Understanding employee demographics can help employers balance the short-and-long-term needs of their workforce
by Patrick RowanMr. Rowan is Managing Director, Retirement Income Strategies & Products for TIAA. In this role, Pat leads the group responsible for product development and management for TIAA’s fixed annuity offering. Visit tiaa.org
Many plan sponsors find it difficult to balance their immediate budget and workforce challenges with their long-term desire to ensure their employees are ready for retirement. The majority of plan sponsors say that budget constraints (63 percent) and issues such as attracting and retaining top talent (60 percent) are the biggest challenges in managing their workforce, according to a 2018 TIAA Plan Sponsor Retirement Survey.
Compared to the immediate challenges highlighted above, plan sponsors are not as focused on many of the longer-term issues. In fact, only 38 percent of plan sponsors surveyed cited preparing employees for retirement as a major concern. However, they are clearly concerned their employees are not prepared, as the survey also revealed 75 percent of plan sponsors worry that many of their employees are not saving enough and 55 percent are concerned that not enough employees are choosing to participate in a retirement plan.
Yet given these concerns about their workforce, just 17 percent of all plan sponsors say they have analyzed their workforce demographics to a “great” extent to better understand their employees’ wants and needs. Four in 10 plan sponsors (43 percent) have not done so at all, or have only done so in a limited way.
A Significant Opportunity
The survey reveals a significant opportunity: by gathering additional insights into workforce characteristics and dynamics, plan sponsors may be better equipped to identify more cost-effective, differentiated offerings that could more effectively meet employee needs across generations, resulting in improved recruitment and retention, as well as increased retirement readiness.
Many organizations have diverse workforces comprised of many different types of employees with differing needs, goals and preferences. It’s important to understand that these different employee segments—such as those based on generations, gender or other criteria—face different hurdles, and that different messages will resonate with them.
Consider the multi-generational workforce in which younger workers (millennials) work side-by-side with mid-career employees (Gen Xers) and more experienced workers approaching retirement (baby boomers). Since each group is at a different point in their professional and personal lives, plan sponsors should try to understand their unique needs and offer relevant benefits and resources.
Three Generations, Three Sets Of Needs
Below is an example of how a better understanding of the needs of three generations could translate into more effective communications and benefit strategies.
Millennials, the largest generation in the workforce and growing, switch jobs frequently, and are burdened by college debt – and nearly a third of them (31 percent) haven’t started saving for retirement, according to a TIAA Lifetime Income survey. They differ from other workers in their views about work, what motivates them and how they like to engage and communicate. Millennials want more financial education at work, especially given their significant student debt. About half of plan sponsor are concerned about retaining millennial talent, and are willing to offer compelling benefits packages to keep them, according to the 2018 TIAA Plan Sponsor survey. As a result, it’s important for plan sponsors to help participants think about how to balance current priorities with longer term needs, such as retirement planning. Integrating financial education into social media, mobile channels and gamification are among the best way to communicate with millennials.
Gen Xers are mid-career employees who are important to an organization’s long-term stability and leadership. Gen Xers juggle multiple financial challenges—college savings, mortgage payments, insurance costs to name a few—as they prepare for retirement. Most worry they are falling short: nearly seven in 10 Gen X managers (68 percent) are concerned they are not saving enough for retirement, according to the 2018 TIAA Nonprofit Survey. By offering comprehensive retirement benefits and encouraging financial advice that help increase their retirement readiness confidence, plan sponsors can show these Gen Xers that they are focused on improving their financial well-being.
Baby boomers are important leaders and mentors; meeting their needs will enhance an organization’s reputation and build employee loyalty. Facing significant retiree healthcare costs while often supporting adult children and elderly parents, many boomers are uncertain about when they’ll be able to retire. Plan sponsors can work with them to help achieve retirement security.
Plan sponsors can gain important insights about their employees’ demographics, behaviors and overall retirement readiness by using tools such as the TIAA Plan Outcome Assessment, a consultative service that helps employers look at demographics and behaviors, and analyze plan goals, design and investment choices. As a result, plan sponsors are better able to tailor advice, education and other resources that employees can use for retirement planning.
With competition for talent intensifying, understanding the wants and needs of prospective and current employees is essential for employers to attract and retain top performers. This understanding helps them make decisions that put employee outcomes at the center, while balancing the immediate and long-term needs of their workforce.◊
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