Most companies are holding the line on executive benefits, but persistent economic uncertainty isn’t the main cause, new research suggests.
In a new survey of 273 executive benefits decision-makers by consulting firm NFP, an Aon company, 80% said their organizations are keeping their executive benefits unchanged for next year. That compares with 74% that are maintaining their existing non-executive employee benefits.
The combined benefits trends “signal a shift toward control and predictability,” NFP wrote in its survey report.
The relatively conservative positions come as 94% of those polled said their employer is at least somewhat concerned about the economy, and 95% said the employer doesn’t know what to expect ahead.
But while the proportion of participants in NFP’s annual survey citing the state of the economy as a top factor influencing executive benefits grew by half this year, it still reached only 18%.
Retaining key employees will continue, for the year ahead, to be the most influential factor, followed by succession planning/leadership continuity.
Most respondents (81%) said their organizations cannot afford to lose top talent. At the same time, 73% said that while executive benefits are important, the company also must watch the bottom line.
The focus on succession planning is intensifying as leaders are moving in less-predictable ways. For example, key employees are staying in their jobs longer, the report noted. In fact, 56% of the surveyed decision-makers saying key employees have become more focused on retirement preparedness
That, however, is a “double-edged sword,” according to the report.
“Organizations are actively retaining critical leaders longer than planned, particularly where institutional knowledge, client relationships or operational expertise are difficult to replace,” NFP wrote. “On the other hand, delayed transitions can also create succession bottlenecks, limiting leadership mobility and making it harder for organizations to prepare the next generation of leadership.”
Yet, almost half of the surveyed organizations (49%) have not implemented any executive benefits strategies to support leadership transitions. And a majority (71%) do not explicitly design executive benefits around succession planning.
"Many organizations know exactly what is at stake, but knowing isn't the same as being ready," said Tony Greene, president of NFP's executive benefits division, in a release.
Meanwhile, executive benefits increasingly rely on third-party administrators, financial platforms, recordkeepers and advisory partners to manage sensitive financial and personal information, the report noted.
As a result, cybersecurity is becoming a more visible component of executive benefits decision-making. A large majority (79%) of the surveyed organizations said their concerns around cybersecurity have increased over the past 12 months.
Only 50% said their employers feel confident they can manage data security risks as AI becomes more embedded in benefits administration.
