60% of Employees Are Reassessing Financial Benefits This Year
Learn how employee views are evolving regarding the role of financial benefits in the wake of new economic challenges this year and more from this latest study.
For over two years, the focus was on how the workplace was changing, driven by the pandemic and the Great Resignation. This year, employees and companies face new economic challenges. Morgan Stanley at Work conducted a study to understand how employees are handling economic uncertainties, how their view is evolving regarding the role of financial benefits and more.
For the last two years, all eyes have been on how the workplace has been evolving in the wake of the pandemic and the Great Resignation. Now, there are other economic challenges, such as inflation and possible recession, companies and employees are facing. So, how are employees and HR leaders handling rising inflation and economic upheaval? And how is their view evolving regarding what role financial benefits play and how they are administered in their organizations?
Morgan Stanley at Work recently conducted a study to find the answers to these questions. One key finding from the study is that employees continue to expect more from their organizations regarding financial benefits and support. Further, equity compensation is still a great motivator.
The following are the findings in detail.
HR Leaders Acknowledge Evolving Employee Needs, but Lag Expectations
About 84% of employees said that companies must become more involved in supporting them through financial problems. However, almost the same percentage of HR leaders said they were currently unable to assist. Employees are also asking employers to step up their benefits offerings. Despite HR leaders reporting they offer high-quality financial benefits, 83% recalled times when they could not grant specific benefits requests. Simultaneously, over 80% of HR leaders said workers had requested support the organization did not offer.
The call to re-evaluate financial benefits is growing stronger. About 96% of HR leaders and 90% of workers have a moderate to high priority on their organizations’ re-evaluating benefits.
What priority do HR leaders and employees think their companies give to re-evaluating benefits?
Source: State of Workplace II — Financial Benefits Study
HR leaders also stated that their companies’ progress was too slow. About 67% of HR leaders believed their organizations were not adequately meeting employee benefits expectations. Only 34% thought their companies were on a good path to meeting expectations.
See more: A $1,000 Annual Pay Raise Improves Life for 33% of Employees: Study
Employees and HR Leaders Agree More Education Is Needed
About 89% of employees said their organizations should do more to help them understand how to maximize the financial benefits available to them. About 96% of HR leaders, too, agreed with it. Improper education leads to vital resources being underutilized. About 60% of workers also said they gave more attention than last year to reassessing their financial benefits. On the other hand, 85% of HR leaders said employees give more attention to reassessing their financial benefits compared to last year.
Employee Perception About Equity Compensation Is Changing
The study found that employees’ perceptions of equity are changing. According to a study conducted by the company last year, 93% of HR leaders and 75% of employees felt stock ownership and equity compensation were effective motivators. This year’s study showed that the percentage had increased to 95% and 80%, respectively.
What employees and HR leaders think about equity compensation being a motivator
Source: State of Workplace II — Financial Benefits Study
HR leaders also said that one of the biggest benefits of equity compensation was allowing employees to achieve long-term investing goals. According to them, the other benefits are that it provides an additional income source, validates a worker’s performance, and gives employees a stake in the company’s success.
On the other hand, employee views regarding the benefits of equity compensation are still mixed. The biggest benefits, according to them, are that it gives them a stake in the company’s success (25%), allows them to achieve long-term investing goals (24%), provides additional income (22%), and validates their performance (15%).
Financial Pressures Due to Inflation Are Affecting People
According to 63% of HR leaders, workers regularly mentioned experiences indicating financial challenges. According to HR leaders, some of the challenges employees faced over the last year included difficulties paying back loans or debt, drawing on emergency funds, and reducing 401(k) contributions.
Financial challenges employees faced over the last year
Source: State of Workplace II — Financial Benefits Study
About 62% of workers reported having reduced their contributions to their long- and short-term savings due to the present economic conditions. Their retirement plans, i.e., 401(k), were the biggest hit, with 31% of employees reducing their contribution. This was followed by reduced payments to loans and debts (26%), reduced long-term savings (25%), limited emergency savings (24%), and lower contributions to their college savings funds (13%).
Both HR Leaders and Employees Agree Financial Stress Affects Performance
The current economic climate has increased stress among employees, affecting their performance at work. About 71% of workers said financial stress impacted their professional and personal life. Simultaneously, 84% of HR leaders are concerned that workers’ financial problems can hamper their productivity. About 85% of them also said the benefits that help workers with financial worries are more critical today than the previous year.
Employees Are Looking Closely at Retirement Planning
Among financial upheaval, workers are looking closely at their retirement planning. However, employees and HR leaders differ in what benefits they think are beneficial. For example, when asked about the types of retirement planning that would be beneficial, 52% of employees wanted access to financial advisors, and 48% wanted goals-based retirement investment planning. About 46% wanted access to retirement planning calculators and tools.
On the other hand, 47% of HR leaders thought employees wanted goals-based investment planning, while 43% thought they wanted access to retirement planning tools. About 40% thought they needed retirement planning workshops, and 40% thought they needed access to financial advisors.
See more: Why HR Leaders Should Educate Employees To Boost Confidence in Benefits
Strong Retirement Planning Resources Allow Companies To Attract and Retain Talent
About 93% of workers prioritized retirement planning assistance when determining where to work. Simultaneously, 76% of HR leaders prioritized retirement planning assistance to retain employees.
Conclusion
A few conclusions can be drawn from the study:
- The stakes are higher: If the pandemic wasn’t enough, today’s economic conditions are putting additional stress on employees. Faced with new difficulties, workers are watching the benefits offered closely, a trend that may continue for a long time.
- Employee demands are going up: Amid uncertainties, workers are demanding industry-best benefits, like access to financial advisors. While HR leaders are working toward meeting these demands, they still need to catch up.
- Long-term goals are a priority: Still being a strong motivator, organization perceptions around equity compensation are changing to align with workers’ long-term financial goals.
- Support translates to performance: HR leaders and workers agree that when financial support is given, workers are motivated to be happier and more productive.
The message is clear — provide the right financial support in terms of benefits and education to your employees, and you will see an improvement in employee productivity and retention.
Image Source: Shutterstock
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