Some companies cut benefits in 2020. This year should be different.
As workers strive to recover from the damaging impact of 2020, it’s important to recognize how deeply the past year has affected them.
2020 was the year of “Benefit Reduction.” If you want 2021 to be the year of employee satisfaction and talent retention, you might want to re-think reducing benefits for your workers. Based on a recent national study conducted by Broadridge Financial Solutions, a whopping 72% of working Americans said that after salary, financial wellness benefits are the most important factor in deciding to accept a job. Further, two-thirds of working Americans would look for another job if their employer took away any of the financial wellness benefits that are important to them. This decision to look for other work is not a purely monetary decision, but one that is driven by perceived value by their respective companies.
Related: 5 benefits and health care trends that may surprise you in 2021
The sudden arrival of a global pandemic hit many areas of the economy incredibly hard and companies struggled with the prospect of declining revenues and profits, as well as workplace uncertainties. Due to economic uncertainties, some found themselves having to re-think the benefits they offered to their workers.
Given the severity of the public health crisis and the sudden shock to the economy, some employers might have expected that employees would be satisfied to simply to retain their jobs during this time. However, the Broadridge study revealed that more than one in three employees suffered a reduction to their benefits and that these workers had to take steps such as adjusting recurring expenses, pulling from emergency funds and modifying retirement plans to maintain their financial health. The experience left them with a much stronger appreciation for the value of their employment benefits and frustration at seeing them reduced.
In the unprecedented crisis environment of 2020, workers and their managers arrived at a new understanding of how important financial wellness benefits really are to both groups. For some workers, benefits are a sign of how their company truly values them and appreciates the difficulties of working through a pandemic that presented them with tremendous financial and personal stress. What they found was that financial wellness benefits are crucial and an important factor when it comes to decisions about taking a new job or staying with a current employer.
This new reality, grounded in national research, presents companies with a difficult challenge. The financial pressures companies faced in 2020 were very intense, and some were forced to make difficult decisions to stay afloat. Longer-term planning and time-honored benefits may have been derailed due to the economic impact of the pandemic. Now, with two vaccines available and expectations about their widening distribution, along with other government programs, there is cautious optimism that this may bring a much-needed boost to the economy and employers may want to develop an approach to their benefits programs that is aligned and grows with improving economic expectations.
In this new year, employers should think about setting targets that set optimistic expectations for the long-term. That means, if you are sitting down to examine whether benefits is an area where costs can be cut, think about prioritizing cost reductions elsewhere, because a reduction in benefits may increase the risk of losing talent that employers rely on.
As workers strive to recover from the damaging impact of 2020, it’s important to recognize how deeply the past year has affected them. The Broadridge national study found that two-thirds of respondents think about their finances more frequently than they did before last year. However, each generation has a different sense of what financial wellness means.
It may seem surprising, but the youngest cohort – Gen Z workers, aged 18 to 24 – have been thinking more about their finances than their older colleagues. In addition, younger workers feel more satisfied than older workers when offered financial advice, investment coaching, student loan reimbursement, and even pet insurance. Older workers instead placed greater importance on being able to retire comfortably.
From a manager’s perspective, Broadridge’s study showed that managers believe that strong benefits offerings can make a significant difference in promoting employee satisfaction, while also helping to attract and retain talent. More than three-fourths of managers surveyed said that they think improving financial wellness plans would help with recruiting and retaining the workers they need, while more than half said not having the right financial wellness plan has made it more difficult to attract talent. Importantly, 83% of managers revealed that they are concerned that workers will change jobs if they don’t feel sufficiently supported by their company.
Managers reported that job candidates overwhelmingly prioritize medical insurance and retirement savings plans above all else when deciding to accept and stay longer at a job. Dental, vision and life insurance options were also rated as important by workers. The type of financial wellness that is most important to workers now is living without financial stress, feeling secure in their future and being prepared for emergencies.
Going further, it’s not just a matter of recruiting and retaining employees: 49% of managers have considered leaving their job due to their own dissatisfaction with their financial wellness plans, while 50% said they think not having the right employee wellness plans makes their job harder. The big picture was clear: an overwhelming majority of managers – 84% – said that having strong employee benefits plans improves company morale.
While financial wellness benefits clearly have a financial value, they also convey to workers that their employer values and appreciates them and recognizes this is a challenging time. Having programs that reflect a holistic appreciation of a worker’s broader needs sends a strong and persuasive message that they are valued as a person, not just as an employee. When it comes to the crucial decision of whether or not to accept a new job offer, or to remain with one’s current employer, the national study revealed that having a benefits plan makes a big difference.
Cindy Dash is senior vice president at Matrix Financial Solutions, a Broadridge Company.
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