Attracting, hiring, and training new workers can be costly — and those aren’t the only prices paid when workers quit. Open positions require other employees to shoulder extra burdens, causing stress that can lead to burnout — and potentially, the loss of even more workers.
According to Pew Research, 2.5% of U.S. workers (about 4 million people) switched jobs every month from January to March of 2022. If no single worker had switched more than once during that time, it would mean that just over a third of all workers would have changed jobs during the first quarter of the year.1
A recent study calculated an average of 42 days and a price range of $2,792 to $4,425 to replace an employee.2 Few businesses are well positioned to absorb these kinds of costs.
Employers are looking for innovative ways to recruit and retain employees before they experience a spiral of attrition and mounting losses that include:
U.S. turnover in 2022 remained higher than pre-pandemic averages as conditions converged, including rising employee expectations, more job openings in some fields, remote and hybrid opportunities, and other factors. According to research by the Society of Human Resource Management, younger employees are more likely to report looking for a new job. These are the top factors they say they’re looking for:3
Millennial and Gen Z employees are also seeking advancement opportunities. Some workers cite a desire to change careers that they attribute to “COVID clarity,” or the time away from work due to pandemic shutdowns, and an opportunity to reflect on values and priorities.
Other considerations that rank toward the top in similar surveys include stability and security, advancement opportunities, a chance to do their best work, and values alignment between employee and employer.
Employers trying to gain a competitive edge have begun looking at recruitment and retention strategies like remote and hybrid options, bonuses, and additional benefits to meet workers’ desires for work-life balance, mental health support, financial wellness, training and development, etc.
Experts in worker retention recommend more innovative retention strategies that include adding more benefits to compensation packages. But how can employers know which benefits will deliver employee recruiting and retention value?
ESOP Partners recently surveyed currently employed, primarily millennial-aged workers. Our results mirrored common findings in many ways — yet our survey respondents placed higher value on job longevity and lower on new benefit trends. Above all, the majority of respondents reported interest in an employer-sponsored retirement plan that doesn’t require a contribution from employees’ paychecks — as is the case with an employee stock ownership plan (ESOP).
Here are the top takeaways from our summer 2022 survey:
|12 months or less||12%|
|1 to 2 years||20%|
|5 years or more||68%|
|A financial education program||6.7%|
|A new wellness initiative||14.7%|
|A 100% employer-funded retirement plan||78.6%|
77% of respondents moderately or strongly agreed that an additional retirement benefit that does not require a contribution from employee paycheck would reduce financial anxiety and/or stress in their lives.
But is the impact on financial anxiety and stress enough to increase employee loyalty? ESOP Partners asked the question.
84% of survey respondents reported that an added retirement benefit requiring no employee financial contribution would have a moderate or significant impact on their likelihood of staying with their current employer.
While the ESOP Partners survey focused on respondents’ perceived value of an ESOP as a qualified benefit plan, it’s important to note that an ESOP is also an employee ownership vehicle and a flexible business transition tool. Many closely-held companies choose to use an ESOP’s tax advantages to strengthen and grow their businesses into standouts for important key characteristics, such as:
A 2021 survey of mid- and lower-level employees4 found that, as a result of the pandemic, non-ESOP employees experienced…
… than their peers at ESOP companies. What’s more, a 2022 study found that ESOP employees give their companies higher marks for social justice, community investment, volunteering, and economic opportunity.5 This points to an ESOP company’s advantage in delivering not only a desirable retirement benefit, but also a workplace culture that aligns with employee values and engenders opportunities for workers to create meaning on the job.
Some of this higher ranking may be attributable to the effect of “ownership thinking,” since ESOP employees become beneficial owners by earning shareholder stakes over time. (Note: When an ESOP employee retires or leaves, the ESOP buys back the shares at their current fair market value—this is, in short, how the ESOP retirement benefit works.) As employee-owners, workers may feel their own values contribute more to corporate culture than those without similar shareholder stakes.
Notably, the level of interest in an added retirement benefit plan is somewhat at odds with workers’ awareness of ESOPs. When we asked whether respondents knew what the acronym “ESOP” stands for, only slightly more than half (53%) selected “Employee Stock Ownership Plan” from the available responses. This suggests workers and employers alike could benefit from an increased understanding of employee ownership and an investigation into whether this additional qualified benefit plan could deliver valuable advantages on both sides of the employer-employee relationship.
Learn more about how ESOP companies effectively establish and strengthen ownership culture by focusing on five key areas by downloading our free guide.
1Pew Research, Majority of U.S. Workers Changing Jobs Are Seeing Real Wage Gains, July 28, 2022.
2Chally, The Real Cost of Employee Turnover, January 26, 2022.
3SHRM, Deconstructing the Great Resignation, September 21, 2021.
4ESCA, Working for an ESOP Company During the Pandemic Meant Far More Employee Financial Stability, Survey Finds.
5ESCA, Survey of ESOP and Non-ESOP Employee Opinions on the Importance of Corporate Social Responsibility Principles and Their Employers’ Commitment to Them.
Melanie Matulonis, Marketing Team Leader