Want employees to stay engaged? Offer company stock: Morgan study

Way back when, Bill Clinton was looking for issues to campaign on against George H. W. Bush. The phrase said by Clinton’s advisor, James Carville, “It’s the economy, stupid,” became his mantra that helped him take the White House.

It’s a long way from the late 1990s but the economy remains THE issue on everyone’s minds. That’s what Morgan Stanley at Work’s annual State of the Workplace Financial Benefits Study II found. For example, employees are scaling back retirement contributions. Why?

Because of the economic impacts related to inflation and/or concerns about a recession, 62% of employees report that they’ve needed to reduce contributions to their savings, with nearly a third (31%) reducing contributions to their 401(k) plans and more than a quarter (26%) scaling back on paying off their debts and loans.

The effects are being felt more by the younger members of the workforce. Gen Z (74%) and Millennials (68%) are more likely to make these reductions than their baby boomer counterparts (37%).

Employees also cite money-related stress as a performance inhibitor which is increasing year-over-year. Nearly 3 in 4 employees (71%) report that money-related stress negatively affects their work and personal lives, up 7% in 2021.

Employees aren’t speaking up when they need it most. Nearly half (47%) of employees report that they have either never thought to reach out or are unsure if they are allowed to reach out to their employer for assistance with their personal finances. Among age groups, Millennials (77%) would be most likely to say financial stress is negatively impacting their work and personal lives, up from 69% the previous year.

When asked what type of retirement planning would be most beneficial to them, employees identified access to a financial advisor as their top choice, with 52%. But there is a disconnect as HR professionals list goals-based retirement investment planning as employees’ top priority (47%), followed by access to retirement planning tools and calculators (43%), and tied for third, access to a financial advisor (40%) and retirement planning workshops (40%).

Related: 4 strategies to communicate effectively with employees about open enrollment

Financial planning, besides helping workers in their day-to-day planning goals, is a priority in retaining employees, with 76% citing this support as a top or high priority. Further, 93% of employees also view retirement planning assistance as a priority when choosing where to work. Also, notes the report, equity compensation is an effective tool to motivate and engage employees. Ninety-five percent of HR leaders (up from 92%) and 80% of employees (up from 75%) agree that equity compensation and stock ownership is the most effective way for companies to keep employees motivated and engaged.