Co-Editor
Co-Editor

Co-Editor's Blog

Ctrl+Shift. Prioritize Employee Needs. Don’t Fall Victim to The Great Resignation.


Prioritize Employee Needs.

The COVID-era has introduced new challenges that employers, employees, and benefits consultants are having to sort through. The workplace landscape has changed, and in a quest for work-life balance and security, control has shifted, and employees have the leverage…at least for now.

First, let’s level set.

By now, you’ve heard of what has been coined “The Great Resignation”. Spawned by the pandemic, U.S. workers began quitting their jobs starting in the Spring of 2021 at near-record levels in search of better available opportunities elsewhere. By the end of 2021, 48 million people had quit, or 30% of the American workforce (1). I wish I could say it’s getting better – 4.53 million employees quit in March of 2022 (1). Throughout this period, workers have left work because of an increased safety net from pandemic-relief checks, a rent moratorium, student-loan interest rate freezes, and an abundant supply of good paying jobs. 

As of the latest information released in May 2022, there are almost 12 million job vacancies, with a hire rate of almost 6.6 million (1). The quit rates and job vacancies vs. hire ratio remain high. Employees are in the driver’s seat and everybody knows it. 

For a more detailed look at the “Why” behind the Great Resignation, here’s an excellent article: Pew Research Center Article on COVID-19 and the U.S. Economy

Let’s continue to frame the difficult situation employers and employees are facing.

To further break it down, according to Gartner, Inc., a technological research and consulting firm, U.S. employee annual voluntary turnover is likely to continue to jump by another 20% in 2022, with 37.4 million people expected to quit their jobs this year (5.5 million more than pre-pandemic levels) (2). New employee expectations will continue to fuel the rise in attrition. An organization with a turnover rate of 20% before the pandemic could face a turnover rate as high as 24% in 2022 and the years to come. Meaning, a workforce of 25,000 employees that would normally be prepared for 4,000 resignations would need to prepare for an additional 1,000 voluntary departures.

Inflation, now at a 41-year high, has put every dollar earned and every dollar spent under scrutiny. The 12-month inflation rate is up to 8.5% (1), with virtually everything being more expensive, and we are all feeling it. Gas is up 43.6% year-over-year, energy is up 11%, housing is up 6.5%, and rent is up 4.8%.

Medical care is only up 3.2% year-over-year; however, deductibles, copays, and out-of-pockets are steadily rising. In 2014, ACA lowered maximum out-of-pockets to $6,350 for an Individual/$12,700 for a family, but the 2023 levels have recently been set at $9,100/$18,200. Unsustainable increases everywhere you look for the average American.

While COVID seems to be less lethal and more under control now through treatment and awareness, there appears to be no end in sight for the instability of our financial markets. In fact, the DOW index had just finished down 8 straight weeks for the first time since the Great Depression, and there are fears of a recession which JPMorgan Chase CEO Jamie Dimon calls “an economic hurricane right out there down the road and heading our way.”

Americans are coming off a few tough years and are sick and tired of being sick and tired. They want solutions that can help them.

Employees need security.

There are important factors that stand out which drive somebody to accept work and stay at work at any given employer – the total rewards package, the company culture, workplace flexibility, and upward mobility. When it comes to the total rewards package, which has traditionally been more of an employee attraction tool than a retention tool, employee departure has become an impetus for employers to start making reasonable changes to employee programs. These changes can include items like permanent remote or hybrid work, expanded time off, student loan relief, mental health services, and voluntary benefits like critical illness, accident, hospital Indemnity/GAP, life, and disability insurance.

