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T H E T R A N S F O R M I N G E M P L O Y M E N T E X P E R I E N C E
H E A LT H W E A LT H C A R E E R
C A N A D AO C T O B E R 2 0 1 5
PA R T 2
I N S I D E E M P L O Y E E S ’ M I N D S
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I N T R O D U C T I O N
At Mercer, our purpose is to help people and organizations optimize their most important asset — their future — by taking the right steps today.
That’s why, over the past 15 years, Mercer has conducted regular research to gauge employee views and perceptions of work and to measure overall engagement levels. This research has provided a comprehensive look into what employees think about their jobs, their employers, their pay and benefits; what motivates them to excel; and what convinces them to stay. Our research is designed to help employers stay on top of key trends and adjust their own value propositions in order to attract and retain the workforce they need for success, and to advance the health, wealth, and careers of their people.
This year, we have brought together questions and insights from two powerful surveys to create our 2015 Inside Employees’ Minds™ Survey, conducted across North America. The findings provide a fascinating look into the transforming world of work from the employee perspective.
I N S I D E E M P L O Y E E S ’ M I N D ST H E T R A N S F O R M I N G E M P L O Y M E N T E X P E R I E N C E
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A B O U T T H E S U R V E Y
In early 2015, Mercer conducted a random sample survey of more than 1,000 Canadian employees and more than 3,000 US employees. Survey questions were drawn from our Inside Employees’ Minds Survey, last conducted globally in 2011, and our Mercer Workplace Survey, last conducted in the US in 2013. The survey findings shed light on critical components of the evolving employee value proposition.
The survey captures employees’ views on topics including:
• Pay.• Benefits.• Careers.• Engagement.• Leadership.• Performance.• Culture.• And more.
The research also included conjoint analysis, which allows us to identify which value proposition elements are most valued by employees — and to look at these findings by various workforce demographics to help us more precisely identify who values what.
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R E S E A R C H H I G H L I G H T S
What’s on employees’ minds today? In the first chapter of our Inside Employees’ Minds™ report, we shared that 40% of Canadian private-sector employees and 28% of public-sector employees are seriously considering leaving their organization at the present time — despite the fact that many are very satisfied with their jobs, employers, and other aspects of work.
In this second chapter of our report, we look more deeply into survey findings around health, wealth, and careers, captured as follows:
• Bullish on Benefits — Even with employees being asked to pay more for health care, benefits are highly valued and make employees feel appreciated.
• Retirement Readiness — Retirement plans are a valued part of the deal, but employees doubt their financial readiness for retirement, especially when it concerns health care expenses in retirement.
• Talent Challenges — Base pay continues to be the most important reward element across all age groups, but satisfaction with it remains mixed. In addition, employees still see opportunity for growth but don’t feel their skills are particularly well-used or developed by employers.
These findings can help employers begin to think about an evolved value proposition that better serves the needs of both employers and employees, today and well into the future.
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B U L L I S H O N B E N E F I T S
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B U L L I S H O N B E N E F I T S
Mercer’s research identified a series of engagement-related issues that employers should consider and act on in order to ensure that their value proposition evolves and continues to meet the needs of the organization and its people. We also specifically explored employee views and perceptions about key elements of the value proposition and found a more nuanced picture. For example, although employees are being asked to pay more and take more personal accountability, they remain highly satisfied with their benefits. However, employees are concerned about the future costs of health care.
Regardless of their age, their position, or the size of their company, employees overwhelmingly state that benefits are critical to their employment equation. Eight in 10 say that getting health benefits through work is just as important as getting paid. When asked who is financially responsible, unlike in the US, Canadians still turn to their employer and the government. However, a higher percentage of private-sector than public-sector employees see themselves as primarily responsible.
agree that getting health benefits through work is just as important as getting a salary.
Base: Enrolled in employer health plan
82%
But who is financially responsible for providing health insurance coverage for you and your family?
