The benefits gap: are HR leaders missing the mark on employee needs?

In an era where personalization is paramount, many businesses are falling short when it comes to tailoring employee benefits to the diverse needs of their workforces. 

A recent study by U.K.-based Towergate Health & Protection, based on responses from 500 HR leaders, uncovered a striking disparity in employee benefits, potentially impacting recruitment and retention as well as employee satisfaction. Despite three-quarters of employers getting employee requests for specific and targeted benefits by demographics, according to the survey, 4 in 10 companies offer the same benefits to all employees regardless of age, lifestyle or risk profile.

The survey found that 7 in 10 employers would like to target their employee benefits but find it too complicated to do so.

That hesitation comes at a time when the benefits landscape is rapidly evolving.

“Benefits are constantly being advanced to offer more specific support for more specific needs,” said Debra Clark, head of well-being at Towergate. For example, benefits around neurodiversity, fertility, eldercare and menopause were pretty much unheard of not so long ago but have since become more mainstream.

“Benefits are constantly being advanced to offer more specific support for more specific needs."

Debra Clark, head of well-being at Towergate.

An earlier study by the Employee Benefits Research Institute underscores the importance of tailored benefits, finding that the value employees place on different benefits varies by age. For example, workers 50-64 prioritize quality healthcare coverage and retirement savings benefits, while those 35-49 value flexibility in work location and those in the 21-34 range put a priority on career advancement opportunities.

Gender-specific needs are also not being met. The Towergate survey also found that about 4 in 10 employers provide identical benefits to men and women, ignoring their disparate needs. That results in striking inequity, according to an analysis by Deloitte. Its research revealed that out-of-pocket healthcare costs for women in the U.S. are approximately $15 billion higher per year than for men — not only exacerbating the gender wage gap but supporting the case for businesses and health insurers to address those inequities through targeted benefits.

Adam Russo, CEO of the Phia Group, which offers employers consultancy services around healthcare, advocates for a more nuanced approach to benefits. “Essentially, there are four distinct groups — baby boomers, Generation X, millennials and Generation Z — each of which has very different healthcare needs and benefit preferences,” Russo said. He notes that soon-to-be-retiring boomers may primarily be interested in long-term healthcare insurance benefits while Gen Zers may prioritize virtual health services. 

Russo emphasizes that tailoring benefits isn’t just about meeting employee needs — it’s about fiscal responsibility. “The greatest benefit to the employer in providing benefits by demographic is that it reduces the chances of spending money on services that are simply irrelevant to many of their employees,” he explained.

“The greatest benefit to the employer in providing benefits by demographic is that it reduces the chances of spending money on services that are simply irrelevant to many of their employees."

Adam Russo, CEO of the Phia Group.

While the advantages of demographic-specific benefits are clear, implementation can be challenging. Russo notes that there is the risk that some employees could perceive different benefit offerings as a sign of discrimination, in particular ageism. Additionally, implementing a more intricately layered plan requires more manpower, and HR departments may not have the bandwidth to thoroughly execute strategic plans. 

But, Russo argues, the potential upside, including significant cost savings for companies and improved quality of life for employees, makes it worthwhile for employers and HR leaders to consider it as an option.

A one-size-fits-all approach to benefits seems increasingly outmoded, with companies that successfully navigate the shift toward personalized benefits potentially gaining a competitive advantage, according to Towergate’s Clark

“Employers should not be put off from the idea of targeting support more specifically to their employees,” she said, arguing that whatever costs arise from offering targeted benefits may be offset by gains in recruitment and retention, as well as employee engagement and productivity.