Maria Trapenasso, SVP, Human Capital Solutions and Megan Nail, VP, Total Rewards Practice
Today's fast changing market requires an agile approach to make great employee benefits, or even good employee benefits.
Have you reviewed your total rewards package lately? Your employees’ needs have likely evolved, and you may still be investing in benefits that no longer hold value, especially when younger generations are continuously bringing new priorities to the workforce.
Top 5 Employee Benefits Trends
Employees seem to have ever-changing needs and expectations. Particularly with how much has changed in the past few years, you might not have the right total rewards offerings for your employees and your organization to match modern employee benefits expectations.
Here are some tips and tools from NFP experts Megan Nail and Maria Trapenasso that can help your organization take advantage of key employee benefits trends.
Total Rewards
A total rewards program is essential in shaping the employee experience. When executed effectively, a total rewards strategy enhances that experience, boosts the brand, and adds value to the company in terms of reputation. A frequent issue for employers is the gap between compensation and benefits. A hiring manager making compensation decisions may not be coordinating details with the leader who manages healthcare benefits.
An employee will see and feel the entire picture — that’s why coordination, open lines of communication and employee feedback are critical.
It’s a delicate balance, and employees will know if that balance is off. If resources are directed at additional employee benefits, rather than compensation, an employee who is generally healthy but struggling to handle cost-of-living expenses may feel that imbalance acutely. For example, if an employee’s rent has gone up and her compensation is flat. She has a top-shelf healthcare plan, but is in great health, so some of the resources directed to that plan may be misspent.
There are factors – environmental, generational and geographic, just to name a few – that can affect the perceptions of total rewards in your workforce. When the pandemic hit in 2020, we saw how a disruption in public health could impact work and what mattered to employees; job security, working from home and paid sick leave increased in desirability and value.
Compensation
Compensation is the primary reason we work. There are exceptions, of course, but compensation is foundational. It’s also challenging. It may seem easy to observe the market and attempt to pay at the market rate or slightly above, but not everyone can or wants to do that. Instead, compensation should be viewed with a focused strategy and a framework that matches the organization.
Establishing a solid compensation strategy and philosophy begins with figuring out what is important to your employees by asking the right questions. Paying a little below market value because you have strong individual health coverage only works if that strong individual health coverage is valued by the current and prospective employees. If my business and employee population is mature, strong individual health coverage may be exactly what is valued.
Questions to consider when generating your compensation philosophy:
- Where do we want to compete?
- How competitive do we need to be?
- What are we choosing to reward?
Leadership and HR should be aligned on:
- Where you want to set pay in relation to the market median.
- Fixed versus variable pay.
- Who your competition is for business and for talent.
- The role of compensation in the total rewards offering.
- Supporting communication and transparency regarding compensation.
This established philosophy and strategy will inform your compensation program and help to align resources to accomplish your organization's goals.
Well-Being
Employers are strategically moving away from the myopic view of using well-being to reduce healthcare costs. Instead, they are implementing well-being initiatives to improve broader people metrics and key performance indicators tied to growth and profitability. If you feel well, you work well – this now includes physical, mental and financial aspects of well-being.
On that note, the NFP 2024 US Benefits Trend Report cites an alarming statistic: “50% of employees have $1,000 or less in savings for a catastrophic medical expense.” According to this year’s survey data, that number is only getting worse. You bet that effects well-being and work performance.
We are seeing this most dramatically in the increased focus on mental health and well-being. The aforementioned US Benefits Trend Report also highlighted mental health, noting that one in three employees feel distracted by non-work issues, and 58% of workers are interested in mental fitness programs. Not only is this a substantial public health issue, it also has major impacts on our organizations. It is important to address mental health concerns and more holistically well-being in general for these reasons:
- Improve morale
- Increase productivity
- Aid in employee recruiting and retention
- Lower absenteeism and increase presenteeism
- Change health behaviors
- Lower health risks
- Become/retain best-in-class employer status
- Improve economic competitiveness
Leave Management
Informed paid leave policies are imperative in today’s talent marketplace to an organization to engage and retain skilled employees. The overall demand for personalized benefit offerings remains strong, which means that having the market insight and strategic know-how to create them is essential for employers looking to address employee needs and advanced organizational goals.
In the 2025 NFP US Leave Management and HR Trends Report, our experts dive deep into the trends across leave management that could make a real difference in your business. Among those trends include:
- HR technology
- Employee relief funds
- Menopause accommodations
- Remote work challenges
- Maternity and paternity leave
- Family caregiver leave
- Bereavement leave
- PTO and vacation
- Paid sick time
- Holidays
- Policy communication
As HR leaders and decision-makers review their company policies, it’s crucial to candidly assess whether the organization’s leave offerings are truly effective in attracting and retaining top talent.
Employers who view their leave policies as strategic assets – rather than mere compliance requirements – will be better positioned to create workplaces that truly support and engage their employees.
Creating a More Inclusive Workforce
Not only do diverse and inclusive teams have better business outcomes, expanding your talent pool and total rewards package to better support underrepresented populations can help fill open positions and gaps in your succession plan. 'Degree inflation' is when jobs require a degree (often a four-year college degree) as a baseline qualifying credential for a job interview, but it may not be needed for the job. To create more equitable and inclusive workforces, employers are turning to more skill-based hiring and programs such as apprenticeships and externships to fill staffing needs. At the same time, this approach is most successful when paired with robust talent development programs, such as learning and development opportunities, mentoring and coaching which can begin with new hires and help cultivate employee development throughout their career journeys.
Bringing It All Together
When each piece of your total rewards program works with each other to support both your employees’ needs and desires as well as your organization’s mission, vision, and culture, you will succeed in making recruiting, retention and engagement easier and more effective for your business.
Want to talk more about total rewards? Connect with Megan Nail or Maria Trapenasso on LinkedIn or connect with NFP's Benefits team.
