The Importance of a Digital-first Approach to Employee Benefits in 2022

Now that global workspaces are getting back up from the Covid pandemic, many companies are adopting a new digital-first approach to employee benefits. 

The pandemic forced leaders to rethink their assumptions about employee well-being and adapt their benefits to the new ground rules.

After reading this blog post, you’ll understand:

• the rising importance of digital-first employee benefits
• the impact of the pandemic on corporate benefits budgets
• key factors for the success of a company’s digital-first benefits package

This blog post leans on the insightful data found in latest the Mercer Marsh benefits report. 

Let’s dig in. 

What are Digital-first Employee Benefits?

Digital-first employee benefits are the employee benefits that can be accessed and managed using a digital platform, such as an app or a web portal. 

Their winning edge is that they enable employees and managers to navigate easily through their benefits package without having to go through volumes of paperwork or company documents. 

For example, imagine needing to do a physical exam. Let’s say you’re aware you have it covered in your benefits package, but you’re not sure how many exams you can do in a year, or when was the last time you did a physical checkup. 

If you don’t have access to your medical benefits file, where you can check the status of your benefits (with data such as last physical exam date), you’d have to go through your employment contract or ask somebody in HR for the info.

Digital-first access to your benefit would save you all that trouble.

From the employer’s POV, it’s significantly more difficult to manage the various benefits packages of a large workforce if they aren’t digital-first. 

According to recent research by Mercer-Marsh, 69% of organizations would need more than a week to answer the question of what is their most expensive employee benefit.

If it takes over a week to discover your highest-costing benefit, imagine how hard it is to get a detailed breakdown of all your employee benefits, and how often they’re used. If you’re an enterprise with thousands of employees, digital-first benefits are your saving grace.  

Some of the most common examples of benefits upgraded to digital-first access:

• Medical Insurance
• Remote and Hybrid Workspaces
• Mental Wellness Programs
• Career Growth Journeys 

Now that you understand digital benefits, why are they so useful and what are the most popular ones, let’s talk about the impact of the Covid pandemic on the digital-benefits landscape.

How has the Pandemic affected corporate benefits budgets? 

For many companies, the pandemic was a once-in-a-lifetime event that spelled disaster. Companies saw their revenue share halved overnight and multiple lockdowns and record-breaking sickness absence disrupted regular business operations. 

One would expect most organizations would cut down their employee benefits budgets. However, one survey revealed quite the opposite; 7 out of 10 organizations increased their benefits spending directly because of the pandemic.

Organizations that keep investing in benefits despite setbacks understand the importance of providing their employees with basic benefits while making them constantly accessible in the new normal. 

In addition, getting rid of some unnecessary benefits clears up the resources for better investments in employee benefits. 

For instance, employees have no use for gym membership benefits if the gyms are closed for being a safety hazard during the pandemic.

A 2021 industry research paper by Sapient Insights Group found that organizations are spending 57% more money on tech focusing on HR analytics, benefits and wellness, and skill management, compared to 2020.

Despite the decreased revenue, digital employee benefits are a top priority for many organizations. 

We definitely know [employers] spent a lot more money on setting up virtual private networks and training. It’s an interesting perspective on where they thought their spending was going to be and what they really spent money on. This year [2021], the 57% increase is all about the uptick from last year and they are saying, ‘Now, we’re going to spend on true HR technology at this point.’ Stacey Harris, Chief Research Officer and Managing Partner of Sapient Insights

Of course, major investments have to be justified; digital benefits are under pressure to achieve a strong ROI. With that in mind, it’s time we discuss the key factors for the success of digital-first employee befits. 

Key Trends for Digital-first Benefits Success 

Shifting your employee benefits focus to digital-first benefits isn’t easy. 

The Mercer-Marsh 2022 report found that 45% of surveyed companies changed their benefits packages significantly in response to the pandemic.

The vast majority of companies from the report recognize the need to change benefits packages. With digital-first benefits, it can be difficult to understand which should be considered a standard in 2022.

To make things easier for you, we’re going to talk about 4 key trends for the digital-first approach to employee benefits in post-pandemic 2022. 

A Focus on Well-being Benefits

We can’t talk about digital-first benefits without addressing the need for employee well-being. 

In the Mercer-Marsh 2022 report, 56% of surveyed companies reported increased employee demand for well-being offerings, and 66% reported increased engagement with benefits directly as the result of the Covid pandemic. 

Even before the pandemic hit, many employees were suffering from poor mental health. However, in the last two years, employee well-being has been under serious fire. 

In 2021, MindShare Partners published a research paper that revealed the poor condition of employee well-being. A whopping 76% of U.S. workers reported at least one symptom of a mental health condition. Here are some of the most commonly reported symptoms: 

• 56% of workers reported feeling burned out
• 46% of workers were struggling with depression
• 40% of workers report feeling anxious   

Many companies focus their benefits budgets on employee well-being to combat various wellness risks that have skyrocketed during the pandemic. Well-being initiatives have become an essential part of comprehensive Total Rewards packages. 

