Daniel J. Prescott
Regional Executive Vice President – Employee Health & Benefits, Retirement Services, Executive Benefits | Southwest Region
In today’s tight labor market, manufacturers recognize that finding skilled workers is challenging and retaining them can also be difficult. With experienced employees retiring, automation and digital know-how in short supply, and frontline wages facing competition from other industries, turnover has emerged as a significant risk for manufacturers, both in terms of urgency and cost.
Manufacturers report it costs an average of $20,000 to $40,000 to replace a skilled frontline employee.
Yet, too often, the solution is oversimplified: raise wages, offer bonuses, and hope employees stay.
Compensation alone may not solve a structural retention problem, especially not in a sector where safety, continuity, and institutional knowledge are critical. As explored in our recent Manufacturing Risk Report, a more sustainable path is to invest in employee benefits that support worker well-being, loyalty, and long-term performance.
Components of a strategic benefits package
Effective benefits packages go beyond basic healthcare to include financial wellness tools, data-driven plan design, and integrated health and safety strategies—all of which directly affect operational efficiency and employee satisfaction. A comprehensive approach may help reduce absenteeism, improve morale, and make your company a destination for skilled talent.
A modern employee benefits strategy is one of the key solutions featured in the Manufacturing Risk Report. Here are seven components that can provide significant value to manufacturers and their workforce:
- Integrated health and safety management: To help reduce claims and support workforce well-being, manufacturers need a connected view of employee health, safety, and absenteeism. Tools like Workers’ Health 360® combine medical, pharmacy, disability, and workers’ compensation data to identify risk patterns early, launch targeted interventions, and improve overall outcomes.
- Smarter pharmacy cost containment: Prescription drug spending is rising fast, with pharmacy benefits costs now approaching 30% of total healthcare spending. A robust pharmacy benefit management strategy helps optimize formularies, promote more cost-effective medications, and negotiate better rates. This approach may help reduce employer spending and free up the budget for other benefits while also improving adherence by lowering cost barriers for employees who need essential medications.
- Data-driven plan design: Gaining insights into how employees use their benefits is critical to optimizing offerings. Employee benefits analytics provide insights into medical claims, enrollment trends, and utilization patterns. This allows employers to eliminate low-value programs, identify emerging needs, and refine offerings to better match the realities of their workforce—from shift schedules to chronic conditions to care access barriers.
- Financial wellness support: Financial stress can undermine productivity and retention. Tools like Prosper Wise offer employees one-on-one coaching, retirement planning support, and help managing healthcare expenses or personal debt. These services can help workers feel more secure and engaged—and those who see a path toward financial stability are more likely to stay for the long haul.
- Accessible, competitive retirement planning: Retirement plans are a cornerstone of long-term retention, especially as the workforce ages. But many smaller manufacturers struggle to offer them. Solutions like pooled employer plans can enable smaller manufacturers to provide competitive 401(k) options while minimizing administrative complexity, helping to level the playing field with larger employers and demonstrating a clear investment in employees’ futures.
- Support for working caregivers: Childcare challenges are keeping many would-be workers out of the manufacturing labor pool. Forward-thinking employers are addressing this not by shouldering the full cost, but by prioritizing flexibility and convenience. Solutions range from flexible shifts and predictable scheduling to coordinated partnerships with local daycare providers or nearby employers. These efforts help make it easier for parents to return to and stay in the workforce.
- Clear communication of total rewards: Benefits only drive value if employees understand them. Manufacturers can enhance transparency with visual tools, multilingual videos, and annual total compensation statements that highlight the full value of their benefits package. When employees realize their $18/hour job is backed by another $10-12/hour in health, retirement, and wellness support, their sense of value—and loyalty—may increase.
A smarter investment for long-term stability
Employee benefits are no longer just a cost center. For manufacturers navigating labor shortages, inflation, and rising insurance costs, investing in a benefits strategy that supports the whole worker may be the most cost-effective decision you make this year.
When you’re ready to turn your benefits strategy into a competitive advantage, Marsh McLennan Agency can help. From analytics to pharmacy programs and retirement solutions, our manufacturing-focused specialists will work with you to build a package that attracts talent, reduces turnover, and supports your bottom line.
For more information on how a comprehensive employee benefits plan can help your manufacturing business, download the Manufacturing Risk Report.
