Employee Loyalty Hits 7-Year Low; Benefits Promote Retention

Satisfaction with benefits parallels a strong sense of loyalty to the employer

By Stephen Miller, CEBS March 22, 2012

Employee loyalty in the U.S. continues to wane. Only 42 percent of employees said they felt a strong sense of loyalty toward their employer—a seven-year low—according to MetLife’s 10th Annual Study of Employee Benefits Trends report, released in March 2012. Conversely, the percentage of employers who felt a strong sense of loyalty toward their employees grew to 59 percent in 2011—a seven-year high.

One in three people would like to work for a different employer in 2012, but that number climbs to one in two for Generation Y employees. Not too surprisingly, people who said they hoped to be working elsewhere were nearly three times as likely to admit to a decrease in the quality of their work.

Driving Retention

The study surveyed attitudes among employees in the three main generational cohorts: Baby Boomers (born 1946-1964), Generation X (born 1965-1980) and Generation Y (born 1981-1994). Among the findings:

More than half of surveyed employees (58 percent) said benefits were an important retention driver—and this was highest among Generation Y (63 percent) and Generation X (62 percent) workers.

61 percent of employees who were very satisfied with their benefits said they felt a strong sense of loyalty to their employer vs. 24 percent of employees who were very dissatisfied with their benefits.

Promoting Engagement

While employers seemed to understand how items like salary and wages, advancement opportunities and company culture influenced employees’ feelings of loyalty, they continued to underestimate the power of leveraging their benefits programs. For example, while 66 percent of employees said that health benefits were an important driver of their loyalty, only 57 percent of employers believed this to be so.

The divide widened when it comes to retirement and non-medical benefits. For instance:

59 percent of employees said retirement benefits were "very important" for influencing their feeling of loyalty toward their employer, but only 42 percent of employers realized this.

51 percent of employees said the same for non-medical benefits like dental, disability and life insurance, while only 32 percent of employers thought this was so.

Among employers, a majority (60 percent) felt that economic conditions were creating additional opportunities to leverage their benefits to promote employee engagement, while only about 10 percent, regardless of company size, said they planned to reduce benefits, according to the report.

Among employers that saw additional opportunities to leverage their benefits programs, large majorities pointed to three key engagement-related goals:

To retain employees (cited by 91 percent).

To increase employee productivity (86 percent).

To attract employees (80 percent).

Acceptance of Cost Shifting

Revealingly, the study found that 62 percent of surveyed Generation Y and Generation X employees were willing to bear more of the cost of their benefits rather than lose them. More than half (57 percent) were interested in a wider array of voluntary benefits offered by their employer, as compared to 43 percent of Baby Boomers.

Employers recognize this interest, as 62 percent of employers agreed that in the next five years employee-paid benefits will become an increasingly important strategy, the study found.

The study was conducted during September and October of 2011 and consisted of two parts: an employer survey based on 1,519 interviews with benefits decision-makers at U.S. companies with staff sizes of at least two employees, and an employee survey based on 1,412 interviews with full-time employees age 21 and over at companies with a minimum of two employees.

(For a look at findings from this study that relate to financial security and retirement preparation, see the SHRM Online article "Employees More Risk Averse, Seek Support for Financial Security.")

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

SHRM Online Retirement Plans Resource Page

SHRM Online Workplace Flexibility Resource Page

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