More than half (56 percent) of employees are using work benefits to buy essentials, which represents a 31 percent increase from 2023, research has found.
The research, from Blackhawk Network Extras (BHN), showed that 25 percent of employees said they have to spread the cost to afford things like nappies or formula for their children. And 76 percent of employees said they are worried about their financial situation in the next 12 months, which rises to 80 percent among millennials.
The research also found that 45 percent of employers are concerned about losing talent to competitors, but only a third are taking action to prevent this.
BHN said this was a surprise because a significant 40 percent of employers believe that providing additional financial support could stop employees leaving their organisations. Financial education is clearly important for employees as 57 percent of them sought out financial coaching or education in the past six months, independent of their benefits package.
Researchers said that the clear disconnect between employer retention activities and employee concerns showed a “glaring gap” between what employees need and the solutions preferred by employers for staff retention.
BHN also found generational differences towards benefits. Younger people, such as
gen Z and millennials, were significantly more frustrated with current offerings (74 percent and 69 percent respectively) compared to older generations such as baby boomers and gen X (39 percent and 55 percent respectively).
Researchers said this emphasises the need for benefits packages to be more tailored to individual needs of employees to ensure that schemes have the intended impact.
Chris Ronald, vice president – incentives, rewards and benefits at BHN, said: “The war for talent continues, and our research uncovers a blind spot for employers. While nearly half fear losing staff to competitors, a surprising number aren’t actively addressing the top concern for employees – financial security. It’s a paradox. We see a laser focus on work-life balance, which is important, but it seems employers are missing the bigger picture. Employers are relieved to see a slow down in the rate of wage increases but they are not off the hook. Paying a ‘fair’ salary is not enough. Employees are stressed about affording basic necessities, and offering alternative options for financial support could be a game-changer.
“Younger generations, especially, are frustrated with current benefit packages. This presents a tremendous opportunity. By offering targeted financial wellness programs like discounts on groceries, household furnishings and technology or even financial coaching – resources demonstrably used by younger generations – companies can bridge this gap and secure a loyal, engaged workforce. Financial security is a powerful motivator, and employers who prioritise it will be well-positioned to attract and retain top talent.”
