Part of the ongoing issue of high turnover among employees may have to do with a disconnect between employers and their workers about what workers value most in the way of compensation, a new study suggests.
The report by Franklin Templeton found that employees prioritize increased pay (56%) and 401(k) matches (42%), but employers surveyed said they would emphasize an increase in health and dental insurance (32%) as their top priority.
The survey, called the “Voice of the American Workplace,” found other areas where employer efforts are not matching up to employee needs. The report noted that workers reported employee stress with work/life balance issues and current economic challenges such as inflation.
“To address these challenges, employers must prioritize strategies focused on employee retention and satisfaction, which may entail offering competitive compensation packages and fostering positive work environments that prioritize employee wellbeing and work-life balance,” added Reardon. “By aligning with employee expectations and prioritizing their satisfaction, employers can mitigate turnover and cultivate a more engaged and productive workforce.”
Significant transitions—fueled by changing expectations
The survey found that 2023 was a year of significant transitions and turnover for employers. The responses found that 62% of employers said they had conducted layoffs in the past 12 months. Terminations were also high with 51% of employers reporting voluntary termination (such as an employee quitting). Overall, 90% of employers experienced 10%+ turnover in their workforce, 57% experienced 20%+ turnover, and 32% experienced 25%+ turnover rates in their workforce.
When asked what the biggest barriers were to attracting and retaining talent, 36% said challenging work schedules, 35% said challenging work environment, and 33% said limited flexibility. Other challenges listed included not being able to compete on benefits or compensation.
As reported elsewhere, changing expectations among employees plays a large role in current rates of turnover. Employers say the areas where they have seen changing expectations include compensation growth (79%); recognition and appreciation (77%); work-life balance (76%); career advancement (76%); and diversity, equity, and inclusion issues (76%). Mental health expectations were also at 76%.
Some employers said the expectations of employees, especially younger ones, can be difficult to meet. “Employees at my organization are asking for raises/increased compensation packages non-stop,” one employer was quoted as saying. Finding a better work life balance also is a factor. “Employees increasingly seek work-life balance to enhance their wellbeing,” an employer said.
Better pay a top priority for workers
The survey was clear in its findings that workers are seeking better and more equitable compensation; when asked to compare areas where their company was successfully building employee loyalty, they listed compensation last (22%), compared to supportive work environment as the highest score, at 39%). They also rated compensation as the top reason for staying longer with a company (55%), with work-life balance coming in second (44%), followed by opportunities for career growth (39%).
The gap between workers and their employers was also evident in a question on priorities—when both groups were asked about a scenario where an employer could spend $1,000 more per employee annually, the most popular option with workers was increasing pay (56% of workers to 29% of employers), the most popular option with employers was increasing the quality of health and dental insurance (32% of employers and 16% of workers).
The employer response: boost benefits
Perhaps cautious about setting expectations on pay too high, employers seem to favor increases in benefits as a way of attracting and retaining workers. The survey found that 70% of employers in the study said they have recently increased the number and/or quality of their benefit offerings. In addition, 65% said their company’s benefits plans were competitive in their industry. The downside: 68% noted they had increased health insurance premiums in the past 12 months, and 80% said their companies were struggling with managing the increasing cost of providing benefits.
The survey found that traditional benefit choices topped the list of what was offered: 88% of employers said they offered health insurance, 88% also said they offered life insurance benefits. Retirement-related benefits were offered by 87% of employers. Other benefits listed at 87% by companies were employee social events and professional development. Interestingly, although pet insurance was the lowest-rated offering (64%), it was the area with the most growth in interest among employees, the survey results suggested. The study found that 78% of employer respondents said employees are asking about pet benefits and pet-friendly policies. The second biggest area of possible growth: student loan repayment assistance, where the survey found 84% of respondents saying employees are asking about benefits in that area.
Employee concerns: income, retirement, health care costs
For employees, the survey found that income was the top concern (42%), followed by retirement savings (40%), and health care costs (36%). But there were some changes: when asked specifically about types of health, 75% rated financial health as a top priority—up 18% from the findings in a 2022 survey. It outranks mental health (73%) and physical health (71%). Some differences were seen due to age; older workers classified as “boomers” had slightly higher concerns about physical health over mental health, but they rated financial health highest of any age group, at 81%.
Financial concerns were repeated throughout these findings: 59% of employees said they were concerned about running out of money in retirement; 55% said they planned to work during retirement.
“American workers are increasingly concerned about their financial health. This is likely due to the increasing cost of living, as well as the uncertainty of the job market,” the report said. “Employers need to be aware of this trend and take steps to address the concerns of their employees. One way to do this is to provide financial resources to help employees manage their finances such as educational opportunities on financial topics and access to financial advice.”