Beyond pay, financial stability increasingly used to draw talent
Talent acquisition can be a moving target, especially in today’s economic climate. And yet, for the second year in a row, HR Dive readers have named hiring as a top priority. It should come as no surprise that money continues to be top of mind for talent, but it’s not just money on workers’ minds: It’s a total rewards package.
Human resources professionals say they are responding accordingly: In HR Dive’s 2023 Identity of HR survey, almost half of respondents (43%) said retirement contributions or benefits are a facet of their talent acquisition approach.
Retirement benefits saw the highest year-over-year uptick, too; only 35% cited this tactic as a tenet of recruiting strategy in 2022.
Workers are eyeing total rewards packages, and HR pros say they're responding accordingly
The data also revealed an uptick in increased hourly wages and referral bonuses as job candidate lures. This indicates that HR is working to meet employee demands not only for fair compensation, but financial stability and security as well, benefits professionals told HR Dive.
For many, retirement savings offer economic relief
Access to emergency savings is seemingly top of mind for talent. For many, the old financial wellness adage that one should have six months worth of income saved is more maxim than lived reality. Recent data from Consumer Financial Protection Bureau suggested that only 27% of Americans would be able to cover more than six months of living expenses. Even fewer would be able to support themselves for two months or two weeks.
More specifically, per a 2021 Morning Consult analysis, only a third of people making between $50,000 and $100,000 in the U.S. would be able to support themselves for six months. In Betterment at Work’s 2022 report, 43% of respondents said they had dipped into their emergency funds during the pandemic. Medical expenses and car and home repairs topped the list of reasons; paying rent or bills, and paying for living expenses while temporarily unemployed, followed.
“Those financial stresses can cause employees to dip into savings that otherwise they might have dedicated for some different purposes. And retirement is the first place that most people are saving for anything medium- or long-term,” Edward Gottfried, Betterment at Work’s director of product management, said.
Additionally, Gottfried highlighted that a recurring theme in his company’s findings was the gap between workers’ financial strain and whether their employers were cognizant of it. (Notably, 83% of Betterment survey-takers said they view financial wellness benefits as a sign that their employer values them and their work.)
With higher pay, total rewards can sparkle
It’s worth noting that as a baseline, workers are demanding higher pay. In 2022, 59% of HR Dive survey respondents said increased hourly wages or salaries were part of their talent strategy. In 2023, that rate crept up to 64%. Workers are increasingly vocal across the board regarding their demand for higher or fairer pay, with state legislators leading the charge.
Tate Hackert, co-founder and president of on-demand pay platform ZayZoon, told HR Dive he has noted the shift in his clients, who come to the Canada-based company for help regarding pay — and that he has been a part of the evolving conversation in his own organization.
“We have employees that work for us because of the mission and purpose that we’re built for, but also obviously to put food on the table. And that pay has to be market-rate competitive along with the other benefits and offerings,” Hackert said. “Like any business, we’re seeing the effects of inflation and the need from our staff to get raises and be compensated fairly. We definitely see that across our client base as well.”
Workers are hungry for financial wellness resources
Why more HR professionals are using retirement benefits as a recruiting ploy is clear: Not only are people hungry for financial stability, but potential candidates are also vocal about the ways those resources make a company an employer of choice. In Betterment at Work’s report, 43% said finding a job with better benefits and/or higher pay was their motivation for leaving their company.
That means employers should work to deliver graceful education around their financial benefits, Gottfried said. Research shows people want financial literacy baked into workplace experience. Online savings platform Vestwell reported at the top of the year that most employees want more involvement from their bosses in understanding their retirement arrangements and options. The majority of workers in that survey also reported financial stress, with the majority saying inflation and economic uncertainty had exacerbated their worries.
And employers best listen
Hackert nodded to the ongoing power shift between employers and employees over the past two years. HR pros have seen this in viral social media trends — the great resignation, “quiet quitting” and corporate villainy. Employees have gained more and more agency, he said.
“They’ve realized that they have a little bit of choice as well. When they go to [find] work, they’re looking for an organization that has solid core values and is creating meaningful work, but then also is offering flexibility and benefits,” Hackert said. This raises benefits industry questions, he added, such as, “How can I provide employees the best possible experience?” and “How can I best engage employees, beyond just compensating them more or differently?”
Hackert said he has observed a recalibration of power in the corporate space. “I think there’s going to be more of a compromise. I think that we are shifting more toward an employer’s market again. But a lot of the needs and wants from employees — that were brought up over the last couple of years — in a lot of instances, are not egregious asks.”
They were factors that employers “probably didn’t really realize” were important “until it was right in front of their face,” he said. Examples include wages that caused workers to live paycheck to paycheck, whether a company offered flexible benefits or avenues for quicker pay. The pandemic made these inequities more obvious, he said, adding, “because of that, there was a lot more empathy built from the employer to the employee.”
Any benefits that are “empathetic” — and especially ones that are low-cost but still meaningful, Hackert said — will be foremost among employers’ differentiation strategies.
Retirement contributions provide acquisition longevity
While discerning the right benefits offering — to entice the right talent — can require a lot of labor on the front end, one return on investment is the ability to retain quality talent. Gottfried said he has witnessed this firsthand.
“Companies certainly feel they can’t afford to lose very good employees. They’re concerned about the ramp-up costs of hiring a replacement for an employee,” he said, noting that his team has continued to “see good energy” around employers improving benefits packages. That’s true even for companies that are reducing head count, he added; hiring freezes haven’t resulted in his clients paring back benefits.
“That would have long-reaching ramifications that are not positive for them,” he said.
Gottfried said the ultimate goal is to create employee affinity with comprehensive benefits packages. “Hopefully, the pendulum is starting to swing a little bit more in the direction of creating good reasons for longer-term employment and longer-term commitment to an organization.”