The new rules of hiring

How to win the competition for talent

 

5 minute read

Key takeaways

  • The foundation of your company’s success is understanding how to optimize recruitment, retention and employee satisfaction
  • Beyond health care and retirement benefits, financial wellness, employee education and employee networks have been shown to boost productivity
  • Encouragingly, implementing many of these programs have potentially strong cost/benefit returns for employers

If there’s one thing that every company has in common, it’s that people are the foundation of success. No matter where your company finds itself in terms of growth stage or size, choosing the right people is vital, likely more so than almost any other factor. At the same time, the competition for talent is stiff and will only become more challenging. A third of American companies report difficulty in finding the talent they need, and the situation is expected to worsen.1 The global talent shortage has nearly doubled in the past 10 years, 2 and by 2030, many sectors are projected to experience significant shortfalls. 3 In such a highly competitive hiring environment, it’s crucial for companies to understand how to optimize recruitment, retention and employee satisfaction. Kevin Crain, head of Workplace Solutions Integration at Bank of America, shared his thoughts on some important trends that impact hiring.

 

Benefits are increasingly taking center stage

Salary, job description and opportunity for advancement continue to be primary factors in successful recruiting. However, benefits have become more important than ever in motivating candidate decisions. First and foremost, a retirement savings plan is a foundational pillar in any benefit package. Typically, the plan is a 401(k) with some level of matching contributions from the employer. In addition to health insurance, employers offer health savings accounts (HSAs) or flexible spending accounts. HSAs, which are available only to those who have a high-deductible health plan, are particularly attractive since they allow the holder to contribute pretax dollars into an account that is completely portable and offers the potential for long-term accumulation of assets to fund future health care expenses.

 

Financial wellness and employee education programs are becoming valued benefits

One concept that has taken hold over the past 10 years is how companies can contribute to their employees’ financial wellness. A Bank of America survey of employers found that 62% feel extreme responsibility for employee financial wellness, up from 13% in 2013. 4 Education is one component of a financial wellness program and can address topics ranging from budgeting and building an emergency fund to debt management and retirement savings and investing.

 

According to Crain, an effective financial wellness program should offer employees tools they can use to assess their financial position and evaluate how they stand based on some type of scoring mechanism. Just like a smartwatch tracks steps, a financial scoring system can look at bank accounts, FICO scores and other metrics to generate a wellness score. Once the user can evaluate their level of financial fitness, educational programs and resources can help them take steps to improve their financial health.

 

Financial wellness programs generate a big payback for employers

The CEO contemplating a financial wellness program might wonder what it means for the company. Sure, it sounds like a nice thing to do, but will it be expensive? As it turns out, it could be more expensive not to offer a program. Studies have shown that employees suffering from financial stress are distracted at work and can cost the company a significant loss in productivity through lost hours and high turnover. 5 Financial stress may also lead to other problems, often impacting both physical and emotional health. Crain emphasizes that financially stressed employees have the potential for higher health care costs, take more time off from work and could have greater need for employee assistance programs. Financial wellness can have a positive effect also on employees’ physical and emotional well-being, enabling employers to enjoy lower costs coupled with higher productivity.

 

What matters most to your employees. The connection between financial wellness and productivity. •	83% of employers believe employee financial wellness programs and tools help to create more productive, loyal, satisfied and engaged employees •	57% of employees feel their well-being has a great impact on productivity •	When asked what factors contribute to their overall sense of well-being, employees cited - Physical (51%),Mental wellness (54%),Financial (49%).  Source: 2020 Workplace Benefits Report, Bank of America

Student loan assistance programs are highly attractive to younger employees

 

One of the greatest hurdles facing younger employees is the heavy burden of student loan repayment. Student loan debt can create significant financial stress and prevent young employees from taking advantage of 401(k) programs. Given the value of an early start to retirement investing, this is a serious consideration. Assistance with student loan obligations is one of the most compelling benefits an employer can offer to millennials.

“The CEO contemplating a financial wellness program might wonder what it means for the company. Sure, it sounds like a nice thing to do, but will it be expensive? As it turns out, it could be more expensive not to offer a program.”

Some employers may opt to offer a stipend to be applied to student loan payments, allowing the employee to take advantage of 401(k) savings opportunities by contributing from their salaries. Others may choose to match student loan payments with 401(k) contributions according to plan matching percentages. In either case, assistance with student loan obligations can make an enormous contribution to employee satisfaction and retention as well as to recruitment.

 

Diversity programs foster a sense of inclusion, enhancing employee satisfaction and retention

 

Every employee wants to feel welcomed, valued, trusted and emotionally safe in the workplace. Diversity and inclusion programs are becoming increasingly common, although in many firms they are still in the evolutionary stage. There are several essential pillars in establishing an effective program.

 

A vital first step involves creating an employee network program with affinity groups based on anything from race, gender and sexual orientation to common interests and concerns. Crain notes that one of Bank of America’s biggest employee networks is for parents and caregivers. The sense of community that comes from participation in such groups significantly enhances employee satisfaction. In fact, a strong feeling of belonging among employees has been linked to a 50% decline in turnover risk.6

 

Also critical is engagement from executive leaders. The principles of diversity and inclusion need to be communicated clearly and emphatically by senior management. Companies must do more than pay lip service, though. It’s important to put in place metrics that look at employee status in terms of diversity – from career advancement and promotions to percentages at varying levels of management and more. Companies must measure their performance and hold themselves accountable for results.

 

Social responsibility is vitally important in recruiting

 

In today’s environment, it’s not enough for a company to be good at what they do or produce an outstanding product. The best candidates, particularly younger candidates, want to work for a company that’s a good corporate citizen. In addition to strong diversity and inclusion programs, potential employees want to see companies that care about the environment and their impact on the community. They expect their employers to build their principles into their business models and exercise responsibility in their interactions with customers and suppliers.

 

Any company can put these principles into practice

The battle to recruit and retain talent will not become any less challenging. Every company, no matter its size, will need to adapt to the changing priorities of the modern workforce. The good news is that there are many low-cost (and even no-cost) ways to implement the programs and benefits that will help recruit and retain quality employees.

 

Many diversity and inclusion programs, such as creating employee networks and fostering diversity and inclusion principles from the top down, involve little in the way of cost. Retirement service and health insurance providers frequently offer educational programs. Even the most cost-conscious companies can take steps to ensure that they are optimally positioned in the search for talent.

 

 


Kevin Crain | Head of Workplace Solutions Integration | Bank of America


 

1 “Closing the Skills Gap: What Workers Want,” Manpower Group, 2020.

2 Ibid.

3 “Future of Work: The Global Talent Crunch,” Korn Ferry, 2018.

4 2020 Workplace Benefits Report, Bank of America.

5 2021 PwC Financial Wellness Survey, PwC.

6 “The Value of Belonging at Work,” BetterUp, 2019.