As anyone who works in the sector knows, healthcare faces intense financial and workforce pressure in the wake of the pandemic. The AHA estimates that hospitals and health systems lost $323 billion in 2020. At the same time, competition for a shrinking pool of qualified talent has deepened now that the worst of the crisis is over. Three of 10 front-line healthcare workers, many of them reporting symptoms of PTSD, indicated they’re considering leaving the field.a
Add these sobering numbers to the well-documented shortage of healthcare workers that existed long before COVID-19, and it’s clear that healthcare organizations have hurdles ahead.
With a rapidly aging population and burgeoning demand for medical services, healthcare providers can’t afford to lose their most capable skilled and unskilled people. To remain competitive in an environment of heightened uncertainty and worker scarcity, they need fresh ways to make smarter, more judicious use of their workforce, keep their best talent, differentiate themselves as a rewarding place to work and motivate the most qualified candidates to climb on board.
Differentiation builds loyalty
Employee benefits and total rewards packages are vital to an organization’s ability to edge out the competition in attracting and retaining qualified people.
The range and types of benefits and rewards offered also send messages to potential candidates as well as existing employees about the organization’s values and attitudes toward its people.
Benefits and rewards can allow organizations to meaningfully differentiate themselves in the market. That differentiation can build loyalty and bolster attraction and retention.
When it comes to developing benefits and rewards programs, however, providers tend to focus on benchmarking — measuring how well their offerings compare with those of competing organizations and the industry overall.
This approach makes sense, to an extent. Providers need to know how their benefits stack up against the competition. But benchmarking isn’t enough, particularly in a post-pandemic world of financial precariousness and employee ambivalence.
“The health crisis has spurred organizations to start rethinking talent attraction and retention,” said Tim Glowa, a principal, and employee listening and human capital analytics lead at Grant Thornton.
In addition to benchmarking externally, providers are beginning to look internally at their rewards and benefits and listen to their workforce using an analytics-driven strategy called employee preference optimization.
“The typical organization in the United States wastes about $5,000 per employee per year by giving people benefits and rewards they don’t value,” Glowa said. “We can help providers change that.”
Employee Preference Optimization (EPO) is a tool that organizations can use to deliver more value to employees while also saving money. EPO can be applied broadly to optimize an organization’s total rewards plan or can be focused only on specific program or employee markets (executive rewards, expat optimization or executive MBAs).
“Using this approach, we can help organizations design programs that 70% to 80% of employees think are better than what they have today and that potentially save $2,000 to $3,000 per person per year,” he said.
The preference analysis is custom-tailored to organizations’ specific priorities and parameters and will yield reliable insights, not only illustrating which rewards employees want most, but the trade-offs they are willing to make, as well. They cannot realistically have everything, but EPO can pinpoint the mix of benefits and rewards that most closely matches employees’ needs, given where they are in their careers or personal lives.
What benefits would a specific population of employees prefer and what would they be willing to trade for those more meaningful benefits instead? How can the organization provide that optimal mix of benefits and rewards more cost-effectively by shifting financial resources to the programs that matter most?
“It’s really important to understand what those preferences are,” said Ashley Edwards, senior manager, Human Capital Services. “And it’s not just about benefits and compensation. Things like career progression, learning and development programs, and work-life balance also come into play. For instance, organizations could offer a sabbatical for employees who are in danger of burnout to keep them engaged. The key is listening, and we can use this employee-listening technique to better understand what employees really value.”
EPO is based on conjoint analysis, a type of statistical analysis often used in marketing to understand how customers (in this case, employees) value different components or features of their products or services (benefits and rewards).
Which would they prefer, for example: twice the amount of life insurance or an extra week of vacation per year? An increase in pay at 2%, 4% or 6% or three visits per year at the health system’s center of excellence for an aging parent or a fitness benefit for themselves at a given dollar value per month?
“We work with our clients to understand the population they’re having concerns with,” Edwards said. “We target the population by working with the HR team to understand their areas of interest and can focus on specific employee groups.”
Insights gleaned from preference survey data can help organizations pinpoint where resources are being wasted on benefits and programs that employees would be willing to give up for more meaningful alternatives. A health system might see huge enrollment in one program versus another that is costing the organization a lot of money but generating little interest. The organization can improve attraction and retention by shifting resources to the preferred benefit, reducing costs in the process.
Preference survey findings led one health system to implement a program that provided a certain number of medical visits per year to the aging parents of a subset of employees, according to Edwards.
Providers can also dive into specific benefit areas to understand what their people value. “An organization may believe employees want additional employer retirement contributions but discover through a preference survey that they really value having more flexible work arrangements, such as four-day summer work weeks,” she said. “We’re able to see those preferences in real time.”
The analytics platform enables modeling of the cost implications of various hypothetical benefits scenarios as well. The simulations help providers identify cost-saving opportunities while developing programs that more closely mirror the preferences of specific employee populations or the workforce at large.
Predicting ‘flight risk’
In many cases, organizations offer benefits purely based on what seems attractive or what the competition is offering. However, a preference survey may reveal that there are certain benefits that are a significant cost to the employer, but that employees consider disproportionately less important. That number may be large enough to warrant replacing the benefit with another option (e.g., a larger professional development stipend) that reduces the total cost of benefits per employee per year as well.
Machine learning can be used to predict, with a high degree of reliability, the employees who are at high, moderate and low risk of leaving the organization within given time frames. Providers can proactively target individuals in the flight-risk group who are high-performing employees with specific benefit and reward offers, based on their preferences, that could motivate them to stay with the organization, rather than move to a competitor.
“Benchmarking is not enough, particularly in a post-pandemic world of financial precariousness and employee ambivalence; differentiated benefits and rewards that are meaningful to employees are inconsistent with benchmarking to the 50th percentile,” Glowa said.
“Not surprisingly, aligning total rewards with the market median often does not result in offerings that are meaningful to your employees or that differentiate your programs from your competitors.
“We can help organizations design a program holistically and support the communication, change management and rollout to employees that goes with it,” Glowa said. “But we can also drill down to the level of an individual employee by understanding what that individual cares about. Don’t offer that person a higher retirement plan contribution if what’s important to them is work-life balance and more vacation time with their kids. That’s the hot button you need to press to engage them and motivate them to stay. Our goal is to help organizations make better decisions about their most important asset, their people, and to give them the data that they need to make those decisions with confidence.”
About Grant Thornton
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a. “AHA report: Hospital financial losses from COVID-19 expected to top $323 billion in 2020,” June 2020, and “Burned out by the pandemic 3 in 10 healthcare workers consider leaving the profession,” Washington Post, April 22, 2021.