In today’s rapidly evolving workplace, understanding employee preferences and priorities is crucial for employers aiming to attract and retain top talent. ADP’s recent TotalSource Benefits Employee Survey—one of the largest of its kind in the US—recently shed light on how workers feel about workplace benefits in current World of Work.
Here are the top five findings from the survey:
1. Compensation Remains the Top Priority
Compensation continues to be the most important consideration for employees, with over half (56%) of survey respondents identifying it as their primary concern. This trend has been rising since 2022 and aligns with ADP’s People at Work 2024 study, where 55% of participants globally ranked salary as their top priority. However, striking the right balance between compensation and benefits is critical. Employers must understand which benefits are most valued to create a compelling compensation package.
2. The Growing Importance of 401(k) Plans
The significance of 401(k) retirement plans has surged, with an 11% increase in importance since 2022. In 2024, 62% of employees ranked 401(k) plans as one of their top three benefits, a significant jump from 30% in 2018.
For the first time in the survey’s history, 401(k) plans tied with dental insurance as the second most important benefit. This trend highlights the growing focus on financial wellness and retirement planning. Employers can capitalize on this by offering robust retirement savings plans to attract and retain talent. Additionally, there is a notable gender gap, with 59% of women respondents rating 401(k)s as important compared to 66% of men, indicating a need for tailored communication and education around retirement benefits.
3. Healthcare Costs and Employee Choices
Employees are increasingly making hard choices about healthcare costs, balancing premiums with out-of-pocket expenses. The survey revealed that more employees prefer lower paycheck deductions for healthcare costs, even if it means adjusting other benefits. In 2024, 53% chose lower paycheck deductions compared to 47% in 2018. Gen Z, in particular, favors more money in their pockets, with 58% opting for lower premiums. