Investment in employee benefits remains a priority for most employers in the US as companies grapple with the challenge of attracting and retaining key talent, according to a report by WTW. Of the organizations surveyed, 80% said competition for talent is a top priority influencing their benefit strategies, while 67% cited rising costs.

“Employee benefits are significant differentiators in attracting and retaining key talent, and companies must prioritize in order to be an employer of choice,” Courtney Stubblefield, managing director and insights and commercialization leader at WTW, said in a press release. “Employers must focus on what their workforce needs by assessing the value of benefits and their impact on employees. This can be challenging given the complexity of benefit programs and the need to simplify operations.”

While competition for talent has been a priority for the past few years, WTW found it to be top of mind this year. Of the employers surveyed, 65% feel that their current benefit plan is effective or highly effective in attracting and retaining key talent, and 49% are focused on their benefit plans meeting needs across all employees. In addition, 43% of employers plan to improve their benefits position in financial well-being.

However, as 75% of organizations focus on managing plan costs in their strategy, balancing employee needs might prove more difficult, according to the report. Employers anticipate costs as a top challenge for benefit budgets in the next two years. While 46% of employers are concerned about the persistence of higher inflation on their benefits budget, 36% expect an impact from the weakening economy and current business environment.

According to the report, to manage costs and simplify offerings, 66% of employers have taken action to improve vendor contract terms; 83% are planning to do so. Meanwhile, for some employers, their only option is strategically evaluating the benefits they offer in response to rising costs.

WTW surveyed 595 organizations across a broad range of industries in the US between March and April for the report.