Over the next several years, the U.S. will continue to see a power shift among employers and employees.
By now it’s clear that the mass retirement of baby boomer employees — and the dearth of millennials and Gen Z-ers to replace them — is causing a nationwide labor shortage that’s forcing employers to work harder to recruit and retain viable employees.
That development may seem like a burden to the employers that must undertake cultural, procedural and financial challenges to keep their younger employees on board. However, it’s a boon to those enjoying the feeling of being sought-after, the higher pay grades and the greater range of benefits. In fact, one 2018 study shows 60 percent of U.S. employees (compared to 52 percent in 2017) are willing to increase what they pay for benefits in exchange for having more choice, flexibility and customization when it comes to their benefit packages. The percentage rises to 64 percent for younger employees and jumps to 84 percent for young parents.
In response, many companies have completely overhauled their employee compensation programs after researching the factors most likely to keep younger employees happy and productive. And one result has been a new selection of attractive voluntary benefits that would never even have been considered in the past.
“Businesses in search of the best and brightest are facing a field of candidates that are more empowered than ever,” notes the 2018 study. “Employees are in demand, positioned to dictate the terms of employment. Employees today see work as a part of who they are and, therefore, want their work to reflect their values, interests and aspirations.”
As employers compete to offer the best employment packages that will attract the best candidates, here are some of the most popular benefits they’re offering.
Financial wellness education. Employers have tuned into the fact that many younger employees want assistance in planning for their financial futures, and that they appreciate work-sponsored sessions that help them decipher the intricacies. In our uncertain world, it’s not surprising that one study determined 54 percent of U.S. employees are stressed about their finances.
The 2018 study found further that financial wellness and saving for retirement are priorities for 70 percent of employees, and 38 percent believe their employers should help them solve their financial concerns. A full 87 percent of respondents say employer-sponsored insurance gives them peace of mind against unexpected circumstances, and 48 percent say having life insurance reduces more stress than having auto, dental or home insurance.
That makes sense, since well-conceived life and disability policies ensure your loved ones will be financially secure if the worst happens and you’re unable to help care for them. Both categories protect your monetary assets — wealth you’ve accrued through time, strategy and hard work — from being depleted by worst-case scenarios.
And it helps explain why work-sponsored seminars, workshops and presentations in layman’s terms about how everything works are often popular with employees.
“Financial wellness benefits are a great way to create a more human connection with employees and to recognize employees both personally and professionally,” notes the 2018 study. “These benefits build confidence for employees, and that creates positive results both inside and outside the workplace.”
Student loan repayment. Student loans are a huge thorn in the sides of millennials and Gen-Zers, and that issue doesn’t appear to be going away anytime soon. In fact, some 44 million Americans already owe a combined $1.5 trillion in student loan debt. And 69 percent of college students in the class of 2018 had outstanding student loans, with an average debt per student of $29,800. Their average monthly student loan payment ... $393.
Savvy employers are seeing the value in helping their younger employees pay back those burdens, above and beyond more traditional salary packages, so they can focus more on their careers and save for the future. In a typical scenario, writes Andrea Januta in Reuters, the employer pays a portion of the employee’s monthly loan payment, reducing both interest and principal. For example, to address a loan of $26,500, charging 4 percent interest, an employer payment of $100/month could cut a 10-year loan to three years and save around $10,000.
Right now, such benefits are relatively unusual; the Society for Human Resource Management found last year only 4 percent of employers were implementing them. However, analysts predict the trend will grow as viable employees become even harder to attract.
Personalized voluntary benefit packages
As employers strive to control costs and employees continue to want different benefits, companies are increasingly adopting the programs and digital tools that allow their people to pick and choose which ones make the most sense for them — especially when it comes to voluntary benefits such as life and disability insurance. That provides a unique opportunity for employers to provide value in the form of related guidance.
