MARKET TRENDS March 11, 2022
The Great Resignation: 5 Steps That Can Help
The pandemic has fundamentally changed the labor market. Learn the 5 steps that can help your business solve the problem of the “missing workers.”

With a record 4.5 million workers quitting or changing jobs last November,1 Morgan Stanley Wealth Management’s Chief Investment Officer, Lisa Shalett, has written that “America’s labor-market dynamics increasingly confound employers, policymakers and investors alike.”2 And with labor costs accounting for more than 54% of S&P 500 companies’ balance sheets,3 getting the employee relationship right is crucial to a company’s long-term success.

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The first step in attracting, retaining and nurturing a productive workforce is to understand what motivates them in this post-COVID era.

The easiest way to find that out is simply to ask—and that’s precisely what the 2021 Employee Benefits Research Institute (ERBI) Workplace Wellness Survey4 did. We’ve highlighted some of the results below.

Step 1: Understand Your Employees in 2022

COVID-19 brought new stresses to employers and employees alike. After a downturn in 2020 that saw 59% of chief executives report layoffs or a hiring freeze,5 employee anxiety now extends beyond health in a way that has become intricately woven into the employment relationship. According to the ERBI survey, seven in 10 employees say their employer has a responsibility to ensure they are mentally, physically and financially well, with identical percentages (49%) saying they are concerned about each of these categories.

But while three in 4 employees trust their employer to help them improve their overall well-being through quality benefits and offerings, fewer than half (48%) are actually satisfied with their financial wellness benefits6—notably lower than their satisfaction with other types of benefits. From improving education and access to the steps outlined below, most companies have significant room to get more out of their financial wellness programs.

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Step 2: Understand Differences Among Employees

While half of all employees are worried about their financial wellness, Black and Hispanic workers appear more vulnerable,7 with fewer prepared for unexpected expenses or illnesses. Accordingly, job and benefits satisfaction rates are lower among these demographics, as is their understanding of health and retirement benefits. For example, 71% of Hispanic workers feel stressed when thinking about their financial future.8

Reflecting these concerns, Hispanic and Black workers are more likely than white workers to be interested in financial wellness programs such as personalized financial coaching and debt management services or counseling.9

Employee Concerns:

  • 1st concern

    49% concerned about emotional well-being

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    49% concerned about physical well-being

  • 3rd concern

    49% concerned about financial well-being

Many companies could improve retention of Black, Indigenous and People of color (BIPOC) employees—creating a deeper loyalty in the process—by better understanding the specific challenges they face, improving their knowledge of benefits and ensuring the benefits reflect their needs.

Step 3: Understand Why It Matters

As more than half of employees struggle with managing multiple financial priorities, 2021 saw a significant increase over 2020 in the perceived importance of financial wellness programs.10 Two thirds of participants now find these programs extremely or very useful, though with a persistent racial gap:11

  • Only 61% of Black and Hispanic employees are finding their financial wellness program extremely or very useful compared to 72% of white employees12
  • Satisfaction was much higher (73%) overall among employees who had taken advantage of education about benefits than among those who had not (43%)13

Student debt, childcare and retirement are top employee concerns:

  • Among benefits offered by their employers, 73% of employees took advantage of student debt relief/repayment programs, with subsidized childcare a close second at 72%14
  • Among benefits not offered, employees expressed the highest interest (52%) in tuition reimbursement15

But when offered a benefits budget — often a more accurate way of gauging relative preferences — employees put the most money into a retirement savings account followed by an emergency savings account.

This reflects the reality of employee financial anxiety. Not only do six in 10 employees report that thinking about their financial future makes them feel stressed, but nearly half say that it distracts them from work.16 Getting to know your workforce, their concerns and how it impacts their performance are the first steps in supporting them. That support, in turn, will help them become healthier, happier, more productive employees.

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Step 4: Address the Unmet Needs

Financial wellness matters to employees and impacts their work, both directly through distraction and more generally in hiring and keeping valued talent. And that impacts your bottom line. Nevertheless, research17 by Morgan Stanley and SHRM shows that:

  • n
  • Only 11% of employers say they offer education on topics such as financial wellness, investing or planning for retirement18

  • 2nd concernt
  • Only 9.7% offer financial planning such as sessions with a Financial Advisor19

  • 3rd concern
  • Only 6.7% offer financial coaching on issues like budgeting, saving, or debt and credit management20

This represents a significant opportunity for employers to gain a competitive advantage in a tight labor market by adding value to their employees through meaningful financial education. Ideally, this would be in the context of a formal financial wellness program that goes beyond informative content to include coaching, savings tools, access to a Financial Advisor and a responsible point person within leadership or human resources who can help guide employees through the offerings to actionable solutions.

Step 5: Bring It Home to Employees
Establishing and supporting a meaningful financial wellness program is critical for recruiting and retaining talent in a tight labor market—and we’ve rarely seen it as tight as today. But simply telling workers that you offer financial wellness benefits is not enough.

A successful financial wellness program that lowers employee anxiety, strengthens loyalty and improves focus needs to go beyond abstract offerings, onboarding brochures and periodic learning modules. It needs to actively put employees on a path to financial security through changed behavior and meaningful solutions. It needs to have a financial coach available for budgeting, build habits like tracking expenses in a financial journal, and offer a Financial Advisor who can talk through decisions on, for example, how to invest, whether to buy a house or finance it, and how to prepare for retirement.

We can provide all the high-tech tools, world-class planning and expert coaching. But a human connection is crucial. A personal relationship with a coach or Financial Advisor starts the road to accountability, and building those relationship starts with the employer understanding that many employees need help to take them there. The rewards for both employees and businesses are not new, but they have become significantly more acute in a post-COVJD labor market that has been dubbed “The Great Resignation.” There has never been a more important time to invest in your people.

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Helping Your Employees Take Charge of Their Financial Health

The more confident your employees are in their finances, the more confident—and less distracted—they can be at work and in life. The first step is understanding their needs with rigorous wellness surveys, as with the ERBI survey used here.

Morgan Stanley at Work can help with the next step: building a comprehensive program that not only gives your employees the knowledge, tools and guidance to take charge of their finances, but actively helps bring it home.

Empower Your Workforce

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