By Rob Starr, Content Manager, Big4.com
Fifty-eight percent of executives say employee benefits costs are the leading factor impacting total reward decisions, according to the 2012-2013 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey. Throughout 2012, employers increased their employees’ share of the health and welfare benefits costs, reduced overtime and staff, and implemented hiring and pay freezes in an effort to reduce or contain labor costs. In addition, as a means to retain and motivate employees while further stretching their labor dollars, employers are favoring high performers with larger pay increases. On average, base salaries increased 4 percent for high performers in 2012, compared to 0.9 percent for low performers.
Eighty percent of employers in the survey experienced an increase in healthcare costs in 2012. One-third say that their health plan costs rose by at least 8 percent from 2011 to 2012. To address this increase, employers are passing more of the cost to employees by raising their share of the premiums, deductibles and co-payments. For companies overall, the average monthly premium for family coverage edged up to $1,252 for 2012, with employees contributing a historically high 36 percent of the cost. The average monthly premium for employee-only coverage was $539 with employees contributing 22 percent of the cost.
Some cost cutting has been necessary for companies to balance their resources during an uncertain economy:
- In the past 12 months, one-third of respondents reduced overtime, while one-quarter reduced staff and 16 percent implemented hiring freezes.
- Fourteen percent anticipate a wage freeze below the executive level in 2013.
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