Quick Look: In the midst of the highest inflation rate since 1981 and spiking costs for healthcare plans, CFOs are feeling the impact of this double-whammy situation. Today’s employees expect tailored medical benefits as part of their overall compensation package, yet balancing costs with increasing demands is proving to be more challenging than ever. However, brokers who work strategically with PEO experts can help alleviate this burden and better prepare clients for the future.
The strain of inflation is weighing heavily on all business leaders. With health benefits being the second biggest HR expense after salaries, mitigating costs is a concern for not only CFOs but all small- and medium-sized businesses (SMB). Because in addition to the hefty 8.5% inflation rate increase, healthcare costs are trending upward due to claims for long COVID, introduction of new therapies, and an overall higher utilization of benefits across the board.
A recent Mercer survey reveals over half of CFOs recognize increasing healthcare costs as one of their top five concerns and are scrambling for sustainable solutions. However, there’s hesitancy to change healthcare plans or provider networks as these often shift additional costs to employees, which reduces a company’s competitive value and often causes current employees and potential candidates to look elsewhere.
Though statistics show the Great Resignation is beginning to plateau, the shift in compensation expectations remains. Promoting a culture based on maintaining an employee’s well-being positively affects productivity, performance, and loyalty. Research shows well over half of employees would be willing to accept lower compensation if the company offered a valuable benefits package, and over 40% are considering leaving their current roles due to lack of adequate benefits.
Therefore, it’s up to PEO brokers to guide company financial leaders to look at their benefits plan from a different perspective. Rather than simply evaluating it as another expense needing to be cut, it should be viewed as a significant asset necessary to retain and attract today’s leading talent.
Turning a stressful situation into a sustainable solution
Sourcing the right health plan is not a one-size-fits-all solution. It requires the attention of a seasoned PEO broker to ensure both employees are satisfied and SMBs are receiving a favorable return on their investment, especially now as employees are being choosier about who they work for and the benefits they wish to receive. Furthermore, traditional health plans are no longer as relevant to the healthcare needs people want and require today. These include mental health care coverage, extended maternity/paternity leave, virtual medical support, and more personalized provider resources. Run-of-the-mill health plans no longer cut it when it comes to staying competitive. So, how do SMBs make changes without being overrun by costs?
Brokers who partner with professional employer organization (PEO) experts can help SMB leaders create and implement cost-effective, long-term strategies by applying employee benefit services tailored to fit each company’s specific needs. This starts by evaluating employee engagement levels, hidden costs, and plan management prioritization.
Healthcare benefits are one of the biggest factors job candidates consider when looking for a job and is a leading retention factor for current employees. By working with a PEO company to initiate employee feedback and personalize benefit selections, brokers can help their clients maximize health plan usage and make changes as needed.
Uncover hidden retention costs
A PEO company can also review a SMB’s current benefits program and uncover hidden costs potentially affecting their bottom line, such as low employee retention. Benefits play a significant role in an employee’s job satisfaction, and when these are sub-par, it’s all the more reason to look for employment elsewhere. The loss of a salaried employee can cost an average of six to nine months of the individual’s salary. Weighing added health insurance coverage against this type of loss can guide SMB leaders toward making more informed business decisions.
Initiate year-round conversations
Workplace needs and budgets can change drastically from year to year, which means benefits plans should adapt to these fluctuations as well. Rather than a standard annual meeting to discuss renewals or possible plan changes, it’s helpful for brokers to engage in ongoing conversations with their PEO partner who can tailor employee benefits services to accommodate their clients’ current work environments.
Alleviate burden from CFOs
Juggling inflation, healthcare costs, and employee satisfaction is a responsibility that requires full-time attention, which SMBs often can’t accommodate on their own. A PEO broker can leverage the support of HR experts to carry the weight of these challenges and free up time and resources for business leaders to focus on other areas of company growth.
Proactively adding value with PEO expertise
Every PEO broker wants to add value for their clients and help them reach their business goals. This starts by giving CFOs and SMB leaders breathing room necessary to grow. Leveraging a PEO like ExtensisHR is a proactive way for brokers to connect their clients with experts well-versed in all things HR who can create for them a tailored benefits strategy. With guidance, technology, and resources readily available, ExtensisHR provides a comprehensive, cost-effective approach to tailoring employee benefits services in a way which works best for each company.
Inflation is an inevitable problem which makes finding cost-competitive answers invaluable. In addition to negotiating cost-effective health plans, brokers can offer clients individualized support through a PEO partnership to help SMBs grow faster and scale smarter. This includes tackling all HR challenges, including talent management and recruiting, benefit planning and administration, and risk management and compliance, all of which is powered by HR technology to streamline workflows and support remote accessibility.
A PEO solution shifts HR responsibilities into the hands of experts, which frees up time, costs, and resources for SMB leaders and helps to reduce employee turnover, increase company competitiveness, and create new opportunities.
Want to support your clients’ business growth with an all-encompassing benefits strategy? The experts at ExtensisHR are ready to chat.