According to the Willis Towers Watson, due to the pandemic, 94% of large employers say that voluntary benefits will be more important to their total rewards strategy going forward, compared with 36 percent of employers who deemed them to be important in 2018 (3). Additionally, 70.8% of employers offered at least 3 different types of voluntary benefits in 2020 (4). In 2021, that number increased to 82.4%, and this trend is expected to continue. Consider this:

•    7 in 10 people in the U.S. are living paycheck-to-paycheck (5).
•    71% of Americans are concerned they don’t have enough money saved for emergencies (6).
•    The average Hospital stay is 4.5 days at an average cost of $10,400 per day (7).
•    Average out-of-pocket cost of a pregnancy was $4,500 – even with insurance. This includes pregnancy, labor and delivery, and three months of postpartum care (8).
•    Men have a 1-in-2 lifetime risk of developing cancer; For women, a little more than 1-in-3. Just in the U.S. alone, it is projected in 2022 that there will be an estimated 1.9 million new cancer cases diagnosed and 609,360 cancer deaths (9).
•    The estimated annual incidence of heart attacks in the U.S. is 720,000 new attacks and 335,000 recurrent attacks (10).

As a result of the day-to-day challenges employees face, 71% of employees reported that they intended to spend more time reviewing their voluntary benefits, with 53% planned to make changes to their benefits (11). Employees are finding ways to maximize their resources to achieve security for themselves and their families.

It is time for employers to act.

At this point, employers are acutely aware of their task at hand as employee attraction and retention has become a hot, and expensive, topic. Currently, 87% of employers are aware of the importance of employee retention and consider it a primary concern (12), while 64% of employees are actively looking for a different job (13). In fact, the Society for Human Resource Management estimates that the cost of replacing an employee is 6 to 9 months of that employee’s annual salary, or 2.9 million dollars per day for American employers (14). 
For employers to respond and restore a balance of control, they need to think even more strategically than ever about their greatest assets – their employees. They can start by asking themselves these questions:

•    How can employers create a modern-day working environment where people are highly engaged?
•    How can employers deploy new tools and strategies to help its teams feel more connected to their leaders, co-workers, and the work at hand?
•    How can an employers introduce new benefit options that fit the culture, and will they be utilized, valued, and useful in attracting and retaining a healthy, productive, and diverse workforce?

To build the foundation for a stronger business, employers need to implement real strategies to deal with turnover to make employees feel valued, wanted, and respected. Voluntary benefits are an important component to an employer’s total rewards package and their availability in the marketplace should be taken advantage of.

Many companies are increasing salaries, as money continues to be cheap, but not every employer has the financial resources as a Fortune 500 company. Also, U.S. employers are budgeting for an average overall salary increase of 3.4% in 2022 (15), which is far less than everyday costs have been rising, as I previously described. On the contrary, voluntary benefits are cost neutral to the employer, affordable to the employee, and customizable. Voluntary benefits can help to keep employees productive and at work instead of dealing with uncontrollable financial stress. A well thought out implementation of a new voluntary benefits offering, including individual benefits counseling and effective communication on how plan offerings can provide an additional layer of help and peace of mind, is an easy way to give employees more of what they need to manage real life situations. 

By fully understanding workplace trends and needs of employees, and given some time, employers can start to shift the control once again and participate in the Great Retention, leaving the Great Resignation for the history books.

Sources:

1.    U.S. Bureau of Labor Statistics, May 2022
2.    Gartner, Inc., 2022
3.    Willis Towers Watson’s Emerging Trends in Health Care Survey, 2021
4.    Corestream Pulse Survey, 2022
5.    Forbes, 2022
6.    MagnifyMoney, 2022
7.    HHS Agency for Healthcare Research and Quality, 2022
8.    University of Michigan, 2015
9.    American Cancer Society, 2022
10.    American Heart Association, 2022
11.    Kiplinger’s Consumer News Services
12.    KRONOS, 2021
13.    PricewaterhouseCoopers, 2021
14.    Society for Human Resource Management, 2022
15.    Willis Towers Watson’s Salary Budget Planning Report, 2022

About the Author:

Drew has built a career in the group insurance business over the past 15 years. His expertise in voluntary benefits led him to join ManhattanLife in May 2020 as Regional Vice President of Sales for the Southeast. He collaborates closely with broker partners to educate on and tailor competitive voluntary benefits programs for employers with the goal of attracting and retaining the very best workforce. AndrewEvelyn@ManhattanLife.com



Comments are closed.
LATEST BLOG
  • Biometrics