Employees' shifting benefits priorities require new strategies

The COVID-driven recession and its aftermath have had far more lingering effects on the labor market and employment practices than initially predicted. Despite a historically short and quick recovery, the labor market and employment practices have yet to return to pre-recession levels. 

Due to a convergence of economic and societal trends that were already ongoing, many experts believe the economy, the labor market, and employment practices will not return to the world we knew before the pandemic. Rather, the workforce has begun to reevaluate their priorities and is now motivated by different factors. 

Entering a new era

Following the pandemic, employees are no longer striving for a work/life balance but a life/work balance that accounts for their own individualized list of priorities. According to a recent LIMRA study that asked employees the top factors they would look for when choosing an employer, salary or income potential (as expected) was the number one choice. However, 63% of employees chose something other than salary as a top consideration. In fact, according to a recent LIMRA Consumer Sentiment study, regardless of employer size, more than half of today’s workforce believes that better work/life balance and career advancement opportunities are just as important as wages/salary, employee benefits, and retirement plans. Other LIMRA research reveals that employees who agree they have good opportunities for career advancement, or their companies provide the training and tools needed to do their jobs well, are each about twice as likely as those who disagree to want to stay in their current positions. 

Additionally, our research shows that most employees feel employers have a responsibility to help them improve their wellbeing,  be it financial, emotional, or physical. Employees are looking at a variety of factors, including non-traditional benefits, work/life balance, and flexibility when they are making their employment decisions.

Understanding the importance of changing priorities

Far too frequently, employers have mainly focused on wages and core insurance and retirement benefits when addressing workers’ priorities and needs, often overlooking the value employees are placing on non-core benefits. While benefits such as medical insurance and paid time off are deemed important to both employees and employers, employees are pushing employers to provide benefits that better support their holistic needs. Moreover, employees rank many non-traditional benefits higher than life, disability, and supplemental health products.

With five different generations currently in the workforce, the set of benefits each desires and finds valuable varies. While some benefits are universally prioritized by employees of all ages, others are prioritized based on the unique needs of each generation. Not surprisingly, younger workers, who have faced economic uncertainty, tend to have a different mindset toward work than their older peers. LIMRA research indicates younger workers appear to place less emphasis on salary when it comes to making employment decisions — only 30% of Gen Z employees say that salary is the most important factor when considering a potential employer compared to 43% of baby boomers. In addition, younger workers are increasingly interested in learning opportunities focused on financial, physical, and emotional wellness. 

Looking ahead

In many ways, the pandemic has altered employees’ needs and expectations of the benefits employers must offer. Workers no longer view their professional and personal lives as separate spheres; rather, the two are increasingly interconnected. Moreover, with employers facing a “structural labor shortage” in the coming years, employers will need to evolve their overall benefits package to fit the changing financial, physical, emotional, and career aspirations of a progressively heterogeneous workforce. They will also need to offer a wider range of benefits to address their value propositions to align with the realities of future workforce needs.

Anita Potter is Assistant Vice President at LIMRA.