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New Study Reveals Differences in How Large and Midsize Employers Are Managing Benefit Costs

Gallagher's Annual Best-in-Class Benchmarking Analysis Offers Fresh Insights to Help Organizations Balance Human Resource Priorities and Healthcare Costs

ROLLING MEADOWS, Ill., Nov. 30, 2017 /PRNewswire/ -- As healthcare costs continue to rise and the labor market continues to tighten, employers face the sustained challenge of managing costs while providing a benefits package that will attract and retain top talent. Gallagher has identified the strategies and tactics organizations are using to successfully address this challenge in two new Best-in-Class Benchmarking Analysis reports, available for large employers (1,000 or more full-time employees) or midsize employers (100-999 full-time employees). The data came from Gallagher's 2017 Benefits Strategy & Benchmarking Survey, which collected benefit and human capital strategy findings from 4,226 organizations of all sizes.

"Employers often look to the experience of their peers for guidance as they pursue destination-employer status. Based on our report's strategic insights, competitive advantage can be gained by employers who leverage and optimize their compensation and benefit approaches," said William F. Ziebell, President, Gallagher Employee Benefits Consulting and Brokerage.

Through Proactive Planning, Large Best-in-Class Employers Spend Less While Boosting Employee Protection and Productivity

While large employers spend more than midsize employers on benefits, the best in class in the large group leverage their scale to keep a tighter lid on their financial outlay. Sixty-two percent spend less than $10,000 per eligible employee on benefits, compared to just 42 percent of large employers overall.

Some per-employee savings are due to the best in class paying a smaller share of employee health and long-term disability premiums, but they also take a more strategic approach to benefits planning. Forty-six percent have a multi-year strategy versus just 27 percent of their large peers, which is more likely backed by data (e.g., workforce traits). Advance planning enables these top employers to make more informed spending and healthcare decisions.

The best in class are also more likely to view total compensation as an investment in maximizing workforce performance to achieve business outcomes (38 percent vs. 25 percent) and prioritize objectives that support production and productivity, such as employee health and wellbeing.

Midsize Best-in-Class Employers Rein in Costs Without Shifting the Burden to Employees

Compared to other midsize employers, the best in class were less likely to increase employees' contributions to health plan premiums (43 percent vs. 57 percent) and their cost share through plan design changes (41 percent vs. 55 percent), such as higher deductibles, copays or coinsurance.

Instead of passing along higher health insurance costs to employees, the best in class are experimenting with other ways to manage total healthcare spending, such as offering fewer plan options — often choosing to self-insure their medical plans and carving out pharmacy benefits.

Midsize best-in-class employers also invest more in programs for employee wellness (63 percent vs. 54 percent) and disease management (45 percent vs. 31 percent). Measures of success include employee engagement and satisfaction as well as participation.

ABOUT THE BEST-IN-CLASS BENCHMARKING ANALYSIS
Gallagher developed the Best-in-Class Benchmarking Analysis reports to provide employers with insights and best practices for managing benefit costs while also attracting and retaining top talent. This year's reports use selected data from 1,192 midsize employers and 315 large employers that responded to Gallagher's 2017 Benefits Strategy & Benchmarking Survey. View the reports here: http://www.ajg.com/bic2017

ABOUT GALLAGHER
Gallagher (NYSE: AJG) is an international insurance brokerage and risk management services firm headquartered in Rolling Meadows, Illinois. The company has operations in 34 countries and offers client-service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.


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