What Workers Think and Feel
Recent surveys shed light on employee perceptions about financial security and retirement readiness, and what would make workers happier on the job.
Retirement Shortfalls and the Older Workforce
Americans are grappling with how much money they will need for retirement and how long it will last. According to a survey commissioned by JP Morgan Retirement Plan Services in July 2010, of 1,014 U.S. respondents, two thirds reported that they don't know how much to save for retirement, nearly half are concerned they will outlive their savings, and only 40 percent express confidence about meeting their financial goals for retirement.
So, would workers have enough money to live on in retirement if they worked a few more years? According to "Is There a Future for Retirement?," a report published by Employee Benefit Research Institute (www.ebri.org) in September 2011, if Baby Boomers and Gen Xers work past the age of 65, many still would not have enough income to cover their expenses and uninsured health-care costs, particularly those in lower-income brackets. Even working into one's 70s isn't a foolproof formula for ensuring adequate income in retirement for some, according to EBRI. The report concludes that continuing to participate in a defined contribution plan is a key factor in improving retirement income sufficiency.
Many people plan to work beyond 65 but are forced to leave the workforce, due to mergers, downsizing, health issues, or age discrimination, according to Sandra Timmermann, vice president and director of MetLife's Mature Market Institute. "The older people who have higher assets and income are the ones who remain in the workforce, often mainly for psychological rather than financial reasons, while ones who need the money are most likely to be unemployable," comments Timmermann.
However, Sue Meisinger, director of the National Academy of Human Resources, suggests that higher-skilled, more highly compensated workers are more likely to exit the workforce since they can afford to retire, leaving lower-skilled older workers to stay and "age in place."
Regardless of the income profile of older workers, one implication for employers is that coincidental with an aging workforce, disability-related issues will increasingly come into play. Anna Rappaport, principal of Anna Rappaport Consulting, cites a 2008 study from the Council for Disability Awareness concluding that 3 in 10 workers entering the workforce today will be disabled at some point during their careers and 1 in 7 will be disabled for a minimum of five years prior to their retirement. As a result, disability benefits will be of utmost importance to more older workers.
Another implication for employers is the rise in age-discrimination complaints and lawsuits, which is already taking place, says Meisinger. In addition to preparing for increased litigation, something employers can do to accommodate older workers is redesigning jobs to offer more flexibility, including options for part-time work, telecommuting, and phased retirement.
Use of Consultants on the Rise for Plan Sponsors
According to Cammack LaRhette Consulting's (www.clcinc.com) second annual survey of U.S. independent colleges and universities, two thirds of the 160 institutions surveyed reported turning to a consultant or investment adviser for assistance with managing their retirement programs. That's a hefty uptick from the one third of respondents that reported seeking such help the previous year. A resounding 82 percent of this year's respondents indicated that establishing a fiduciary process is their top challenge, no doubt due to a changing regulatory environment focused on fiduciary oversight.
Among other survey findings:
- Fifty-two percent of plan sponsors use a single provider and 93 percent use three or fewer vendors.
- The majority of institutions responding provide an immediately vested contribution of 8 percent or more of pay (base and matching contribution combination).
- Of the 2011 survey respondents, 95 percent include a 403(b) plan in their retirement savings plan options.
Employee Engagement on the Decline
It's no surprise to most that the nation's economic recession has taken a toll on the good feelings employees have for their employers. According to a June 2011 report of employee views on work ("Inside Employees' Minds: Navigating the New Rules of Engagement"), conducted by Mercer in 2010, one third (32 percent) of the 2,400 U.S. workers who responded are seriously considering leaving their current organization, compared to the one fourth (23 percent) of those who said the same in 2005. As a subcategory, 40 percent of younger workers (ages 23 to 34) said they wanted to leave their current employer. And, perhaps in an alarming twist, 56 percent of senior managers said they were ready to look elsewhere, compared to 34 percent of managers and 30 percent of non-managers.
From 2005 to 2010, employee engagement scores declined by several percentage points in response to four core statements:
- I am willing to go beyond the requirements of my job to help my organization succeed (72 percent in 2010, down from 75 percent in 2005).
- My work gives me a feeling of personal accomplishment (69 percent in 2010, down from 72 percent in 2005).
- I am proud to work for my organization (67 percent in 2010, down from 71 percent in 2005).
- I feel a strong sense of commitment to my organization (60 percent in 2010, down from 64 percent in 2005).
