SDBJ: 2023 Economic Trends Preview Section

SDBJ: Economic Trends Preview Section

An excerpt from the San Diego Business Journal‘s 2023 Economic Trends preview article in advance of Tracey Best’s presentation at the upcoming event. 

Tracey Best started her career in employee benefits over 20 years ago and still loves what she does. She is a partner and leads the employee benefits division at C3. Her core passion in working with clients continues as she finds getting to the heart of what clients truly want and need, bringing meaningful solutions that help their business and their employees very fulfilling. She is a member of SHRM, NAHU, Assurex Global and CIAB and believes in being a lifetime student.

What Tracey Best will be talking about at the 2023 Economic Trends event:

As 2023 begins, employers are still adjusting to the shifts that occurred during COVID both from an economic and talent perspective. Labor shortages, supply chain disruption and inflation issues are the top economic impacts facing companies. According to reports from the Bureau of Labor Statistics, health system labor costs grew 25% between 2019 and 2022, supplies up 18%, services up 16% and pharmaceuticals up 21%.

The long-term cost impact of deferred care due to the COVID pandemic is still being felt. With a majority of employer benefit insurance programs renewing on December or January 1, cost is top of mind. While most medical carriers kept increases for 2022 fairly stable, 2023 is the first year we are starting to see the impact of higher-than-normal health insurance increases. In 2022, most rates were set by carriers in the summer and fall before the impact of data was realized so carrier increases for 2022 were stable, if not below normal increases. For example, Mercer reported an average 5.6% increase (after plan changes for 2023) and AON projected 6.5%. In California, the mid-market companies have been experiencing the highest increases in the double digits and San Diego has experienced small group increases in the high single digits before plan and carrier changes.

2023 is the first year since COVID we are seeing the impact of claims costs, inflation and labor market increases in health care. These costs are included in the provider contracts when they come up for renewal between the carriers.  Carriers have multi-year contracts with health care providers and systems so they renew at different times and play an important role in the carrier renewals delivered.

Most companies tried to absorb increases in benefits costs as best they could for 2022 and starting in 2023 while passing along minimal costs to employees due to the tight labor market. Increases are not predicted to get much better in 2024 so it will be important for employers to plan with their broker partners now.  They can do this by working on creative strategies that can offset future cost increases in 2024 and beyond while still maintaining quality.

Remote Work – The Quiet Disconnection

The move to remote work has created some wonderful relief for workers and their families as well as unintended consequences. The sense of “quiet quitting” or what I believe is quiet disconnection: people working remotely who have over time lost some of their connection to the company, colleagues, and friends in the workplace. Those small moments of connection – conversations in the elevator, the halls, the workspace next to you, grabbing lunch, joking and smiling with a co-worker – are slowly being lost and that can be an added challenge for talent retention efforts for HR. Finding ways for those working remotely to have meaningful connections will be important going forward especially to companies with a large remote workforce.

Flexibility will continue to be a great benefit and a big challenge for HR in the balance between flexibility, culture and productivity.  Understanding your employee experience end-to-end will also provide many opportunities for improvements and increased attraction and retention.  Set aside time in early 2023 to review your employee engagement and retention strategy.

Do an assessment of your employee experience from end-to-end.

• Recruiting
• Applicant process
• Interview and Hiring
• Onboarding (first 90 days)
• Ongoing experience

Employee benefits are one of the biggest investments companies can make for their employees.  Making sure you communicate the value and resources throughout the year and in each of the employee experience steps above is critical to the overall satisfaction, understanding and value.

• How comprehensive and competitive is your program?
• Do you provide opportunities for employees to personalize benefits important to them?
• What is your enrollment and open enrollment experience?
• Is your information accessible from anywhere/anytime via technology so employees can find the resources and tools they need fast?
• Do you have an annual benefits communication plan to educate employees throughout the year on the various programs and perks available to them?
• Do you conduct micro surveys throughout the process for areas where you shine and those to improve?

Ways to stand out to current and prospective employees and begin to reconnect

There are many ways employers can stand out. Breaking down your employee experience into segments can be a good way to focus on each while making sure you maximize every step.  For example:

• Recruiting – one way to stand out is managing your brand and marketing on recruiting sites like Indeed and Glassdoor. When was the last time you looked at your sites? What do they say about your company to future employees? Do they reflect your true culture and brand?  What reviews do you have and what do they say? Do you know how to best manage those reviews? Your online presence is critical and tells a story in today’s connected world. C3 Risk & Insurance thinks beyond insurance to how we can help clients enhance their brand and presence in a variety of different ways both internally and externally.
• Onboarding – C3 Risk & Insurance works with HR departments to create a best-in-class communication and onboarding experience for employee benefits programs. This ensures that when employees onboard, it is easy to execute, understand and engage with the benefits and perks offered. We do this by taking the time to understand the current experience and how we can help make it even better.

In the end, make sure to work with your employee benefits advisor to put best-in-class cost strategies in place that help manage the expenditure, increase employee engagement and retention and make the most of your investment.