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Data were collected from 1,307 midsize (100-999 full-time employees) and 340 large employers (1,000 or more full-time employees) to determine commonalities among high-performing organizations that have minimized turnover and unlocked cost efficiencies. In today's competitive job market, these savings create crucial opportunities to invest in salaries, wages, bonuses and specific employee benefits that target strategic advantages, and support growth in revenue and market share.
"Employers are constantly searching for ways to drive better outcomes through better performance, but most are struggling to identify the strategies that will help get them there," said
Best-in-Class Employers Creatively Manage Rising Healthcare Expenses in Ways that Minimize Costs Absorbed by Employees
Best-in-class employers excel by focusing on helping employees get the right care at the right place, time and price. To better understand how they do this, Gallagher measured three-year trends for health premium increases and decreases, as well as the priority placed on managing health benefit costs and the perceived success of the underlying strategy. Best practices that emerged from the analysis include:
- Best-in-class employers tend to shift fewer healthcare costs to employees through premiums, deductibles and copays. Instead, they're making coverage more affordable to increase the likelihood that employees will seek the care they need and follow treatment plans.
- The best in class are more likely to offer only one or two medical plans. Narrowing the health plan platform concentrates buying power to rein in employer expenses, and consolidates efforts to communicate and measure employee wellbeing for clearer results.
- For a better perspective on how to actively manage and lower overall spending on drugs, without directly affecting employees, best-in-class employers are more inclined to carve out pharmacy benefits from the health plan.
Investing in Employee Growth and Wellbeing Creates Alignment with Organizational Strategies and Operational Priorities
An organization's philosophy and culture are strong influencers of its approach to HR management. Furthermore, when employees see their employer as a partner in advancing their health, financial and career wellbeing, they're motivated to perform at their best. To identify shared characteristics among the best in class for HR management, turnover in the prior year was analyzed with points assigned for both actual turnover, and how that percentage compared to the targeted rate. Gallagher also examined employers' strategic focus on communication, employee engagement and HR and benefits technology (HRBT). Examples of best practices that differentiated the best in class from the rest of the pack include:
- Best-in-class employers are about three times more likely to have a comprehensive communication strategy, helping employees better access and understand their overall rewards, health benefits, HR programs and career support tools.
- Despite the required upfront investment, best-in-class employers tend to place a higher value on wellbeing and disease management programs as levers to control healthcare costs.
- Best-in-class employers appear to maintain an employee-centric mindset to boost employee engagement and job performance, with most prioritizing clear performance goals, timely and constructive feedback, and development needs and action plans for each employee.
Best-in-class practices help organizations take a more proactive and structured approach to planning, developing and executing HR and benefit policies and programs. While no single approach works best for all, the emerging themes and key takeaways found in the annual Best-in-Class Benchmarking Analysis can be used to explore healthcare and other talent investments that have the potential to drive better business outcomes.
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 1,307 midsize employers and 340 large employers that responded to Gallagher's 2018
View the reports here: www.ajg.com/bic-2018.
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