What gives? According to the report, "an evolving employment deal" in recent years that employees see as a series of takeaways, coupled with additional actions employers have pursued in response to the downturn (cuts to pay, benefits, promotions, and training), have left employees feeling like they've gotten a bum deal.
What could help? By a wide margin, the No. 1 element of the employee value proposition for U.S. workers is base pay, according to the report. Ranking second: a good retirement savings plan. When it comes to benefits, employees want more choice and greater control. Forty percent (up from 26 percent in 2005) want to reduce the value of certain benefits to increase the value of others, but only 36 percent (down from 48 percent in 2005) are willing to assume a greater cost share to pay for the benefits they deem most important. Benefits do remain a strong recruitment and retention tool, with a growing number of workers saying these factor in their decisions to join an organization (45 percent, up from 35 percent in 2005) or continue working at an organization (53 percent, up from 48 percent in 2005).
One bright spot for employers may be in the area of communication. As organization budgets have been hit hard across the board, managers and leaders have had to learn how to tell it like it is, and that increased focus on conveying the truth and helping employees cope and adjust appears to be paying off. For instance, 50 percent of survey respondents said senior management explains the rationale of important business decisions (up from a mere 38 percent in 2005); 51 percent believe senior leaders do a good job with confronting issues before they turn into big problems (compared to 39 percent in 2005); and 56 percent gave leadership high marks for clearly communicating the future direction of the organization (up from 49 percent in 2005).
Employees likewise gave improved marks to their employers in the areas of performance management and career development:
- Sixty-eight percent of respondents agreed with the statement: "My last performance review was helpful in identifying actions I could take to improve my performance" (up from 59 percent in 2005).
- Half (50 percent) of workers responded affirmatively to the statement: "My organization does a good job of developing its people to their full potential" (compared to 39 percent in 2005).
- Fifty-nine percent of survey respondents agreed that: "I am provided with the information and assistance I require to manage my career" (up from 52 percent in 2005).
Flexibility at Work
A recent survey commissioned by Mom Corps (www.momcorps.com), a national flexible staffing organization, concludes that flexible workplace options are of utmost importance in the minds of professionals and can be a determining factor when deciding to take a position.
Key findings from the survey of 1,071 workers nationwide indicate that many employees would consider taking a pay cut to receive greater flexibility in their work schedules. For instance:
- Forty-two percent of working adults would be willing to trade pay for more flexible working arrangements, and they would forgo on average up to 6 percent of their salary.
- Men are twice as likely as women to give up more than 10 percent of their pay for more flexibility.
- Adults in the 18-to-34 age group are three times as likely as workers ages 35 and older to forfeit up to 10 percent of their salary.
In other findings, even during these turbulent economic times, flexibility has remained a significant factor for those seeking employment. According to the survey, 62 percent of working adults agree, and 21 percent strongly agree, that flexibility is one of the most important factors in evaluating a position. In fact, 51 percent of adults between the ages of 18 and 44, and 22 percent of those ages 45 and older, plan to seek a new job within the next three years that offers flexible working arrangements.
The survey also suggests that offering flexible arrangements is a valuable retention tool, with 79 percent of mothers and 77 percent of fathers saying they would stay with a company that offered flexible work schedules. Overall, 82 percent of working parents surveyed indicated that flexible arrangements enable them to be better parents.
Higher Health-Care Costs
Results from the College and University Professional Association for Human Resources (CUPA-HR) 2011 Comprehensive Survey of College and University Benefits Programs indicate that the median total premium costs for the three most prevalent plans (PPO, HMO, and POS) increased 7.3 percent for both employee-only and employee and family coverage. (As a benchmark, prior year increases were 6.7 percent and 7 percent, respectively). Median annual plan premiums also saw a greater increase than the previous two years, with the median cost for employee-only coverage rising to $5,868 and employee and family coverage increasing to $16,388.
Among other findings:
- For the fifth consecutive year, more employers are offering health-care benefits to same sex and opposite sex partners, now at 56 percent and 43 percent, respectively.
- Over half of survey respondents offer health-care benefits to retirees under the age of 65 and a little less than half provide benefits to those over age 65.
- Sixty percent of responding institutions offer wellness programs.
- The percentage of respondents offering consumer-driven health plans increased to 26 percent, up from 11 percent in 2007.
Nancy Maguire is a consultant to NACUBO; e-mail: firstname.lastname@example.org.