost wellbeing, employers should survey employees directly on wellbeing goals, implement programs that align with those goals and leverage technology. FINANCIAL WELLBEING OPPORTUNITIES OFFERED Financial advisor sessions 66% Gym subsidies 54% Employee discount programs 49% Financial literacy and other education opportunities 45% Debt counseling 23% $ Financial wellbeing efforts help reduce employee stress, improving engagement and productivity. The most common tactic for financial wellbeing among manufacturers is providing access to financial advisors (66%). Gym membership subsidies, which incentivize physical wellbeing, are second (54%). Nearly half (49%) of manufacturers offer employee discount programs, and 45% offer financial literacy and other education opportunities. Twenty-three percent (23%) have debt counseling. GALLAGHER AJG.COM 5

6 Voluntary Benefits 54% OFFER TUITION ASSISTANCE INNOVATIVE EMPLOYEE SUPPORT OFFERINGS Employee assistance program 66% Pretax dependent care account 51% Legal services 22% Identity theft protection 20% VISION AND DENTAL COVERAGE 71% 95% OFFER STAND-ALONE VISION PLAN OFFER DENTAL COVERAGE Voluntary benefits provide customizable solutions to support employees in each stage of their lives, accounting for unforeseen risk and promoting wellbeing. As employees lifestyles and values evolve, voluntary benefits allow for nimble, valueadded flexibility and innovation to benefit design. Fifty-four percent (54%) of manufacturers offer tuition assistance. The most common reimbursement maximum is $5,250 per year; reimbursement is usually contingent on meeting grade minimums (94%) or coursework being job-related (91%). Many (63%) require tuition recipients remain with the organization to avoid tuition clawback, most often one year (41%) or two (44%), though 15% require three or more years. Two-thirds (66%) of manufacturers offer employee assistance programs to help employees navigate planned and unplanned life events and circumstances. Pretax dependent care accounts offered by 51% of employers reduce financial burden and bring peace of mind that loved ones are safe while employees are at work. Legal services (22%) and identity theft protection (20%) reduce risk and support employees outside of the workplace. Ninety-five percent (95%) of manufacturing employers offer dental coverage, most often as an employersponsored benefit (68%). As a voluntary benefit option (27%), dental plans round out a more robust, customizable health benefit package. Stand-alone vision plans (71%) help employees afford eye exams and costly treatments or corrective lenses. Employer sponsored (29%) or employeepaid (42%), vision coverage helps stretch compensation and reduce financial barriers to necessary care BENEFITS STRATEGY & BENCHMARKING SURVEY INDUSTRY ADDENDUM

7 Final Remarks In the face of competitive pressures and a tight labor market, more manufacturers are taking a data-driven, sophisticated approach to compensation and benefits strategy. Incorporating contemporary workforce values with financial data into the decision-making process can result in strategies that address high turnover while keeping benefit costs in check. And as employee demographics are constantly shifting, manufacturers are re-examining traditional benefit designs and developing holistic total compensation and engagement strategies. In addition, manufacturing employers have an opportunity to advance medical benefits design through employee health and consumerism, increased cost sharing and other tools. Wellbeing programs support employee total health and productivity, while voluntary benefits offered strategically help fill the gaps between foundational benefits, rounding out a more attractive and competitive total compensation package. This report explores key compensation and benefit management issues, trends and solutions for manufacturing employers. It is intended to provide direction that can help HR and benefit planning take a strategic approach that is more efficient, better aligns with sustainable operational goals and builds better employee and organizational outcomes. To learn more, contact Account Director, Brenda Armour (Brenda_Armour@ajg.com), or your local Gallagher consultant. GALLAGHER AJG.COM 7

8 About Gallagher Better. It s something all companies strive for. Better outcomes from better performance. But how do you get there? You start by building a better workplace. One that attracts, engages and retains top talent. What does that look like? It s a workplace where people feel they belong where there s a stronger sense of developing a career than punching a clock and a culture of opportunity that draws new talent because it inspires employees to deliver their personal and professional best. Gallagher s comprehensive approach to benefits, compensation, retirement, employee communication and workplace culture aligns your human capital strategy with your overall business goals. It centers on the full spectrum of organizational wellbeing strategically investing in your people s health, talent, financial security and career growth and developing benefit and HR programs at the right cost structures to support a multigenerational workforce. From evaluating the demographics of your workforce to surveying and analyzing competitor trends, Gallagher helps you gather new insights and apply best practices that promote productivity and growth. A data-driven focus allows you to continually improve. That s what it means to create a better workplace culture. It s about never being content to rest each time you reach your best. Your better is never finished. As you develop and sustain this destination workplace culture, your people can thrive and perform at a higher level optimizing your annual talent investment and mitigating organizational risk to maximize your profitability. Best of all, you gain a competitive advantage as a workplace that simply works better. 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 Website 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 Arthur J. Gallagher & Co. 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. 18GBS25075G