The Role of Benefits in the War for Talent October 2021 KEMBRE ROBERTS, VP, WELLBEING SHANNON DEMAREE, SVP, BENEFITS SERVICES PRACTICE LEADER The term “war for talent” was first coined in 1997.1 Today, however, it is taking on a whole new meaning with a new term emerging of “the great resignation.”2 Historical data collected by the Bureau of Labor Statistics shows a steep increase in job openings and a continued increase in job separations through July 2021.3 This trend doesn’t appear to be slowing down anytime soon. In fact, according to a recent pulse survey by PwC, 65% of employees said they are looking for new jobs.4 Understanding what is creating unrest in the workforce and what will be attractive to new talent is paramount to a successful talent strategy. 65% LOOKING FOR A NEW JOB AUGUST 2021 35% LOOKING FOR A NEW JOB MAY 2021 Source: PwC, Aug. 20214 1 LOCKTON COMPANIES | 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Jul-21 RATEOpenings Separations JOB OPENINGS AND LABOR TURNOVER THROUGH JULY 2021 Source: U.S. Bureau of Labor Statistics 2 Lockton Companies The Role of Benefits in the War for Talent The PwC survey identifies that employees are looking for higher compensation, expanded benefits, career advancement and flexibility, but employers should be aware that these drivers are weighted differently across their diverse workforces.4 Women, Black and Hispanic workers are more focused on compensation in an effort to close the pay gap.4 Younger generations seek job satisfaction and work-life balance.5 Employee well-being concerns around financial, mental, social and physical health vary by gender, race/ethnicity and generation.6 DIFFERENTIATING WITH BENEFITS While salary is the No. 1 reason employees look for a new job, benefits and flexibility closely follow.5 A potential employee looks for a comprehensive benefits package to protect them against unexpected costs, but with today’s added stressors, employees are looking to feel understood and supported by their employer around their financial, mental and physical well-being. So how can an employer know which offerings will resonate with their employees or potential employees? IDENTIFY WHAT YOUR WORKFORCE OR FUTURE WORKFORCE VALUES Analyze demographic data of your own workforce (or future workforce if it is changing) to understand prevalent needs. Evaluate surveys, like Metlife’s 19th Annual U.S. Employee Benefits Trend Study, that allow you to break employee interest down by age, gender, race/ethnicity, income, etc. to better understand what employees value. Compare your current benefits offerings to this data to identify gaps or less visible benefits. Are there opportunities to eliminate some benefits to reinvest in programs that better support your workforce? Is there a need to better promote an existing benefit so employees remember it when they need it? Of course, the most direct path to understanding what your workforce values … ask them! Your employees, including new hires and candidates who declined your offer of employment, can provide a wealth of information. 3 Lockton Companies The Role of Benefits in the War for Talent DIFFERENTIATORS ARE BECOMING TABLE STAKES Over one-third of respondents to the 2021 Lockton Benefits Survey said they strive to be an employer of choice and view benefits as a key part of their value proposition to employees. An additional 60% said they are seeking to remain competitive. What it takes to compete and stand out is rapidly evolving. Benefits that were once only found in the large, high-tech firms are quickly becoming a requirement to attracting new talent. As employers look forward, we see a shift in how they view the future of work and the continued role of benefits programs in supporting the needs of individuals and organizations. Business objectives and priorities have evolved beyond cost containment and talent acquisition — becoming more altruistic in nature. From a heightened focus on supporting emotional and total well-being to deliberately evolving programs to be more inclusive and expansive, organizations have doubled down on supporting their most valuable asset, their employees. ETHAN DELLHIME SENIOR VICE PRESIDENT, BENEFITS SENIOR CONSULTANT The pandemic emphasized the value of benefits such as caregiver support, enhanced EAPs, and other mental health support as well as flexible schedules and work site locations. Potential employees are likely to pay more attention to whether a potential employer offers support in these areas. 4 Lockton Companies The Role of Benefits in the War for Talent SOURCES: 1Created by Steve Hankin in “The War for Talent,” McKinsey Quarterly, January 1998 2Created by Anthony Klotz, Associate Professor, Department of Management, Texas A&M University 3U.S. Bureau of Labor Statistics, “Job Openings and Labor Turnover Survey” 4PwC, “U.S. Pulse Survey: Next in Work,” Aug. 19, 2021 5Fortune, “What’s fueling ‘The Great Resignation’ among younger generations?” Aug. 26, 2021v 6Metlife, “MetLife’s 19th Annual U.S. Employee Benefits Trend Survey 2021,” Interactive tool 7Walmart, “Walmart To Pay 100% of College Tuition and Books for Associates,” Jul7 27, 2021 8Best Buy, “Best Buy adds Backup Child Care for employees,” Dec. 18, 2018 9Modern Restaurant Management, “401(k) Plans for Restaurants: The New Way to Retain Workers,” Nov. 1, 2018 Walmart and Target have recently made headlines by offering COLLEGE TUITION to employees.7 Best Buy offers SUBSIDIZED BACKUP CHILD CARE.8 Some restaurants have started offering 401(K) BENEFITS.9 EMERGING DIFFERENTIATORS Cutting-edge employers are understanding the needs of their workforce and getting creative with benefits to support them. These benefits may help address an existing need (e.g., on-site child care, technology stipend), or provide an unexpected perk (e.g., “pawternity” leave, company-provided meals). Focus on diversity, equity and inclusion (DEI) and social determinants of health is changing the way employers view their benefits offerings. Examples include fertility, surrogacy and adoption benefits to support LBGTQ+ employees and transportation services to medical appointments to reduce barriers to access. Technology is also playing a big role in emerging benefits with app-based advocacy services that help members maximize their benefits and navigate the healthcare system. Another example is digital health technologies that enable virtual care delivery and improve access and impact of managing care. Don’t hesitate to be a thought leader within your own industry with the rich data you can obtain from your own employees. Stay tuned for future newsletters where we will dive deeper into this concept of differentiating with benefits within the different types of rewards. 5 Lockton Companies lockton.com | © 2021 Lockton Companies. All rights reserved. C | 1012-1048369