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How HR departments are adjusting employee benefits amid COVID-19

February 22, 2021, 2:00 PM UTC

As we approach the one-year anniversary of COVID-19 lockdowns in the United States, employers are reevaluating the unprecedented and unavoidable challenges their workers have faced.

Care.com, a platform for finding and managing family care, just released the results of its 2021 Future of Benefits Report, revealing how COVID-19 has influenced how employers plan to change, and potentially expand, the benefits they offer to employees this year and in the future.

Gathering responses from C-suite executives and HR leaders across the country, the report examines how employers are prioritizing benefits like family care (for both children and seniors living at home) ahead of others, such as commuter benefits and office meals, because of the pandemic’s impact on how employees work as well as their well-being, performance, and attrition.

Overall, 98% of employers say they plan to expand benefits in some form. Care.com describes the boost for family care benefits as an “HR awakening,” with 82% of managers acknowledging that their organizations have become more aware of the care challenges their employees have been dealing with throughout the pandemic. At least half have seen productivity decrease in parents with minors, and 64% have experienced high attrition rates, in which 95% report care concerns as a major factor. In response, employers plan to combat this attrition by offering increased work flexibility (66%) and implementing childcare benefits (63%). 

And based on the report’s responses, the dedication to better family care benefits could be here for the long term. Approximately 50% of employers say they believe that the positive impact of childcare benefits outweighs the costs. Additionally, 65% selected “flexibility” as the potential positive impact of care benefits, followed by improved employee mental health (59%) and increased productivity (53%).

“While the need for better childcare benefits is definitely not new, the pandemic has forced a universal truth into the spotlight: Childcare is simply integral to absolutely everything. Without it, parents can’t work, business can’t grow, and our economy collectively suffers,” Alyssa Johnson, vice president of global client management for Care.com, tells Fortune. “The pandemic has also fundamentally changed where and how so many of us work, and indicators are that some of those changes will be permanent. The upside to no boundaries between home and work is that employees are now truly being seen as humans, not just workers. And as our research shows, this had shifted how companies invest in and prioritize care benefits from ‘nice to have’ to ‘must-have.’”

On the same note, it’s impossible to extricate family care benefits from the setbacks and job losses that women—especially women of color—have faced during the pandemic. Echoing other workforce studies, 71% report increased attrition has been more common in their female employees, resulting in 91% concerned by this loss of female talent.

“When women are forced to choose between their children and their jobs, everyone loses,” Johnson says. “Our research shows that overwhelmingly, employers believe that expanded childcare benefits can play a significant role in stemming attrition of female talent, and many plan to add them to their benefit offerings in the year ahead. These benefits include subsidized access to care platforms, backup care, and cash subsidies for childcare, among others.”

HR departments are also taking mental health more seriously, as for many office workers, months of working at home—while either alone or a crowded household, both involving their own set of stress factors—have taken a physical, emotional, and mental toll on employees. The consequences of stress have been intensified by the pandemic, and nearly a year in, many people are facing extreme levels of burnout.

While 61% of respondents say they already offer some form of mental health benefits, 41% plan to expand them in the coming year. And more than two-thirds of parents who sought mental health help for their children since the start of the pandemic said they had witnessed a decline in their child’s emotional well-being (72%), behavior (68%), and physical health because of decreased activities and exercise (68%). In response, 59% of HR managers say improved mental health will be one of the primary outcomes of caregiving benefits (and that percentage increased to 68% in companies employing more than 2,000 workers).

However, if employers are going to be boosting resources and benefits in one area, that inevitably means other employee benefits will take a hit. Approximately 89% of employers say that as a result of the pandemic, they will be deprioritizing at least one type of benefit—most frequently citing paid vacation days, commuter benefits, tuition reimbursement, on-site meals, and on-site childcare.

“While every company is different, one thing is clear: The future of work is flexible. Where, how, and when people are working no longer fits a particular model, so a traditional approach to benefits no longer applies,” Johnson says. “While PTO [and] vacation will always be in demand, so are solutions that help reduce stress and friction on a daily basis, like backup care or more flexible daily childcare options. More and more, companies are focused on fostering a flexible culture that enables employees to succeed wherever, whenever, and however they work.”

This report was conducted using the online survey platform Pollfish and compiled by DKC Analytics. The sample encompasses responses from 500 C-suite HR leaders and managers in the United States, surveyed between Dec. 16, 2020, and Jan. 6, 2021. The margin of error is 2.23%, and the sample was weighted for an even gender balance.