When it comes to attracting and retaining talent, benefits are often a major deciding factor. This is especially true in the wake of the Great Resignation.
In the last year and a half, millions of dissatisfied employees have left their jobs. I’m sure I’m not the only one who’s seen talented contractors who are vital to their team’s success happily resign in favor of other roles simply because those offers include healthcare and 401(k) benefits, not to mention the paid vacation time that they may lack. And honestly, in the same situation, I would too. The numbers don’t lie—when it comes to attracting and retaining talent, benefits are a major deciding factor.
This is especially true of the Great Resignation, which, let’s remember, was caused by the Covid-19 pandemic, a period during which retirement and healthcare benefits were vitally important, to the point that special exceptions were made to allow employees to tap into their retirement funds penalty-free. Findings from a 2021 study by Betterment surveying 1,000 full-time employees supports this, and their research shows that 74% of respondents “would be likely to leave their job for an employer that offered better financial benefits.” They also found that the most sought-after benefits are “a high-quality 401(k), a 401(k) matching program, and a flexible spending account or health savings account.” After all, even if Job A offers $5,000 more than Job B, if Job B has better benefits, those can quickly outweigh the pay difference. One medical emergency or even a single medical procedure can end up costing four or five figures (looking at you, $3,000 ambulance rides). And when it comes to retirement savings, it’s not just the money employees are losing out on in the moment, it’s the employer match and interest that would grow over 20, 30, or 40 years. Let’s be honest; there will usually be someone willing to pay a great candidate more. But benefits are the trick up sponsors’ sleeves that can make an enormous difference when it comes to attracting and developing a stellar workforce.
However, there’s an obvious caveat: this strategy only works when employees enroll. And as anyone will tell you, low enrollment is the bane of every sponsor’s existence. Therefore, sponsors should not only work to ensure their benefits set them ahead of the pack, but also that they’re doing everything in their power to make their benefits accessible to all to improve participation. Educational materials, for example, should involve clear, simple communication in multiple languages, formats (such as email, virtual seminars, in-person meetings), and approaches (information tailored to certain demographics, such as those with student debt, or those saving to buy a house, or employees on a tight budget vs. those with extra financial wiggle-room) that lay out the compounding benefits over time. In addition to inclusive outreach, material changes that can improve enrollment may include strategies such as employer contributions, lowering fees, and immediate plan eligibility and vesting.
Recruiting, training, and retaining employees is an expensive venture. According to the Association for Talent Development's 2016 State of the Industry report, employers spent an average of $1,252 per person in 2015 across all business sizes just training new employees, a number that has undoubtedly increased in recent years, particularly due to inflation. That accounted only for an average of 33 hours of training (less than a full work week!) which is certainly not the full amount of time it takes for new employees to get up to speed at a new job, a process that can take weeks or even months. Employees, especially new employees, can be expensive investments, but they are investments nevertheless. Given the importance placed on high-quality retirement and healthcare benefits packages, by offering top-tier benefits, sponsors can ensure that they see return on those investments while also creating a positive work environment and satisfied, long-term employees.
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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