Originally published in the November 2022 issue of Human Capital Leadership Magazine
As the COVID-19 pandemic finally appears to be waning, there’s a lot of talk about recovery – from how long it will take to what it will look like. However, now that companies are confronting stratospheric inflation, ongoing supply chain disruptions, and one of the tightest labor markets in many years, it’s clear that there will be significant economic headwinds for a long time to come.
One of the most daunting challenges CEOs and other company leaders face today is how to maintain a healthy workforce at a time when labor is highly mobile, talent markets are extremely tight, and the threat of turnover is more serious than it has been in decades. Employee demands and expectations shifted dramatically during the pandemic, particularly around workplace flexibility and benefits. This is why one of the most important steps companies can take to recruit and retain employees is to offer benefits that meet their unique needs.
The companies in the strongest position to navigate the economic fallout from COVID-19 are the ones capable of attracting and retaining top talent. The best way to do this is to offer robust and customized benefits packages that will help employees through this period of economic uncertainty and demonstrate that the company genuinely cares about their well-being.
Employees need more support
The past two years have been difficult for employees and consumers, from layoffs and reduced hours in the early days of the pandemic to surging inflation. While the unemployment rate is back down to 3.6 percent, the U.S. Bureau of Labor Statistics reports that the number of quits hit 4.5 million in March – the highest level since the BLS started tracking the statistic.
There are many reasons employees are quitting their jobs at nearly unprecedented rates. According to a survey conducted by Pew Research Center, low pay and a lack of opportunities for advancement were the top reasons employees wanted to quit in 2021. However, a lack of flexibility and insufficient benefits were also major contributors to churn – 45 percent and 43 percent of employees, respectively, said they wanted to quit for these reasons.
At a time when millions of employees are reassessing their professional lives and asking for more support from employers, rampant inflation has given them yet another reason to seek out companies that will focus on their individual needs and concerns. Companies have to adapt to the new economic landscape to remain competitive. Reducing turnover has never been more critical, and HR teams in the strongest position to do so will be the ones that meet employees where they are with comprehensive and flexible compensation and benefits packages.
Treating employees as individuals
At the beginning of the pandemic, millions of employees made the overnight transition to remote work – a shift that has permanently changed how and where people work. Many employees have grown accustomed to more independent and flexible work, and this is reflected in their priorities. According to a 2021 IBM survey on employee expectations, the top reason respondents cited for changing employers was a need for greater flexibility. The third-most-cited reason was the need for “more benefits and support for my well-being.”
Companies can meet both of these demands at the same time by offering flexible benefits like convertible paid time off – a form of PTO that can be repurposed to meet a wide range of employee needs. PTO is a widely underused benefit – our research indicates that just 40 percent of employees use all their allotted time off, while 75 percent report that they’ve taken an “unneeded” vacation to avoid losing time they’ve earned. During the pandemic, 44 percent of employers say they increased the amount of PTO available to employees, despite the fact that they were even less inclined to use it.
Convertible PTO allows employees to redirect resources from time off to a range of other benefits, such as retirement contributions, student loan payments, and health savings accounts. When the majority of employees don’t use their PTO, companies that fail to offer alternatives are telling their employees that they don’t care enough to provide support that actually makes a difference in people’s lives. By building your benefits package around your employees’ actual needs, you’ll show them that you’re committed to their well-being.
It’s time for an innovative approach to human capital
Your company’s productivity is inextricably tied to the health and morale of your workforce. Beyond the fact that turnover is extremely costly for companies (from the loss of institutional knowledge to the expenses associated with finding, onboarding, and training new people), employee dissatisfaction also leads to a lack of engagement and worse job performance. Just one-fifth of employees are engaged at work, and Gallup estimates that this costs the global economy over $8 trillion in lost productivity every year.
These are all reasons companies need to drop antiquated and ineffective approaches to managing human capital, such as benefits programs that employees don’t use. While HR teams face a series of the biggest challenges they’ve ever confronted, these challenges also present opportunities. Over the next several years, the most competitive companies will be the ones that stop treating employees as if they’re interchangeable with one another. As the labor market remains tight and employees continue to quit their jobs at an unprecedented rate, companies have to make retention a central focus of their HR platforms.
The one-size-fits-all approach to compensation and benefits alienates diverse members of your workforce, increases turnover, and limits productivity. Flexible benefits, on the other hand, will meet the core demands of today’s employees and ensure that your workforce is as healthy, engaged, and loyal as it can be.