April 2022
Communicating the Value of the Total Compensation Package During Onboarding Is a Key to Public Employers Staying Competitive for Talent
Amidst today’s tight labor market and the Great Resignation, it is more important than ever that state and local government employers effectively communicate to each employee the value of their total compensation package. Ideally, these communications would begin during the recruitment phase, through job postings, during initial interviews and in job offer letters. However, the onboarding process provides a key opportunity to help new employees understand the full extent of the benefits that are being offered to them.
Public Sector Employers Offer Competitive or Superior Benefits
Traditionally, state and local government employees have recognized that while public sector employment often offers a lower salary than private sector employment, the retirement and health care benefits they receive are on par with—and, oftentimes, superior to—those offered by private sector employers. While the 2021 State and Local Government Survey conducted by MissionSquare Research Institute, IPMA-HR and the National Association of State Personnel Executives showed more than half (60 percent) of state and local government human resource professionals felt the wage compensation their organizations offered employees was competitive with the labor market, the vast majority (92 percent) believed their benefits compensation is competitive.
Retirement and health care remain the cornerstones of public sector job benefits. The February 2022 MissionSquare issue brief titled Benefits of State and Local Government Employees confirmed this with an analysis of U.S. Bureau of Labor Statistics data showing that 86 percent of state and local workers have access to a defined benefit (DB) pension plan. Some 75 percent of public sector workers participated in the DB plans available to them. Further, 38 percent of public sector employees have access to a defined contribution (DC) plan, and 18 percent participate a DC the plan.
These numbers should be considered against the backdrop of data from a Nov. 10, 2021, Congressional Research Service report indicating that 28 percent of state and local government workers lack Social Security coverage. Regarding health care, MissionSquare’s benefits brief shows 89 percent of state and local government employees have access to health care benefits such as medical, dental, vision and prescription drug coverage. Additionally, 78 percent of state and local government employees participate in those benefits.
Nontraditional Benefits Appeal to Job Seekers
Today’s job applicants increasingly look at more nontraditional benefits as they consider their next job. There are a number of reasons for this, including a decrease in the generosity of retirement benefits over the past decade; shorter job tenures in state and local government in recent years, making retirement benefits less appealing; and a general reevaluation of priorities and the alignment between personal and professional goals that has occurred during the COVID-19 pandemic.
As individuals considering a job in state and local government think about where, when and how they want to work, paid leave and quality of life benefits are becoming increasingly important recruitment and retention tools. Employee assistance programs, wellness programs, financial planning, child care and student loan repayment are examples of quality of life benefits.
Overall, few public sector employers provide these kinds of benefits to their employees. For example, 27 percent offer financial planning. Only 15 percent offer child care benefits, and just 5 percent offer student loan repayment (see the accompanying chart). Employers who do offer quality of life benefits should ensure that new employees are aware of these offerings, especially given employees’ desire for these benefits.
The following is also worth noting:
- Though fewer than 1 in 3 public sector employees who responded to a 2019 MissionSquare survey on their needs and preferences for financial literacy and financial education programs indicated their employer offered a workplace financial wellness program, 68 percent of the respondents said they would participate in such a program if it were offered.
- Employees surveyed for the March 2022 MissionSquare report Continued Impact of COVID-19 on Public Sector Employee Job and Financial Outlook, Satisfaction, and Retention indicated that they continue to feel stressed, anxious and burned out and fatigued while at work, and also that they would like more emotional support from their employer, including respect, acknowledgment and encouragement.
- The same COVID-19 report notes employees have been finding it difficult to balance work and homelife demands. This has been particularly taxing on those who have had to work from home over the past two years while also taking care of their children who are younger than 18.
Accordingly, when quality of life benefits are offered, they should be included in communications about the value of the total compensation package.
State and Local Government Quality of Life and Other Benefits, Access, March 2021
Adapted from MissionSquare Research Institute, Benefits of State and Local Government Employees (February 2022).
Explain Available Benefits to Employees at Every Opportunity
During the onboarding process, HR professionals should consider sitting down with new employees to explain the array of traditional and nontraditional benefits their organization offers, as well as (and to the extent possible) the monetary value of those benefits. These discussions could include, for example, increases in retirement plan savings due to compound interest accrued from higher supplemental retirement plan contributions; savings on commuting costs by being able to work from home several days per week; and decreases in borrowing from retirement plans to make ends meet because an emergency fund can be created through a financial wellness program.
It is important to note that while onboarding is a critical time for explaining the total compensation package, it should not be the endpoint for such communications. Rather, employers can continue to engage with workers on these topics at specific times each year, during key lifecycle events and at various career stages. Another way to understand this is to recognize that rather than assuming employees will still remember pertinent details from their day-one orientation, employers should consider the discussion of benefits to be a process that gets revisited and refreshed on an ongoing basis.
The yearly benefits enrollment period is a natural opportunity to reopen the discussion of the value of an employee’s total compensation package. This is when employees are most open to considering how their interests and needs have changed since they first opted for certain benefits. Similarly, the performance evaluation period, when a salary adjustment is most likely, is a prime time for HR professionals to remind employees of the impact that putting salary increases toward benefits such as retirement or flexible spending accounts can have in the short, medium and long terms.
Key lifecycle events such as marriage, the birth of a child or sending a child to college are also good opportunities to discuss total compensation. At such times, employees and their families are likely to be going through significant changes that will impact their finances and their priorities. Providing information about benefits that may not have been relevant to employees earlier in their lives helps them understand how to maximize the use of the benefits offered.
Finally, as individuals transition from new hires to mid-career and late-career employees, certain benefits may feel more or less relevant. For workers at the start of their careers, information on topics such as student loan repayment, child care assistance and subsidized commuting may be most important. As employees enter the middle of their careers, however, dependent care subsidies, flexible scheduling and financial planning may be of more importance. And as workers approach retirement, wellness programs, retirement planning and health care benefits are likely to be top of mind.
As state and local governments compete for talent, especially for hard-to-fill positions, communicating the value of an employee’s total compensation package is critical for recruitment and retention. Employers who do this effectively and consistently will have a competitive advantage as they seek to build a diverse, talented and dedicated state and local government workforce.
01 April 2022
Category
HR News Article