Employee retention is a serious issue that employers in the hospitality and food service industry are facing today and as businesses recover from impacts of the pandemic, labor shortages still threaten the progress. According to the Bureau of Labor Statistics, the industry has an annual turnover rate of 73.6%1, much higher than any other industry.
As the hospitality industry focuses on overcoming the labor shortage in advance of the holiday season, many are turning to employee benefits as a strategic incentive to attract and retain talent. According to a recent survey by Joblist2, an employment search site, 38% of hospitality workers were not planning to return to the industry, citing a desire for higher wages and more benefits than the industry can support. About 45% said they wanted higher pay and 29% wanted better benefits.
However, for employers across all industries, rising healthcare costs have unfortunately been a common trend during employee benefit plan renewals this year. This has largely been a result of several factors since the start of the pandemic and beyond.
- For example, while all COVID-related claims (vaccines, hospital stays, etc.) have been mostly free for members, the insurance carriers are still paying for them, and in turn increasing their premiums to offset the expenses.
- Additionally, various drivers have led to higher carrier costs, such as more people are going back to the doctor for their elective surgeries uncovering that some issues may have gotten progressively worse over the past several years.
- With hospitals consolidating and doctors joining larger groups, providers are asking for more money for their services, etc.
According to another recent study, larger employers, where rates are individually set with carriers, project their health care costs will jump 6% next year compared with an average 5% increase they’re experiencing this year.3
In today’s market, restaurants, and all other employers within the hospitality industry must utilize creative solutions to mitigate the rising costs of healthcare, while still providing employees with competitive benefits offerings. This includes:
1. Individual Coverage Health Reimbursement Agreements (ICHRA)
An ICHRA enables employers of any size to reimburse their employees tax-free for health insurance premiums and medical expenses. With an ICHRA, employers set an allowance and employees choose the individual state plan that fits their needs.
Advantages include cost-effective renewals (individual plans do not increase much year over year), no minimum participation requirements and employees provided with a platform to assist them with enrollment.
2. Make Sure Plan Design Is The Best
The need to create an experience that your employees will value, in the workplace and beyond is a win-win for all. Utilizing HUB’s Persona Analysis tool is a powerful approach to designing and delivering employee benefits. It uses comprehensive understanding of your employees’ real priorities to develop a truly customized benefits plan that enhances the quality of the employee-employer experience and helps you stay ahead in the competition for talent.
3. Explore a Professional Employer Organization (PEO)
A PEO helps to manage a company’s HR operations. The PEO handles payroll, provides employee benefits, HR technology and compliance.
For smaller employers, the PEO underwrites the health insurance and if the demographics are favorable can save significant premium dollars. For companies without a true HR infrastructure and/or employees in various states, the PEO is ideal to assist with state by state complexities around mandates and taxes.
4. Voluntary Benefits
Offering voluntary benefits can help manage the labor gap in the hospitality industry and attract long-term staff. Funded by the employer or not, voluntary benefits have value to workers in this highly competitive labor market. Here are some options to consider:
- Supplemental health: Employees are often stretched to cover out-of-pocket medical costs. Supplemental health coverage pays benefits to members directly for treatments related to injuries, the costs of hospitalization or a covered critical condition.
- Accident insurance: If an employee or the employee’s family members suffer an accident away from the job, accident insurance helps pay for treatment. This coverage can help reduce workers’ compensation claims, as the funds enable employees to pay for treatment (rather than delaying it) if they are hurt.
- Legal services benefits: Group legal plans ensure access to professional legal help for everything from traffic tickets and small claims to landlord and immigration issues. They are good for employers on multiple fronts beyond recruitment, helping reduce presenteeism and absenteeism.
- Early wage access: These programs give employees access to earnings that have accrued between paychecks. Early wage access can be an attractive option for food and beverage workers to help avoid predatory lending and other practices that can hurt their finances.
It’s also very important for that employees are aware of all their health care options, as those over the age of 65 may find it more affordable to look into Medicare and purchasing a supplemental plan instead of taking the coverage provided by the employer.
Most importantly, shop the market. Working with an experienced insurance advisor affords you the opportunity to vet out markets that may not have otherwise been available to you.
- https://www.bls.gov/news.release/pdf/jolts.pdf
- https://www.joblist.com/jobs-reports/q2-2022-united-states-job-market-report
- https://www.wtwco.com/en-US/News/2022/09/us-employers-double-down-on-controlling-healthcare-costs-enhancing-affordability
