Rethinking the employee compensation package

In today's business environment, U.S. organizations face a unique challenge. While the unemployment rate held steady at 4.2 percent in May 2025, a significant skills mismatch persists in the labor market. According to the U.S. Chamber of Commerce's 2025 Worker Shortage Index, for every 100 job openings, there are only 92 available workers in the U.S. This shortage, combined with a growing skills gap that is projected to cost the U.S. economy $8.5 trillion by 2030, presents a critical challenge across various sectors.

The disconnect between overall unemployment rates and growing skills shortages means HR leaders and C-suite executives must rethink their approach to total compensation and benefits strategies. The traditional salary-first mindset is giving way to a more sophisticated understanding of what truly drives employee attraction, engagement and retention.

And U.S. employers agree, with 70 percent saying their company’s benefits package is critical to attracting and retaining the best workers. Moreover, according to the January 2025 TELUS Mental Health Index, 33 percent of employees would prefer better support for their wellbeing over a 10 percent salary increase.

This article explores how forward-thinking organizations can navigate these challenges by adopting a more comprehensive approach to employee benefits and total compensation. It will examine current labor market conditions and emerging trends in employee benefits. It will also present practical strategies that HR leaders can adopt to help create compelling value propositions that resonate with today's workforce, and that could ultimately help improve recruitment and retention of top talent.

The evolving employee benefits landscape

With recruitment and retention becoming a central focus for many organizations and HR departments, there is a growing importance of offering comprehensive and flexible benefits packages to help bolster these efforts.

However, when it comes to employee wellbeing in general, today’s employers face an increasingly complex landscape: economic uncertainty, fragmented remote and in-office teams, and widespread workforce mental health struggles. As employees navigate a combination of mental, financial and social health challenges, their expectations of workplace support have reached new heights.

These multifaceted challenges underscore the need for employers to help support the holistic health of their workforce. To do this, employers can shift their focus from addressing the poor health of individual employees to building a healthy workforce. They can do so by taking a portfolio approach: addressing poor health and promoting good health, and creating healthier teams, jobs and organizational environments.

This approach aligns with recent findings from the Business Group on Health’s 2025 Employer Well-being Strategy Survey, which found that, despite increasing costs, 93 percent of employers plan to maintain or expand wellbeing offerings in 2025.

The new total compensation package

Employers can differentiate themselves and help improve retention by aiming to take a holistic view of their compensation package. Here are a few areas that HR leaders can consider to help enhance their current offering:

• Financial benefits: Beyond competitive salaries, consider robust 401(k) plans, retirement savings plans and profit-sharing options.
• Personal health services: Offer comprehensive health services including dental, vision and prescription drug coverage for all employees (including part-time) and their families.
• Mental health and wellbeing support: With 51 percent of American workers citing cost as a reason for delaying or avoiding mental health care, solutions such as EAPs can help ensure employees can easily and proactively fit physical and mental health care into their day-to-day lives.
• Flexible work arrangements: U.S. workers prioritize flexible schedules and remote work options. In fact, 40 percent of employers are offering flexible work arrangements to attract skilled candidates.
• Professional development: Invest in learning programs, tuition reimbursement, and career advancement opportunities.
• Engaging perks: Consider unique offerings such as gym memberships, childcare support, paid volunteer days and personalized wellness stipends.

Measuring the impact: From ROI to VOI

While return on investment (ROI) metrics remain important, forward-thinking organizations are increasingly looking at value on investment (VOI). This approach considers qualitative business attributes such as morale, recruitment success, retention rates, employee satisfaction and engagement levels.

A valued, well-supported workforce is more engaged and productive. Organizations with engaged employees experience 18 percent higher productivity and a 21 percent decrease in turnover. Moreover, organizations that demonstrate genuine concern for the health and wellbeing of their people and their families stand out in a competitive labor market, making it easier to recruit and retain top talent.

As we progress through 2025, the U.S. workforce continues to evolve, presenting both challenges and opportunities for businesses. By taking a comprehensive approach to employee benefits and focusing on creating value for employees, organizations can better position themselves as employers of choice in this competitive landscape.

For HR professionals, benefits managers and C-suite executives, the key lies in understanding and responding to the changing needs of the workforce. By offering comprehensive, flexible and innovative compensation packages that encompass the whole person, employers can help support a happier, healthier—and by extension, productive—workforce.

Working with a partner like TELUS Health can enhance your compensation package and unlock measurable impacts for your business and people. Discover how our end-to-end solutions can help strengthen your organization and support your workforce.