In a 2018 study, 73 percent of employees agreed that having customized benefits increases their loyalty to their employers. “Employees will depend more on their employers for advice and help in understanding how to best leverage their benefits to address their specific needs," predicts benefits manager Tim Weber on SHRM.com. “Benefits offerings will become more personal, with targeted education to help employees on a need-to-know basis. Employers will use data-driven approaches to tailor their information and guidance, all wrapped in an engaging employee experience."
Flexible schedules. Younger employees are less willing than previous generations to put work before home and family, and as such, they’re insisting on at least some flexibility in when they get their work done. That aligns with a Marketplace-Edison Research poll finding workers 18 to 34 are more likely than those 35 and older to prioritize flexible schedule and remote work opportunities.
Employers large and small are listening after finding the perk of a flexible schedule makes their employees more productive, less stressed and better able to balance family obligations with work obligations. That explains why 67 percent of U.S. small businesses were already offering flexible work arrangements as of 2018.
For some companies, such policies simply allow employees to deviate one to two hours from the standard 9-5 work schedule, for example clocking in from 7-3 or 11-7. Others are even more relaxed about when work is conducted as long as each person’s workload gets done; some companies even allow unlimited time away from their offices depending on the scope of work involved. “The reality is, working a certain number of hours per week with set time off is a thing of the past,” writes Dede Henley in Forbes. “Given our access to information and new ways of working, flexibility and accountability are the way of the future.”
Remote work opportunities. Many employers are taking the principle of flexibility a step further by allowing employees to routinely work from home, from their cars or from other locations of their choice. That offers employees a number of advantages ranging from reduced commutes to less need for childcare to freedom to travel. Employers also benefit in a number of ways; for example, their older employees can stay in the workforce longer despite physical limitations, and employees who are sick can complete work at home without contaminating co-workers.
One February 2020 report found that that the number of Americans working remotely grew 44% in the past five years and 91% in the past 10.
“Remote work is no longer a privilege — it’s become the standard operating mode for at least 50 percent of the U.S. population,” notes Abdullahi Muhammed in Forbes. “Traditional employers are finally on-board and ready to propose a flexible work arrangement higher up the pipeline.”
Career and personal development. Studies show millennials want their work to mean something beyond just a paycheck. In a Manpower survey entitled “Millennials Careers: 2020 Vision,” 93% of millennials said ongoing skills development is so important to their future careers that they’ll pay for it personally and give up their own time to pursue it.
Some ways firms are making that happen? They may offer seminars or webinars that increase workers’ knowledge about their jobs, technology, leadership principles or other career skills. Other tactics include regularly recognizing those who go above and beyond, offering clearly defined internal promotional opportunities and/or creating personal growth plans for each employee.
“Millennials fundamentally think about their role as a stepping stone and a growth opportunity,” notes Brandon Rigoni in HBR. “But they also want to feel deeply committed to their role and to work for a manager who will invest in their development.”
One final note: Digitization is becoming crucial
In a national trend affecting every kind of employee compensation, benefits-focused technology continues to rapidly evolve. As younger generations naturally seek more digital solutions addressing HR matters, companies are increasingly adopting online HR platforms that improve management and enable better decision-making by employees. “(That will) help the increasingly diverse employee workforce learn, understand and navigate the benefits process based on their specific needs," predicts benefits software exec Jon Shanahan in the SHRM article. “These systems can also reduce HR's transactional tasks, given that HR managers say they lose 14 hours a week due to lack of automation.”
In summary, if you are an employer who's continually strategizing how to recruit and retain the best employees, you'll want to pay close attention to the benefits and perks being offered by others in your field. Start planning now so you can keep going strong and compete, even in the tightest labor market.
Contact Ochs at 651-665-3789 or firstname.lastname@example.org to help you determine the best options for your organization. For more than 75 years, Ochs has specialized in group insurance for public employers. Additionally, Ochs developed The Municipal Pool as a way for small to mid-sized public entities to leverage their purchasing power. Members of “The Pool” receive enhanced plan designs, competitive rates and better rate stability.
Let Ochs work for you to find customizable employee benefits and technology solutions to complement your overall benefit plans.