Dramatic social, demographic, economic and legislative changes have introduced an era of accountability never before seen in the employer-employee relationship. To proactively assist employers in navigating these new dynamics, Mercer has launched “ Making Accountability Work: Effective Employer Strategies in a Multigenerational Age” ( www.mercer.com/accountability).
Mercer has identified a convergence of external forces that has ushered in this era of accountability and is redefining the very nature of work, health care and retirement, including:
Multigenerational workforce – The Millennials (those born after 1981) surpass the size of the Baby Boom generation and are bringing a vast influx of 20-somethings into the workforce. On the other end of the spectrum, 54% of pre-retirees plan to delay retirement 1 which means four distinct generations (Millennials, Gen Xers, Baby Boomers, and Traditionalists – each with its own set of values, attitudes, opinions, and needs) are working side-by-side for the first time in history.
Consumer choice – An explosion of options and access to information has shifted greater decision-making and financial responsibility for health care and retirement planning to the individual, with 72% of large employers offering voluntary benefits to fill gaps in core employer-paid benefits, 2 and the average number of 401(k) investment options increasing to 19, compared with only five options 20 years ago. 3Do-it-yourself culture – Health and retirement programs are following the popular trend toward a do-it-yourself approach, with two-thirds of large employers expecting to offer a consumer-directed health plan (CDHP) in the next three years 4, and defined contribution plans serving as the primary retirement plan for 78% of workers. 5 Business risks – Health care reform requirements and retirement plan expenses are increasing just as employers face heightened scrutiny on spending and risk management. As a result, 54% of employers offering pensions are likely to use a de-risking strategy in the next two years 6 and 58% currently use or are considering a defined contribution approach to control the cost of providing health benefits. 7 Employers also face a daunting workforce dilemma; while 64% believe that managing critical talent is essential to success, only 30% say they have programs that are “extremely effective” in achieving this goal. 8 Upon analyzing the significant workplace pressures created by this era of accountability, Mercer has identified three critical areas in which to focus its consultative guidance and targeted solutions for employers:
- Navigating the changing health and benefits landscape – Employers need strategic guidance to address the cost and complexity of health care reform, which has resulted in a growing demand for new benefit solutions, along with the growing demand for benefit program flexibility, consumer control, and easy-to-use decision aids.
- Securing retirement outcomes – Plan sponsors face the challenge of mitigating ongoing pension costs and risks while providing the appropriate defined contribution and savings programs, tools, and education needed to foster a retirement-ready workforce.
- Driving talent performance – To drive performance, organizations need help effectively forecasting talent needs, engaging multigenerational employees, mobilizing workforces, rewarding performance, and developing skills.