While many small and medium-sized businesses are showing financial improvement over last year, evolving geopolitical issues, interest rate hikes and continued recruiting challenges are raising concerns about the ongoing impacts, particularly inflation and employee retention, according to the Principal Financial Group.
The latest main index of financial well-being noted that 68% of companies report financial improvement compared to the same period last year. While employers and employees see inflation as their top concern, companies also feel compelled to increase wages and benefits to attract and retain employees. Employees expressed concern about mental health and well-being and finding a new job with better pay.
Amid this increased competition for talent, companies are focusing heavily on increasing their number of employees. Compared to the same period last year, many more companies are increasing their number of employees, with 53% more employees, compared to 32% in March 2021, according to the survey. And on average, 36% of open positions in a company are new positions.
Looking more closely at vacancy levels, smaller companies are doing better than their larger counterparts, which are now experiencing higher vacancy levels. Only 28% of employers with less than 500 employees report higher vacancy levels. For companies with more than 500 employees, however, 43% report higher vacancy levels.
Companies are taking steps to attract new employees, the survey notes. Nearly half (49%) of companies offer flexible working hours while 40% have increased wages for most or all of their employees. More than half of employees surveyed said they had received a raise in the past year. The most common amount was a 3% increase.
Benefits are essential
The role of benefits is becoming more apparent, with 37% of employers noting that they are increasing the quality of the benefits they offer to help recruit employees, according to the survey.
Employers are prioritizing specific benefits such as caregiver support, vacation and pet insurance, all of which have risen to the top of the list of benefits offered by employers to attract new employees. Of the employees surveyed, those who were less likely to receive benefits such as retirement, vacation, and dental and vision insurance in their current position were more interested in leaving their jobs.
As companies grapple with a changing workforce, improving the employee experience is critical for retention, the survey finds. When asked about the benefits that companies increase to improve employee satisfaction and well-being, employers identified the following:
- Disability insurance (short or long term)
- vacation time
- Mental health and wellness programs are the top three.
Employees who are more satisfied at work are more likely to have access to opportunities for financial well-being, training and education, as well as healthcare benefits.
Why benefits are important
There are many reasons why benefits are becoming so important to attracting and retaining employees, explained Kara Hoogensen, senior vice president of benefits at Principal. Non-traditional benefits and more traditional benefits offerings (like life insurance and retirement solutions) contribute to a holistic benefits package, she said, which is essential to retain and attract top talent in today’s tight work environment.
“A competitive retirement benefit package and other financial wellness benefits are especially critical to helping employees not only manage their day-to-day finances, but also plan for the future,” Hoogensen said. “These types of benefits greatly increase employees’ long-term financial security. And that sense of financial security can contribute to more engaged and productive employees. »
Hoogensen added that according to the main index of financial well-being, the top three benefits that employers expect to see increase are training and education, health care benefits and retirement. “Investing in employee education shows companies care about their future goals and helps them consider opportunities for growth within the organization, contributing to better retention,” she said.
Retirement is the main reason to leave
Retirements are among the main reasons for staff departures, according to the business leaders surveyed. Companies reported a 16% decrease in their workforce over the past three months, driven by the retirement of 27% of employees. However, staff losses due to retirement may not last as people face rising costs and potential loss of savings due to inflation and recent market volatility.
So what can employers do to retain their employees in this highly competitive market? As companies face complex labor shortages and a self-employed workforce with growing demands, benefits packages are a critical component, Hoogensen suggested. “In addition to higher salaries, employees want to work in a place where they feel valued, and tailoring benefits to employee needs is key to retaining talent,” Hoogensen said. “For example,” she added, “if you have a number of younger employees who may be expanding their families in future years, you might choose to offer disability support and/or or short-term caregiver as employees balance work and family life. ”
The main Financial Wellbeing Index surveys business owners, decision makers and business leaders aged 21 and over who work in companies with 2 to 10,000 employees. The national survey, commissioned since 2012, examines the financial well-being of American workers and employers.
Ayo Mseka has over 30 years of experience reporting on the financial services industry. She was previously editor of NAIFA’s Advisor Today magazine. Contact her at [email protected]
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