From a four-day workweek to pet PTO, employee benefits in 2025 will focus on personalization
As HR teams prepare for the year ahead, employee benefits packages are poised to undergo a dramatic transformation to meet the shifting expectations of a multigenerational workforce.
And with Gen Z set to overtake boomers as the largest segment of the working world and many traditional benefits losing their appeal, companies are getting more creative with their offerings to attract and retain top talent.
“Gen Z evaluates roles based on the immediate value and growth opportunities,” said KeyAnna Schmiedl, chief human experience officer at employee recognition company Workhuman. The trend is driven by several factors, including the sunsetting of pensions, the normalization of job hopping and the fact that a growing portion of Gen Z don’t think they will be able to retire, she added.
Indeed, the one-size-fits-all approach to employee benefits is quickly becoming obsolete. As Rick Hammell, founder and CEO of HCM and payments platform Helios, said, “The rise of benefit marketplaces will allow organizations to provide a diverse range of options while managing costs, empowering employees to customize their benefits to fit their unique lifestyles.”
Benefits under the microscope
Along with an increased emphasis on personalization comes more scrutiny of existing benefits.
During the pandemic, employers added certain benefits to support employees’ immediate needs. But CFOs have started to ask HR leaders what, exactly, the company is getting out of each of these offerings, according to Evan Falchuk, CEO of Family First, a caregiving solutions company.
“Benefits leaders are prioritizing benefits that affect a large percentage of employees, that those employees will actually use and that deliver a measurable return on investment for the company,” he said. “Benefits that pass this test will be the most successful.”
Customized wellness programs
The rise in personalization extends to wellness programs, with companies moving beyond traditional Employee Assistance Programs (EAPs).
Nadine Robinson, vp of HR at employee benefits platform Compt, predicts that garden-variety wellness benefits will be replaced by curated stipends employees can use for whatever supports their well-being: mental health, physical health, financial coaching or family care.
As companies invest in more sophisticated mental wellness services, the emergence of nonclinical mental wellness programs continues to catch fire. “It’s about creating cultures of mental wellness and well-being … having a kind of benefit where employees feel like you care about them instead of, here’s a self-serve EAP,” said Marissa Andrada, chief transformation officer at storytelling platform WUF World.
The hybrid work evolution
While remote work is no longer novel, companies will continue fine-tuning their approaches.
“If we don’t make hybrid work feel inclusive, fair and consistent, we risk leaving people behind,” said Edel Holliday-Quinn, chief leadership psychologist of the consultancy Centre for Leadership Psychology. “Employees want flexibility, but they also want to feel like they belong to something bigger.”
When it comes to alternative working arrangements, the four-day workweek is one of the most promising benefits to have gained traction, according to consultant Jorge Tittinger. The truncated week not only enhances productivity by encouraging employees to focus on outcomes rather than simply the hours put in but also helps reduce burnout and foster a better work-life balance, he suggested.
Pets are family, too
The concept of family benefits is expanding to reflect a range of lifestyles — and that includes families with household critters.
“As workers define what ‘family’ means to them and define it differently, individuals who choose to adopt pets want time to make sure their new furry family member has time to acclimate,” said Eric Mochnacz, director of operations at HR consultancy Red Clover, noting the rise of employee leave policies around pet adoption.
Pet health insurance has become an increasingly popular benefit among the workforce. In 2022, 36% of large employers offered it as a voluntary benefit, up from 22% five years earlier.
Andrada, whose company produces content centered around people’s relationships with their pets, points to recent data indicating that pet benefits figure heavily into people’s employment decisions — a trend that coincides with broader changes in family-related benefits, including enhanced fertility benefits and adoption support.
A yearlong affair
As organizations rethink their benefits strategies with an eye on flexibility, personalization and holistic well-being, Robinson advises HR leaders to regularly assess benefits offerings throughout the year, not just in preparation for a new year, to ensure “they’re really supporting your people.”
As the workforce spans multiple generations that do not necessarily value benefits in the same way, employers should let their people choose benefits that align with their life stage and personal needs, she suggested.
The most successful companies will be those that offer benefits packages reflecting their organizational values while meeting the diverse needs of employees. “By fostering a culture of choice and personalization in benefits, organizations can attract and retain top talent in an increasingly competitive landscape,” said Hammell.