25% Yourself
Public sector
32% Government
43% Employer
Private sector*
34% Yourself
32% Government
35% Employer
* Does not equal 100% due to rounding
I m p o r t a n c e o f h e a l t h c a r e
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B E N E F I T S C H O I C E A N D F L E X I B I L I T Y M AT T E R
B e n e f i t s c h o i c e a n d f l e x i b i l i t y a r e c r i t i c a l
Many employees are calling for greater flexibility in their benefits choices. Three in five workers, including both public- and private-sector employees, agree that if they had to pay more for benefits, they would like a greater say in what they get. Support for this concept is strongest among younger workers and declines with worker age, which is consistent with perceptions about this generation in general; that is, they are used to flexibility and value it more than do older generations. This makes a strong argument for incorporating a range of voluntary benefits into your benefits package, as well as choices within core benefits offerings.
Y O U N G E R E M P L O Y E E S L O O K I N G F O R M O R E F L E X I B I L I T Y
65% 63% 54%
18–34 years 35–49 years 50+ years
61%
of employees agree that they would reduce the value of some benefits they receive and
increase the value of other benefits.
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H E A LT H C A R E C O S T A N X I E T Y I S R I S I N G
Employees are satisfied with benefits today and view them as very important, but there is concern about affordability in the coming years, with a sharp decrease of 15 points in those who see health care as affordable five years from now. If grouped by those selecting “affordable” or “easily affordable,” there is a 19-point difference between today and five years from now.
5%
40%
37%
17%
9%
55%
27%
9%
Easily affordable
Affordable
Not easily affordable
Not affordable
How would you characterize the affordability of your out-of-pocket costs for health care today? And five years from now?
Base: Enrolled in an employer-sponsored health plan
Today Five years from now
A n x i e t y a r o u n d t h e c o s t o f b e n e f i t s l o o m s
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S H I F T I N G V I E W S
Although satisfaction with the employment value proposition has declined in many areas, private-sector employees (73%) are even more satisfied (those choosing “very satisfied” or “satisfied”) with their medical coverage today than they were in 2011 (68%). For all employees in 2015, 75% said they were satisfied with their medical coverage, which shows the effect of the generally more positive public-sector employees. Beyond medical coverage, however, the scores drop among all employees: Sixty-three percent are either satisfied or very satisfied (net satisfied) with their dental care plans; 56% are net satisfied with their vision plans; and 50% are net satisfied with their voluntary benefits — those that are additional and that employees pay for themselves.
Though employees say they are less inclined today to reduce the value of some benefits and increase the value of others compared with 2011, employers may still have an opportunity to enhance flexibility and make better use of the benefits spend. Any change, however, would have to coincide with an effective communication program to help move attitudes on flexibility closer to their 2011 levels.
Another cost-effective benefit that more employers are offering is a wellness program, though Mercer’s conjoint analysis shows wellness programs trailing other value propositions. Lack of participation and incentive may be the reason. Of the 79% of all Canadian employees enrolled in a health plan, only 55% of respondents say their employer offers a wellness program; 47% say their employer offers incentives. However, of the relatively few who have a wellness program and have incentives, 78% say that incentives encourage participation.
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A s h i f t i n v i e w s o v e r f o u r y e a r s
How satisfied are you with the following benefits in your organization?
I would like to reduce the value of some benefits I receive and increase the value of other benefits:
63%
73%
62%
68%
Retirement savings plan/pension plan**
Medical coverage* 2011 2015
59%
Respondents selecting either “very satisfied” or “satisfied.” Inside Employees’ Minds Canada, 2011 and 2015.Private-sector employees for trending purposes. *Enrolled in an employer-sponsored health plan **Have retirement benefits
68%
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R E T I R E M E N T R E A D I N E S S
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R e t i r e m e n t b e n e f i t s v a l u e d h i g h l y t o d a y i n C a n a d a
R E T I R E M E N T R E A D I N E S S
Saving for retirement continues to be a major objective for employees across the board. And though workers overwhelmingly agree that they are personally responsible for providing an adequate and secure income for their retirement, there is growing concern over the cost of health care in retirement and overall retirement readiness.
A clear majority of employees are satisfied with their retirement plans, yet many are uneasy about factors — both internal to their organization and external — that could wreak havoc on their golden years. One of their greatest concerns is saving enough for retirement.
