EMPLOYERS FOCUS ON RECRUITMENT AND RETENTION
Reviewing benefits and work practices in a tight labor market
By Thomas A. McCoy, CLU
More than half of employers (56%) made no changes to their employee benefits offerings last year, according to Guardian Life’s 2021 Workplace Benefits Study. They were necessarily focused on pandemic-related concerns. Now employers are better able to think long-term and consider benefits recommendations that match their long-term goals.
Evidence of the shift in employers’ priorities comes from Guardian surveys of approximately 1,000 HR and benefits professionals taken in June of 2020 and June of 2021. In last year’s survey, the executives ranked “Retaining and hiring employees” lowest among seven priorities-at 8%. A year later, it ranked third, at 43%.
Employers will be looking for an edge in a highly competitive job market. The U.S. Department of Labor reported 9.2 million job openings in April, 9.5 million in May and 10.1 million in June. The number of employees quitting their jobs rose every month during the first half of this year.
“After a period of low employee turnover early in the pandemic, employers are experiencing pent-up attrition,” said Lauren Mason, senior principal and career consultant at Mercer. “In recent months the U.S. has entered a period of supercharged growth, resulting in the need for many employers to staff up,” she noted at a recent Mercer webinar.
“While the pandemic has exacerbated the issue of labor shortages, there were already labor shortages before the pandemic as employers were facing a mismatch of skills for the workforce they needed.”
These challenges are likely to last for years, Mason said, citing Bureau of Labor figures, which project U.S. labor force growth of only .4% over the next decade.
Hourly front-line workers and hourly factory workers present the greatest attrition and recruitment problems, according to a Mercer survey conducted in early August. Almost three-quarters (73%) of employers surveyed were experiencing moderate to significant difficulty in recruiting hourly factory workers.
“Employers are offering more and more types of leave-some paid, some unpaid.”
Senior Vice President/Chief Strategy and Development Officer
The worker groups experiencing the next-highest levels of attrition and recruitment difficulties were professionals-both entry level and mid-career managers. Almost half of employers reported rising levels of attrition among these professionals.
“These challenges among professionals have been especially pronounced in industries such as professional services that rely heavily on knowledge workers,” Mason said.
The general news media has focused on companies that are raising their pay levels to draw workers into the fold. (Less publicized is what employers may be doing about pay increases for existing staff, which can be critical to employee retention.)
Mason said pay increases and other financial fixes, as well as flex time, paid time off and other perks are “fast actions” that employers can take to address their staffing problems in the near term. She said it will be important to balance these near-term actions with longer-term solutions.
“Because the labor market constraints are systemic and likely to persist, employers that don’t take longer-term actions are likely to continue to find themselves in a reactive mode.” Long-term solutions could include work-design changes, technology solutions and use of gig workers, Mason said.
She suggested that employers conduct an analysis of the unmet needs of their employees. “It should seek to identify what the greatest pain points are in their work and family life.
“The goal is to seek out sources of differentiation in their value proposition in a crowded labor market, as opposed to simply replicating the actions of other employers. This can also be used to target specific workforce segments such as women and minorities since we know that many of those workers have left the workforce.”
“An employer flex-time schedule could be a way to serve the needs of women and minorities with heavy childcare and caregiving responsibilities,” Mason said.
Kate Brown, leader of the Center for Health Innovation at Mercer, stated, “If an employer’s benefits program is designed to serve as a retention and recruitment tool, then management needs to examine how closely the benefits align with the needs of different segments of its employee population.” This could involve considering the needs of an entire generation.
“Gen Z is going to account for nearly 60 million job seekers in the next decade, which will vastly outnumber their Millennial predecessors,” Brown said. “Sixty percent of Gen-Zers report that they are unsatisfied with their company’s current benefits.”
Aside from the competitive reasons for employers to devote resources to employee needs, there are humanistic reasons in play as well. Almost half (48%) of employers surveyed as part of Guardian Life’s current Workplace Benefits Study said the pandemic made them more aware of employees’ well-being.
One response to this recognition of the importance of well-being has been increased attention to employee leave policy. Four in 10 employees in Guardian Life’s study said paid time off is a major factor in a job choice. Four in 10 also stated that they do not have access to flexible work arrangements like telecommuting but they wish they did.
Mike Prestileo, senior vice president and chief strategy and development officer of Guardian Life, told a Guardian webinar audience, “Employers are offering more and more types of leave-some paid, some unpaid. Some are provided in order to stay in compliance with state and local regulations, but some are doing it simply to differentiate themselves in the market.”
He added that, as employers increase their types of leaves offered, they are doing more outsourcing of leave administration.
Half of working Americans think that their workplace benefits are more important to their overall well-being due to COVID-19, according to Guardian’s study. Zarifa Brown Reynolds, vice president and head of the Guardian’s Small Business Segment, put it simply at the Guardian webinar: “The pandemic has taught workers what it is like when you get sick.”
The upcoming benefits enrollment period will provide evidence of how the pandemic experience affects individual product selections by employers and employees. Guardian’s study indicates that, of those employers that made changes to their benefits offerings in 2020, more than one-third (36%) added life insurance or hospital indemnity.
Voluntary products’ sales declined by 15.5% overall in 2020, with critical illness and hospital indemnity faring the best, according to Eastbridge Consulting Group’s U.S. Voluntary/Worksite Sales Report. Between 1997 and 2019, voluntary benefit product sales grew at a compound annual growth rate of just under 7%.
Eastbridge predicts a resumption of the historical 6% to 8% compound annual growth rate for voluntary business, “although it may take more than a year to recover to pre-COVID-19 levels. The move of employer-paid products to voluntary will most likely continue to increase as health insurance takes a larger bite out of the employer’s benefit budget.”
Regardless of whether protection products are delivered as employer- or employee-paid, there are ample gaps to be filled in delivering further security to workers. In Guardian’s study, half the workers surveyed had no disability insurance, one-third had no life insurance and 20% had no retirement savings plan.
“The goal is to seek out sources of differentiation in their value proposition in a crowded labor market.”
Senior Principal and Career Consultant
At every level of employment, competitive pay is critical, but employers realize they must look beyond pay rates as they seek to build a stable, productive workforce. Traditional benefit products will continue to play a major role. So will expanded leave policies, flex scheduling, and other non-traditional work arrangements when they serve to motivate good employees.
Traditional benefits or employee-focused workplace policies-the goal is the same. Prestileo of Guardian summarized it when speaking about leave policies: “An energized, well employee is a productive employee.”
Thomas A. McCoy, CLU, is an Indiana-based freelance insurance writer.