The Herman Trend Alert|
November 15, 2006
Evolving Employee Benefits
One sure sign of a tightening labor market is employers' willingness to sweeten the pot to aid recruitment and bolster retention of qualified workers. According to a recent employer survey this trend is exactly what happened over the first two-thirds of 2006.
The study, released in August by JobKite.com, indicated that 56 percent of respondents report having made "significant" benefits enhancements during this period. Some benefits changes are fairly typical. For example, 88 percent of respondents supplemented medical benefits and 69 percent enhanced compensation in a variety of areas including increased stock vesting, 401(k) funds, salary relative to market averages, sign-on bonuses, quarterly bonus plans, and/or relocation packages.
However, other program changes are less traditional. Forty-one percent of responding companies reported increasing the number of paid days off per year. Thirty-six percent have ventured into alternative working arrangements. Specifically, they are adding or enhancing flexible work schedules or allowing employees to work remotely.
These aren't random changes. Members of younger generations, most notably Generation Y, those born after 1985, are known for wanting more control over their work lives. The Boomers' concept of "work-life balance" is irrelevant to the youngest members of today's workforce. The focus now is "life-work balance".
A semantic difference to some managers, this issue is of utmost importance to those entering the workforce today. They want to know how their work will enable them to live the types of lives they want to lead. Work to them is an enabler of life, not the reason for it. They define themselves not by what they do during the work week, but what this sacrifice allows them to do outside of it.
Accordingly, the type of benefits and bonuses offered to induce these workers to join and encourage them to stay must change in order to continue to match up with the values they hold.
According to the Bureau of Labor Statistics, nearly 50 percent of the United States workforce will become eligible for retirement by 2012. As older workers retire and the composition of the workforce evolves further, expect more changes in all areas of employer-employee relations.
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