In Canada, workers across the board place a high level of importance on retirement savings. In fact, in Mercer’s conjoint analysis ranking of most valued elements of the value proposition, retirement savings/pension plan was second only to base pay in terms of importance, and ahead of health care coverage, paid time off, and flexible work.
1 2 3 4 5
Most valued elements of the value proposition (out of 13)
Base pay/hourly wage
Retirement savings/pension
plan
Health care coverage
ffo emit diaP Flexible schedule
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T O P S AV I N G S O B J E C T I V E
A significant percentage of Canadian employees say that paying down debt and saving for a major purchase were major savings objectives, but saving for retirement was the clear leader among employees’ savings goals. By age, 40% of employees ages 18–34 selected retirement as a major savings objective, but 46% said their major savings objective was to fund a major future expenditure; 56% of those ages 35–49 selected retirement, and 46% said paying down debt; for workers 50 and older, 71% said retirement, and 42% paying down debt.
R e t i r e m e n t r e m a i n s t h e # 1 s a v i n g s o b j e c t i v e
Percentage of employees who describe one or more of the following as a major savings objective:
23%
26%
30%
44%
55%
Unexpected expense (apart fromhealth care)
Saving for a child's education
Saving for a major purchase
Paying down debt
Retirement
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W h a t k e e p s y o u r e m p l o y e e s u p a t n i g h t ?
B I G G E S T F I N A N C I A L W O R R I E S
How taxing are financial issues for many employees? Twenty percent say that their biggest worry is saving for retirement — big enough to keep them up at night — and 17% said the same about their monthly expenses. As expected, retirement concerns grow as employees age.
B R E A K D O W N O F W O R R Y I N G A B O U T R E T I R E M E N T S A V I N G S
18% 32%
20%
worry about saving enough for retirement.
P E R C E N T A G E O F E M P L O Y E E S W H O D E S C R I B E T H E F O L L O W I N G A S T H E I R B I G G E S T F I N A N C I A L W O R R Y
17%
worry about keeping up with monthly expenses.
11%
18–34 years 35–49 years 50+ years
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R E T I R E M E N T R E A L I T I E S
Expectations for retirement shift from year to year, largely following economic trends. And as expected, older employees are more attuned to retirement issues and show more concern as their golden years turn from far-off dreams to fast-approaching reality. For many workers age 50 and older, retirement reality includes part-time work, a lower standard of living, and even a delay in retirement. As time is likely a factor in the differing views by age, another possibility is personal exposure to those who are retired or nearing retirement. Younger workers may be conjuring images of their grandparents, who have generous defined benefit retirement and favourable health care plans. Workers age 50 and older are becoming more attuned to colleagues who are recently retired, many of whom may be encountering unfavourable realities.
E x p e c t a t i o n s i n r e t i r e m e n t
Given the retirement savings in place right now and the rate at which I am adding to my savings, I expect the following to be true in retirement
18-34
35-49
50+
21%
34%
46%
41%
25%
29%
33%
33%
31%
22%
24%
22%
I will have enough money to pay for health care expenses.
I will consider delaying retirement.
I will have to reduce my standard of living.
I will work at least part-time in retirement.
AGE
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R e t i r e m e n t f i n a n c e s – b y a g e
Employees contributing to a defined contribution plan or who have a balance of $1,000 or more agree
18-34
35-49
50+
64%
64%
72%
45%
56%
64%
70%
62%
59%
58%
71%
82%
I’m not saving enough for retirement.
I should have started saving in my defined contribution plan earlier.
Because health care costs are going up, I need to save even more for retirement than I thought.
I have time to catch up on my defined contribution plan contributions before I retire.
AGE
I S T I M E O N T H E I R S I D E ?
Time can be subjective, and when employees think they have more of it, they become more optimistic on certain aspects of retirement. For example, younger workers say they have plenty of time to catch up on their defined contribution plan payments — older workers, not so much.
