U.S. businesses are shifting their HR/benefits strategies in response to some powerful workplace trends, such as soaring medical bills, baby boomer retirements and labor shortages. Their response to these trends sheds light on what the future of benefits will look like.
By polling 1,232 HR professionals, the Society for Human Resource Management found the top 10 workplace trends are:
1. Rising health care costs.
2. Large numbers of baby boomers retiring.
3. Medical costs jeopardizing the competitiveness of U.S. businesses
4. Aging U.S. population
5. Growing need for retention strategies
6. Federal health care legislation
7. Preparing organizations for an older workforce and the next wave of retirements
8. Threat of recession in the United States
9. Labor shortages at all skill levels
10. Demographic shifts leading to a shortage of highly skilled workers
Other issues became less urgent and were bumped off the top 10 list this year, including:
- Outsourcing and offshoring of jobs
- Demand for work-life balance
- New attitudes toward aging and retirement
- Increase in uninsured Americans.
- Increase in identity theft
- Work intensification/ employers demanding more productivity
- Technology vulnerable to attack or disaster
"There weren't that many surprises" in the survey findings, says Jennifer Schramm, manager of workplace trends and forecasting at SHRM. "The threat of recession was kind of a new one. Our members seem to be concerned about the U.S. [economic] strengths."
How did employers respond to the important workplace trends?
The most common actions by employers included: offering tuition reimbursement; investing more in training and development; implementing an employee data privacy policy; protecting employee and customer data from identity theft; increasing the use of technology for HR transactional functions; and implementing preventive health programs .
Companies are preparing for events that could impact their bottom line in the future.
"You just never know what's going to happen," Schramm remarks. "It's important to think about a number of different scenarios and have in mind what you can do to prepare for any number of different scenarios. You have to be prepared for anything, even things that seemed highly unlikely."
Important functions and outsourcing trends
The top five HR functional areas that are the most critical to contributing to a company's business strategy are staffing and recruitment (52% of employers); training and development (29%); employee benefits (29%); employee relations (27%); and strategic planning (27%).
Surprisingly, communications did not rank high at only 10%, according to SHRM.
Nevertheless, the recent slump in the national economy means that "recruiting difficulty seems to be easing," Schramm notes.
Outsourcing has been a fairly common strategy for managing HR and business challenges.
Companies are most likely to completely outsource employee assistance/counseling (62% of firms), flexible spending accounts (60%), background checks (52%) and COBRA compliance (46%).
They are least likely to completely outsource performance management, employee communication plans, policy development and implementation, organizational development and recruiting of nonexecutives.
"The more strategic things are done in-house because there's a need for a thorough understanding of the business and the business strategy," Schramm explains.
"Functional areas that are more process-oriented, not necessarily strategic, are the things that are easier to outsource."
Looking at the political landscape, HR professionals cited these factors as most likely to have a major strategic impact on the workplace: federal health care legislation, state health care legislation, growing complexity of legal compliance for employers and the outcome of this year's presidential election.
The survey was conducted in November 2007, before the election results were known.
Employee satisfaction
Benefits rank second among the components that employees consider very important to their job satisfaction, according to SHRM.
The top driver was job security, which is not surprising in today's economic climate.
"In 2008, we saw that job security was the No. 1 factor that determined how happy and satisfied people were with their jobs," Schramm notes.
"We don't know what our findings will be in 2009. It seems likely, given the current economic environment, that job security will continue to be one of the absolutely most critical job satisfaction factors."
When it comes to benefits, "the factors that employees seem to really value are the ones that have to do with a sense of security," she adds.
"There's a lot of insecurity people are feeling around having access to health insurance and not losing that. It's very important for them. People are very concerned about economic issues right now. In the past, work-life balance was really high on the list, but I think the current economic environment has pushed that down in favor of the more basic security factors."
Future predictions
In the future, the human resource consulting firm Watson Wyatt expects to see employers place greater emphasis on employee health behaviors, health risk assessments and giving workers more access to health and wellness programs.
"Employers are making great efforts to bring the dollar value of health care benefits into their employees' decision-making process," says Randall Abbott, a senior health care consultant at Watson Wyatt.
"With more employers shifting to plans with higher deductibles, introducing health savings accounts, and offering new incentives and penalties, employees need to take a more active role in their plan management and evaluate which benefits are right for themselves and their families," he adds.
Watson Wyatt also predicts a continued trend toward value-based prescription drug benefits, a continued shift to coinsurance and greater access to onsite clinics, retail clinics and health coaches.
To contain costs, more employers are conducting dependent eligibility audits and levying surcharges on employees who keep their spouse enrolled as a dependent when the spouse has access to health care coverage elsewhere, Watson Wyatt notes.
Newt Gingrich, founder of the Center for Health Transformation and former speaker of the U.S. House, anticipates technology playing a larger role in health care in the future.
He recommends using text messaging and cell phones for reminders about open enrollment, scheduled checkups and other preventive measures.
He says cell phone technology "will fundamentally change our behavior" in regard to health care.
In addition, he foresees a paperless future for health care, similar to the way banking has gone almost paperless during the past 10 years.
"We will save enough [by significantly reducing medical fraud] to pay for an electronic system nationwide," he predicts.
"We are migrating very slowly toward electronic [medical record] systems. Big hospital systems are getting there first."
Podcast
Hear more from SHRM's Jennifer Schramm in a "Five Minutes With ..." podcast, available at
