The economy is causing employees – particularly younger generations – to turn with greater interest to employers for help with establishing financial security. Nearly half (49%) of all employees surveyed say that because of the economy they are counting on employers' benefits programs to help with their financial protection needs, and that percentage climbs to 55% for Gen X workers and 66% for Gen Y. The majority of surveyed employers (60%) feel economic conditions are creating additional opportunities to leverage workplace benefits programs to achieve their objectives, and only about 10%, regardless of company size, say they plan to reduce benefits, according to MetLife's 10th Annual Study of Employee Benefits Trends. Findings from the study, available at www.metlife.com/benefitstrends, highlight ways employers can evolve their benefits strategies as a result of the recession to cost-effectively attract and retain a talented and productive workforce
Among the employers that see additional opportunities to leverage their benefits programs, 91% feel strongly that benefits can be used to retain employees, 86% say that benefits can greatly increase employee productivity, and 80% feel that benefits can greatly help attract employees – all key objectives.
"Economic conditions are driving fundamental differences in younger workers' attitudes toward employee benefits, financial decision-making, career planning, job satisfaction and loyalty to employers," says Dr. Ronald S. Leopold, vice president, MetLife. "While one out of three surveyed employees are hoping to work for a different employer this year that number jumps to one out of two among Gen Y. With younger workers in particular looking more closely at their workplace benefits, employers have the opportunity to leverage them as a driver of employee loyalty. The study found that employees who are very satisfied with their benefits are nearly three times as likely to say they are very satisfied with their jobs."
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Voluntary benefits are of increasing interest to both employees and employers. More than half (51%) of employees overall are interested in having their employer offer a wider array of voluntary benefits, and that percentage jumps to 57% for Gen Y and Gen X workers. Furthermore, the study found that 62% of these demographics are willing to bear more of the cost of their benefits rather than lose them. The appetite for voluntary benefits is also growing among employers – 62% of those surveyed agree that in the next five years employee-paid benefits will become a more important strategy than they are today.
Retirement Readiness: A Growing Issue
The study illustrates that the past several years have eroded retirement savings, and the percentage of employees who have fallen behind schedule in their progress towards retirement savings has increased from 45% in 2004 to 50% in 2011. More than one-third of surveyed Baby Boomers (35%) say that as a result of economic conditions they plan to postpone their retirement. Having enough money in retirement is a growing concern for younger workers as well. For instance, in 2003 one-third (33%) of employees ages 21 to 30 were very concerned about running out of money in retirement. Now more than half (52%) of that age group are very concerned.
Workplace financial programs can help with retirement planning. The study found that only 39% of employees overall feel very confident in their ability to make the right financial decisions for themselves and their families, and 72% express interest in having various financial education programs made available in the workplace. The study also found that attending these programs can make a difference: 58% of people who attended a financial education program feel very confident in their decision making contrasted to 43% of people who had a program available to them but did not attend.
Loyalty Gap Widens
The study found that employee loyalty continues to wane. The percentage of employees who feel a very strong sense of loyalty towards their employer is at only 42% – a seven-year low. One in three people would like to work for a different employer in 2012, but that number climbs to one in two for Gen Y employees. Not too surprisingly, people who say they hope to be working elsewhere are nearly three times as likely to admit to a decrease in the quality of their work. Conversely, the percentage of employers who feel a very strong sense of loyalty towards their employees has grown to 59% in 2011 – a seven-year high.
More than half of surveyed employees (58%) say benefits are an important retention driver – and this is highest among Gen Y (63%) and Gen X (62%) workers. The study highlights a correlation between benefits satisfaction and loyalty. For instance, 61% of employees who are very satisfied with their benefits say they feel a very strong sense of loyalty to their employer compared to 24% of employees who are very dissatisfied with benefits.
While employers seemed to understand how items like salary and wages, advancement opportunities and company culture influence employees' feelings of loyalty, they continue to underestimate the power of leveraging their benefits programs. For example, while 66% of surveyed employees say that health benefits are an important driver of their loyalty, only 57% of employers believed so. The divide widens when it comes to retirement and non-medical benefits. For instance, 59% of employees said retirement benefits are very important for influencing their feeling of loyalty toward their employer, but only 42% of employers realized this, and 51% of employees said the same for non-medical benefits like dental, disability, and life insurance, while only 32% of employers thought so.
For employers interested in realizing the optimal return on their benefits investment, it is hard to overstate the necessity of understanding employee viewpoints when it comes to what they want and value in their benefits. Without this insight, employers may be leaving important opportunities on the table – opportunities to better serve employee needs and improve their return on investment for the benefits program.
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