'When you're looking to redesign your program, you have other aspects of the programs to be meaningful to employees,' says Normandin Beaudry's Daniel Drolet
While cost optimization has historically dominated the design of employee benefit plans, recent trends outlined in MBWL’s recent report have found that plan sponsors are beginning to shift their focus. One from trading margin-minded strategies for initiatives that prioritize employee wellbeing.
As Daniel Drolet explained, this pivot marks a significant departure from the cost-cutting tactics that defined earlier economic downturns. However, he did acknowledge that cost remains a pressing issue for organizations, particularly as group benefit expenses continue to rise faster than both inflation and wage growth.
“It's a bit lower than previous years but that becomes a challenge when you expect everything to align. You have those benefits trends that have doubled, then CFOs are asking more questions than before, like ‘Why are we trending at eight [per cent]? The rest is around three [per cent]. It should be aligned.’ It's not the same forces that drive costs as employee utilization also plays a role. It's not just inflation,” explained Drolet, senior partner, group benefits at Normandin Beaudry, MBWL’s partner. “That becomes a discussion we have often, and it's still a concern.”
Historically, employers approached plan redesign with a focus to optimize and do more with less like maximizing efficiency within a fixed budget. Drolet believes that approach has run its course as he noted over the past decade, many organizations have already implemented optimization strategies, notably around adding plan flexibility, expanding employee choice, and improving communications.
With much of that low-hanging fruit now gone, companies are rethinking what drives plan redesign as Drolet pointed to a drop in the number of employers listing cost as a primary redesign driver - from 81 per cent to 66 per cent - as a sign of changing priorities.
“What it means to me is today, companies who are redesigning their plans aren’t thinking about costs. There’s other consideration. Cost is still there, but it's not the main driver. When you're looking to redesign your program, you have other aspects of the programs to be meaningful to employees. That probably that takes more weight in the decision making than before. I don't think it means they have more money to put than before,” said Drolet.
He believes companies have accepted that cost containment has its limits as most have already optimized what they can without sacrificing value. Now, they’re more focused on aligning benefit strategies with employee needs, even if that means spending more in the short term, particularly around employee wellbeing.
Indeed, one of the standout insights from MBWL’s latest survey is how prominently wellbeing figures into future planning. Mental, physical, and even financial wellbeing programs have gained traction—not just as perks, but as essential tools for talent retention and long-term cost control.
Wellbeing initiatives in the workplace ranked highest among areas introduced or improved over the past two years, with 54 per cent of organizations identifying it as a top focus. When asked what employers are prioritizing to manage benefits costs, enhanced wellbeing programs again topped the list at 38 per cent. Drolet explained that while not all of these measures directly reduce spending today, they’re part of a longer-term strategy.
He noted that preventive care, such as early detection and intervention, ranked second among cost-control strategies. While not synonymous with wellbeing, Drolet said it reflects a similar mindset around reducing more severe and costly outcomes later, noting “It’s in the early stages of intervention."
What’s driving this change, he argued, is less about provable Return On Investment (ROI) and more so about responding to employee expectations. A few years ago, employers were obsessed with justifying every wellness dollar spent. But that equation has become harder to pin down as organizations appear more willing to invest without guaranteed returns because they recognize how much value employees place on these offerings and value employee retention.
“Companies today believe in that,” Drolet said. “Even though the ROI didn’t evolve that much, they’re willing to invest in employee health and wellbeing.”
The pressure to do so is also being driven by a more demanding workforce as Drolet highlighted employee expectations have risen significantly, especially around access to inclusive and supportive benefits. He argues that plan sponsors are realizing they can no longer afford to underdeliver; not if they want to stay competitive in an ongoing war for talent.
“Losing one person hurts them more than saving a bit on benefits,” he said. “Companies are willing to engage with their employees more about their benefits, they’re willing to invest more and to communicate better so employees understand their benefits, and they're willing to sustain an increase in usage.”
But Drolet asserted that sustainability in benefits is more than just about controlling costs, it's about having the operational capacity to maintain and manage them without growing internal headcount, pointing to mounting pressure on HR departments who are already stretched thin.
While employers may be more willing to invest in programs, the back-end resources to administer and sustain them haven’t kept pace. Many companies are turning to automation and external providers to ease the administrative burden.
He emphasized that HR and finance departments need to collaborate more closely. Too often, benefits planning occurs in silos, which can lead to misaligned expectations and missed opportunities.
“HR and finance need to work together to see the costs coming in advance when they design their plan. It shouldn’t come as a surprise but be built in in the forecasting and strategy,” noted Drolet.
