An End To Burnout?
December 5, 2022 | Anthony Conte, MSFS, CEPA, CFP®
While employee burnout may have fueled much of The Great Resignation, it just left many employers feeling burned.
Pandemic pressures led to the worst of the resignations in the consumer, retail, healthcare, and education sectors, according to a 2022 study by McKinsey & Company. And those sectors continue to suffer as the remaining employees now endure the post-resignation burnout and employers struggle to properly grow or even maintain their employee base.
A tight labor market and the fading emphasis on gaps in the resume have reduced the stigma historically associated with frequent job-switching. While the prospect of an imminent recession (next year, maybe?) might reduce the risk of losing good talent in the coming year, now is as good a time as any to consider the sorts of benefits that business owners can provide to create meaningful value for their teams.
First, the Research
Yes, we will get to the investment and insurance-based retirement plan and benefit options that are so popular with financial advisors. But shouldn’t we first consult the research to better understand the value of these benefits relative to others in the eyes of your employees?
Among the top reasons why employees have been leaving their jobs without another in hand, according to that McKinsey report referenced earlier, are ‘uncaring leaders, unsustainable work performance expectations, lack of career development and advancement potential, and lack of support for employee health and well-being’.
You didn’t happen to notice anything about compensation or benefits there, did you?
Well, that’s because every one of those concerns ranked higher than ‘inadequate total compensation package’.
This isn’t to suggest that employee benefits are not meaningful (they certainly are, given that just shy of 30% of respondents to the survey referenced the ‘total compensation’ rationale for quitting), but rather that much else matters too.
But before we get there, can we talk about ‘lack of workplace flexibility’ which comes in with nearly equal relevance in the survey to the ‘compensation package’ concern?
What Would a Financial Advisor Know About PTO?
First, I know that the cost of retraining employees is astounding.
A Society for Human Resource Management (SHRM) study from 2019 calculated the cost of a resignation to be roughly 1/3rd of that worker’s salary. Roughly 67% of that is due to soft costs like reduced productivity while the rest represents hard costs like recruiting and hiring temp workers.
Second, I manage a company of 23 advisors and 15 support staff, and I work with a multitude of business owners, managing their employee benefits with them. I can share, experientially, that some of the most meaningful changes that firms have made over this past year have been the least expensive, on a hard dollar basis.
This brings us back to that McKinsey study about ‘lack of workplace flexibility’, and, ultimately the question of PTO.
Like many employers over the past few years, we have implemented a ‘team centered attendance policy’ (also known as unlimited PTO, and this, among other changes, has contributed to a dramatically positive impact on workplace morale.
You can google your time away and find all of the risks inherent in a policy like this, but when imposed on the right kind of team in the right kind of workplace it can work wonders.
The correct implementation of ‘unlimited PTO’ can give employees a sense of freedom to take time when they need it, it can remove the burden imposed on employers to track various types of days off in complex PTO policies, and it can bring the team closer together by creating a sense of shared responsibility and a focus on results, rather than a focus on time spent doing a job.
And because this sort of policy often leads to employees taking less time off than they might otherwise, some firms have even gone so far as to require that employees take a mandated number of hours off a year to help reduce burnout.
And while we are talking about flexibility, let’s not overlook that whole ‘remote work’ thing. Honestly, why are you still fighting it?
Surely, you knew we’d get here. I mean, I am a financial planner, after all.
According to a 2020 workplace and wellness survey conducted by the Employee Benefit Research Institute, “Seven in ten (70%) feel employees need their employer’s help to make sure they are healthy and financially secure. However, six in ten (62%) say it is the employer’s responsibility to do so.”
No compensation and benefits package is complete without consideration of retirement benefits.
While the traditional 401k is a perennial favorite given its remarkable savings caps (in 2023, $30k for those over age 50 and $22,500 for those under age 50), let’s not overlook the remarkable tax benefits inherent in the ROTH 401k.
Saving into a ROTH 401k offers participants the opportunity to pay their federal income taxes at today’s income tax rate and grow their retirement savings totally income tax free. Kind of a big deal (hence the italics).
Companies with an interest in simplicity and low-cost implementation might consider either a SEP IRA or a SIMPLE IRA.
The SEP IRA allows for considerable maximum savings, up to $66k in 2023, but all of that savings must come from the employer.
The SIMPLE IRA allows for employee savings in 2023 up to $19K for those over age 50 and $15,500 for those under age 50. These plans come with either a requisite match of up to 3% or a nonelective contribution of 2% of each eligible employee’s compensation.
A whole host of insurance-based benefits packages exist to meet a variety of intentions. An employer may want to focus on saving himself or the firm on taxes (think 412(e)(3) plans), or provide an insurance benefit for executives’ beneficiaries (think split-dollar plans), or even create a golden handcuffs-type arrangement for key employees (think nonqualified deferred compensation plans like SERPs or COLIs).
Creativity is key in retaining employees with benefits, and in a future column I will take some time to further flesh out those insurance-based employee benefit plans referenced above.
Read the article in Central Penn Business Journal here.
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker/dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Conte Wealth Advisors, Central Penn Business Journal, and Cambridge are not affiliated.