Employers Struggle to Meet Employee Demand for Higher Pay, Better Benefits
Mar 13, 2024
New
research reveals employers are often out of touch with the needs
of their employees, who seek higher
compensation, better work-life balance and quality
benefits.
With increased turnover rates in 2023 and rising demands from
employees for higher pay and better benefits, employers continue to face
challenges in retaining and recruiting top talent, according to new research
conducted by Franklin
Templeton Investments.
According to the firm’s “The Voice of the
American Employer Survey,” which included responses from 1,000 U.S. employers,
all with more than 100 employees, 62% said they conducted layoffs in the 10
months prior to the survey, and 91% of employers said they experienced at least
a 10% increase in staff turnover.
Around half of turnover was attributed to
voluntary terminations, such as employees quitting, and the other half was due
to involuntary terminations, such as company layoffs.
Additionally, 79% of employers recognized that
their employees’ expectations for compensation growth have increased in recent
years, and 76% said employees increasingly value work-life balance, as well as
career advancement. In particular, Franklin Templeton found that the rising
tide of promotion requests are often fueled by younger workers, as 86% of
employers reported that their younger employees have been more vocal about
their desire for raises and/or promotions.
Around 82% of employers also agreed with the
statement that “The workplaces of today face insatiable employees that continue
to ask for more,” with 80% of employers struggling to meet employees’ requests
for increased compensation.
While a majority of employers said they
recently increased the number of benefits they offer or have increased the
quality of their benefits, 80% said they are struggling with managing the
increasing cost of providing benefits, and 68% said health insurance premiums
for employees increased in the last 12 months.
Employee Concerns
Employers are trying to offer the right
benefits to retain and attract talented workers, and those workers are, of
course, most concerned with their own finances.
According to Franklin Templeton’s “The Voice
of the American Worker Survey,” which included responses from 2,001 U.S.
adults, the majority of workers reported being concerned about their income and
maintaining a standard of living, with other concerns including retirement
savings and health care costs.
For the first time in Franklin Templeton’s
surveys, financial health ranked higher in importance than mental and physical
health, experiencing a 15% growth from 2023 to 2024. Many workers said
they are concerned about running out of money in retirement, and 55% said they
plan on continuing to work during retirement.
The National
Institute on Retirement Security also found in its
new survey on retirement insecurity that 79% of Americans agreed, in 2023, that
there is a retirement crisis, up from 67% in 2020. In addition, 73% of
respondents said recent inflation has made them more concerned about
retirement.
Franklin Templeton found that the most common
factors workers cited as preventing them from retiring when they wanted to were
rising health care costs, global economy uncertainty, rising housing costs and
their debt burden.
Employers Are ‘Out of
Sync’
In general, employers are making strides
toward addressing employee needs by bolstering benefits packages and offering
financial wellness benefits, but they are often out of sync with employees’
needs.
For example, if given the option for an
enhanced benefit, employees expressed a clear preference for increased pay and
increased 401(k) match, while employers assume employees would prefer improved
health and dental insurance, health savings accounts and charitable
contributions.
Seven in 10 workers also reported experiencing
challenges when it comes to understanding benefits offered by their employer.
Specifically, 33% of workers said they experience confusion when changing
benefits and plans, and 29% said they struggle to understand the “true monetary
value” they would receive from certain benefits.
As a result, Franklin Templeton recognized
that employers need to work to effectively communicate the resources they make
available and focus more on articulating the holistic value of total
compensation and benefits packages.
Both surveys conducted by Franklin Templeton
were fielded in November 2023.
Source: Plansponsor.com