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TA L E N T C H A L L E N G E S
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Q u e s t i o n s a b o u t s u p p o r t , g r o w t h , a n d c a r e e r o p p o r t u n i t y
TA L E N T C H A L L E N G E S
Overall, employees have mixed views of pay, performance, and career opportunity in their workplaces — things they value quite highly. Only a little over one in three say their organization does an adequate job of matching pay to performance. Pay remains the most important value proposition element to all employee demographics, but scores are dropping on many pay-related survey questions. As if this weren’t enough, employees say that their employers are providing less support and not effectively retaining those who should be kept. If these trends continue, organizations could find themselves in a severe talent drought.
More than half of private-sector workers believe they are treated fairly, though this is down eight points from 2011. Other scores also show that organizations may be losing ground on development and retention efforts, which may be significant factors for a growing number of employees who are seriously considering leaving. (As a note, trend data between 2011 and 2015 compare only private-sector workers, as the 2011 survey did not include the public sector.)
39%
41%
44%
58%
48%
47%
54%
My organization is doing a good job of developing its people to their full potential.
My organization is doing a good job of retaining its most talented people.
I believe that I have sufficient opportunity for growth and development in my organization.
Personally, I am treated fairly in my organization.
66%
78% of employees just four years ago said their job makes good use of their skills and abilities; today, only 58% agree. There’s more
2011
Today
Inside Employees’ Minds Canada, 2011 and 2015. Private-sector employees for trending purposes.
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M I S M AT C H B E T W E E N PAY A N D P E R F O R M A N C E
Furthermore, employees say that their organizations are falling behind on efforts to match pay to performance. This should be a wake-up call for organizations to either enhance their communications with employees or recalibrate their pay plans to improve the alignment between performance and rewards. One final thought on this subject: A possible explanation for the decrease in scores could be a change in attitudes among all workers based on a growing proportion of millennials in the workforce. Younger workers have shown that they are more nomadic, have much shorter tenure expectations, and have higher expectations for rapid advancement and pay. The change from 2011 likely reflects their increasing numbers in the workforce and the changing attitudes of all employees.
P a y a n d p e r f o r m a n c e
35%
60%
39%
51%
39%
69%
46%
57%
When I do a good job, my performance is rewarded.
I have clearly defined performance goals and objectives.
My organization does an adequate job of matching pay to performance.
I am paid fairly given my performance and contributions to my organization.
2011
TODAY
Inside Employees’ Minds Canada, 2011 and 2015. Private-sector employees for trending purposes.
Percentage of private-sector employees who agree that
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P e r f o r m a n c e m a n a g e m e n t
P E R F O R M A N C E M A N A G E M E N T A L S O D O W N
Although employees are less pleased with their organizations’ efforts to match pay and performance, they also say they are losing support from those most directly tied to their performance evaluation: their managers. Since 2011, employees are seeing less support from managers regarding performance feedback and career planning, in addition to their faith in equitable promotions declining.
37%
36%
50%
41%
43%
53%
Promotions are generally given to the most qualified employees in my organization.
My manager plays an active role in my personal career planning.
My manager gives me regular, informal feedback on my performance.
2011
TODAY
Inside Employees’ Minds Canada, 2011 and 2015. Private-sector employees for trending purposes.
Percentage of private-sector employees who agree that
2 0
T R E N D I N G L O W E R
In addition to an increase in the number of private-sector employees looking to leave their organizations, increasing numbers are becoming less satisfied with a variety of additional engagement barometers. Since 2011, fewer are proud to work for their organizations, fewer have a feeling of personal accomplishment, and far fewer would recommend their organizations to others.
Comparisons are made between 2011 and 2015 for private-sector employees. As shown previously, public-sector employees consistently have a more positive outlook on their jobs and organizations.
P r i v a t e s e c t o r e n g a g e m e n t t r e n d s
52% 66% 56%
59% 67% 64%
I am proud to work for my organization.
My work gives me a feeling of personal accomplishment.
I would recommend my organization to others as a good place to work.
Inside Employees’ Minds Canada, 2011 and 2015. *Private-sector employees only for trending purposes.
2011* 2015*
60% 66% 61%
Private sector Public sector 2015
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I T ’ S A L L A B O U T T H E B A S E
Base pay remains the most important reward element — by far. However, employees are less satisfied with their pay compared to other value proposition elements they hold dear, such as retirement savings, health care, paid time off, and a flexible schedule.