Even going into 2020 with mental health, we were seeing growth and mental health had surely become a priority for all employers. But I think if there is anything we’ve seen out of this year, it’s really become the fourth pillar of benefits for every employer out there. Everyone has medical, dental, and vision. Mental health has now really become that fourth pillar of benefits for all employers. Alyson Watson, Founder, CEO of Modern Health

Digital-first benefits excel at improving existing medical benefits like health insurance, but they also address the rising need for employee mental healthcare. In the pandemic’s wake, many companies included online therapy and meditation apps in their well-being benefits for employees. 

For example, Starbucks expanded its well-being benefits package and offered its employees and their eligible family members 20 free hours of therapy that can be accessed online.

Another fantastic example of adopting digital-first well-being benefits comes from PwC. The company made mental health care available 24/7 through an app. 

One way that we’ve opened the door for these important conversations around mental health and well-being is by giving employees free 24/7 access to connect with a coach or therapist through a mental health app. We’ve introduced new benefits that specifically address the needs of our people during COVID-19, by quickly redeploying executive coaches to provide 1:1 and group well-being coaching sessions. Michael Fenlon, Chief People Officer at PwC

Given the fragile state of employee well-being, investing in digital-first benefits that focus on employee health will continue, especially in terms of offering remote access to mental health care. 

Remote or Hybrid Workspace is the New Standard 

In the post-pandemic era, remote or hybrid workspaces are a key employee benefit.

Before the pandemic, the number of remote employees among surveyed companies was 4%, according to Mercer Marsh. 

However, the pandemic irreversibly changed the workspace environment. Research revealed that 30% of employees will move to a fully remote arrangement, and 29% of employees will switch to a hybrid arrangement.

Let’s put these numbers in perspective: for every worker returning to the physical office, one worker will keep working remotely, and one worker will adopt a hybrid model between remote and office-based. 

Compared to the 4% of pre-pandemic remote workers, the combined number of hybrid and remote workers has reached a staggering 61%. 

This is an unprecedented jump in just 2 years’ time. 

With the development and adoption of team management tools, offering employees with remote or hybrid work benefits is a viable option for many enterprises. 

The trend of offering remote work benefits is likely to continue well after the world has fully recovered from the pandemic. 

Centralized Benefits Software

Up to now, we have mentioned well-being and remote/hybrid benefits as the key digital-first employee benefits. 

The research from Mercer Marsh found that using centralized software to administrate and deliver benefits to employees has been significantly helpful to organizations during the pandemic. 

Out of all surveyed organizations, 94% reported using software to deliver and manage employee benefits.

However, the case for centralized benefits software becomes even stronger when the research looks at the results of this approach towards benefits. 

For starters, the research found that organizations with centralized benefits software were twice as likely to respond quickly to the challenges brought by the pandemic. 

One reason for this is that centralized specialist software enables employers to fine-tune the benefits for remote workers. 

On the other hand, organizations that manage their benefits at a localized, decentralized level were almost twice as slow to respond to mid-pandemic challenges. Compared to organizations with centralized benefits software, they are twice less likely to meet employee engagement targets.

In addition, 47% of organizations plan to fully centralize their employee benefits administration in the next year. 13% of organizations will follow suit in the next 3 years. 

Centralized employee benefits software is at the heart of digital-first employee benefits. 

Improving Employee Experience is the Top Priority 

Regardless of the changes in the employee benefits landscape, ensuring a globally consistent employee experience is still a priority for organizations in 2022. 

The past two years have caused massive dispersion among enterprise workers – approximately one-third returned to the physical workspace, and two-thirds opted for a remote or hybrid work arrangement. 

These workspace dynamics highlighted the need for consistently shared employee experience across all groups of employees. 

According to research by Mercer Marsh, ensuring consistent employee experience has been important. However, recently, it’s been a top priority for organizations.

The number of organizations that see globally consistent employee experience as a top priority has almost doubled in 3 years. In 2021, almost 9 out of 10 organizations seek to deliver this objective.

It’s important to consider these numbers in the context of digital-first benefits. 

In 2022, the workforce is dispersed between working from home, the field/office, or both. 

Organizations are turning to digital-first benefits to address this situation:

• Digital-first benefits can be modified quickly in urgent situations to address pressing employee
• They offer a wealth of data for understanding the current state of employee experience
• Digital-first benefits are easy to administer and manage with the help of centralized benefits software

When joined with centralized employee benefits solutions, digital-first benefits allow organizations to deliver consistent employee experience on a global scale. Employee experience has become a critical element of the work experience as employees believe (find meaning), become (learn and grow), and belong (connect with others). Dave Ulrich, Co-founder of the RBL Group

Conclusion 

There’s been a tectonic shift in the employee benefits landscape. 

The workspace is now dispersed between remote, on-site and hybrid employees; all of which have needs that their benefits have to meet.

Today, you learned about the digital-first approach to employee benefits. Together, we and unpacked quite a few insights from the Mercer Marsh 2022 report:

1. How has the pandemic affected benefits budgets?
2. What are the 4 key trends for digital-first benefits?
3. How are organizations using solutions to cater to their employee benefit needs?

Reflect on what you’ve read and evaluate your company’s approach to digital-first employee benefits and rewards.