Retention Edges Cost Reduction as Benefits Objective
The study shows that 41 percent of employees polled in November “consider workplace benefits to be the foundation of their personal safety net as they awaken to current realities about their financial security,” up from 33 percent in August. That number rises to 52 percent for workers in a company that employs 2,500 people or more.
The cratering economy has caused 46 percent of employees interviewed to take a greater interest in understanding their benefits. In addition, 51 percent report that they obtain most of their financial products through their employer.
The attention to benefits is understandable in light of the fact that 50 percent indicated that they have only enough savings to miss two paychecks.
Even as layoffs increase sharply during the economic downturn, 50 percent of employers cite retention as their main objective in offering benefits. It just edges out controlling costs, which was cited by 49 percent.
“It truly is a balancing act you’ve got going on here,” said Bill Raczko, MetLife vice president and chief marketing officer for institutional business. He spoke at a conference Monday, March 23, in Washington where he released MetLife’s seventh study of employee benefits trends.
One of the biggest providers of insurance and benefits, MetLife conducted interviews of more than 1,500 company officials and more than 1,300 full-time employees in August and November.
The study shows that benefits strengthen the bond between companies and workers. Employees cited pay, health care, retirement and all other insurance benefits as the top factors influencing loyalty. Companies think that pay, health care, company culture and advancement opportunities are the most influential.
As they increasingly value their benefits during the recession, 33 percent of workers expressed concern that companies would cut benefits over the next 12 months. But only 12 percent of employers are mulling reductions.
Boosting productivity is the primary objective in offering benefits for 40 percent of companies. For instance, the number of companies adopting wellness programs has grown from 27 percent in 2005 to 33 percent in 2008.
Of course, for employees to feel good about company benefits, they have to know about them. Raczko said employers need to communicate better, especially because employees are depending on them for financial guidance.
“Taking the time to have that dialogue is something that employees respond very positively to,” he said.
That is especially true for Generation Y workers, who are experiencing their first recession and have a proclivity for seeking and absorbing information from a variety of sources.
“They are almost like sponges,” Raczko said.
The twentysomethings also are in the vanguard of a trend toward accumulating retirement income through annuities—a goal of people across age groups who will be left with what Raczko calls “financial and emotional scars” from the precipitous drop in the stock market.
“Volatility is the issue here,” he said. “Guaranteed income that lasts a participant’s lifetime is increasingly being seen as the critical missing element of defined-contribution plans.”