In Mercer’s 2011 Inside Employees’ Minds Survey, employees also said that base pay was their most valued reward overall. Retirement came in second place, as it does this year. Health care came in ninth place in 2011; this year it is the third-most valued element. In 2011, rounding out the top five were type of work at number three; working for a respectable organization at number four; and bonus or other incentives as the fifth-most valued element.
This year’s number four and number five, paid time off and flexible schedule, were seven and four, respectively, in 2011.
B a s e p a y r a n k s m o s t i m p o r t a n t , b u t s a t i s f a c t i o n i s l o w c o m p a r e d t o o t h e r e l e m e n t s
1 2 3 4 5
M O S T V A L U E D E L E M E N T S O F T H E V A L U E P R O P O S I T I O N ( O U T O F 1 3 )
Base pay/hourly wage
Retirement savings/pension
plan*
Health care coverage**
Paid time off/vacation schedule
elbixelFschedule
54% 69% 70% 66% 57%
E M P L O Y E E S A T I S F A C T I O N W I T H E A C H E L E M E N T
*Employees have retirement benefits **Employees enrolled in employer sponsored health plan
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O N A P O S I T I V E N O T E : D I V E R S I T Y
Employees seem to be taking their employers to task in a number of areas, but one category that has remained steady in their views is corporate culture and diversity efforts. In recent years, most organizations have focused on efforts to enhance diversity and inclusion in their workforces. In 2015, more private-sector employees recognize the diversity efforts than in 2011, and a respectable 62% still see their organizations as treating employees with dignity and respect. Regarding teamwork and cooperation, slightly fewer say that those elements are recognized.
D i v e r s i t y e f f o r t s p a y i n g o f f
Inside Employees’ Minds Canada, 2011 and 2015. Private-sector employees for trending purposes.
My organization actively supports diversity in the workplace.
Employees in my organization are treated with dignity and respect, regardless of their position or background.
2011 2015
68% 63%
62% 62%
In my organization, teamwork and cooperation are recognized.
55% 58%
Percentage of private-sector employees who agree that
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W H AT ’ S N E X T ?
A D D R E S S I N G T H E I S S U E S : W H AT Y O U N E E D T O A S KGiven the findings of Mercer’s 2015 Inside Employees’ Minds™ Survey around health, wealth, and careers, employers should ask themselves the following questions:
• Do our benefit programs reflect a more fluid/mobile workforce? Do they allow the flexibility that younger workers are seeking?
• Are we adequately addressing employee concerns regarding future health benefits costs?
• Do our employees feel financially ready for retirement? If not, what additional steps can we take to address this?
• Do we have solid succession plans in place?• Does our career approach help employees easily see where they
can go and what they can do within our organization?• Given the importance of base pay to all employees, how strong is
our own link between pay and performance?
A D D R E S S I N G T H E I S S U E S : A C T I O N S T O C O N S I D E RIf you don’t know the answers, or are not satisfied with the answers, consider taking some of these steps:
• Analyze or update your employee survey findings to determine where you may be at risk.
• Survey employees to understand trade-offs they are willing to make among various reward elements and within benefit programs. Pinpoint the differences among different demographic groups.
• Build greater choice and flexibility into your benefit programs.
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• Enhance your financial wellness efforts to help employees better prepare for retirement.
• Consider establishing a career framework to help employees better understand their career options.
• Review and resolve any pay inequities.• Train managers on performance and talent management capabilities.• Examine leadership development needs and your succession pipeline.• Create a plan to evolve your employee value proposition as your
workforce continues to transition.
C O N S E Q U E N C E S O F N O T TA K I N G A C T I O NOrganizations face significant risks if they don’t take the right actions or sufficient action to address these workforce issues:
• Flight of key employees/executives; impact on productivity and morale.
• Rewards investments not delivering best value/return.• Business goals not being achieved due to underutilization of talent.• Loss of ground competitively.
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© 2015 Mercer (Canada) Limited. All rights reserved. October 2015 20328B-MG
For further information, please contact your local Mercer office or visit our website at www.mercer.ca.
For more information about the Inside Employees’ Minds Survey, visit www.mercer.ca/inside-employees-minds.
