Retention a bigger challenge than controlling costs

Feb 27 2007 by Nic Paton Print This Article

There are signs of a dramatic shift of balance in America's workplaces as bosses throw financial caution to the wind and shower money and benefits on their key staff in an ever-more desperate battle to stop them leaving.

If further evidence were needed that the war for talent in America is escalating, a study by insurance and financial services company MetLife has found that keeping key workers happy, challenged and motivated is becoming more important to U.S businesses than controlling costs.

Employee retention was identified as the most important priority by more than half of employers overall polled, with retailers (62 per cent) and the service sector (59 per cent) placing an even greater emphasis on the need to retain people.

In an environment where two out of five employees said they had changed employers at least once in the past five years, there was growing recognition among employers of the need to pump money into benefits' plans to keep workers on board, said MetLife.

Bespoke benefits for senior executives and other high flyers were also becoming more common, as the competition to hire and retain highly-paid senior executives grew ever more fierce.

Almost half of the 1,500 companies polled said they offered such benefits, up from nearly four out of 10 in 2004.

The most popular executive benefits were individual disability insurance and optional or supplemental life insurance, followed by long-term care and group universal life insurance.

The study, which also polled 1,200 employees, found a strong correlation between workers' benefits and their job satisfaction.

Among those workers who were "highly satisfied" with their benefits, eight out of 10 indicated strong job satisfaction, up from two thirds in a similar study last year.

Seven out of ten of employees said workplace benefits were a reason for joining their current employer and, crucially, eight out of 10 said it was a factor for remaining there.

The finding could be important in helping employers and HR better to understand why it is workers are leaving, and how to stop the exodus.

Earlier this month a survey by online recruiter found a clear disconnect between what employees valued and what HR professionals perceived to be the most important factors in employee job satisfaction.

Its survey of 11,852 employees and 311 HR professionals found more than six out of 10 of employees were planning to look for a new job in the next three months, nearly double the proportion that employers believed were looking.

Unlike the MetLife survey, concluded it was pay and title, rather than benefits, that were the deciding factors in whether an employee stayed.

Nearly half of the employees believed they were underpaid, with more than a fifth, after analysis of their jobs, proved right.

Employers doling out more senior sounding job titles were not helping, with nearly a third feeling underpaid because, in reality, their job title had been over-inflated.

The MetLife study also found, perhaps unsurprisingly, that employees at different stages of their working life placed a different emphasis on workplace benefits when it came to deciding whether to take a new position.

Nearly a third of married employees and four out of 10 of employees with young families said workplace benefits were a top consideration for joining their current employers.

By comparison, just a tenth of singles said the same thing.

"While employee retention is a major benefits objective for employers, controlling costs is a close second," said Dr Ronald Leopold, MetLife vice president of institutional business.

"The strong relationship between benefits satisfaction and job satisfaction indicates that there is more pressure than ever on employers to strike this balance and utilise benefits strategically to achieve both objectives," he added.

Among other findings, the study found that employers are becoming more likely to get involved in giving guidance to employees on complex issues such as financial planning.

"The value of workplace benefits has never been greater. Faced with a diverse workforce and increasing competition for talent, employers should look to benefits as a long-term commitment to future viability," said Leopold.

"For employees who are assuming greater fiscal responsibility for their health care decisions, retirement planning, and overall financial protection, workplace benefits offerings can be critical for helping them build a safety net based on their personal situation," he added.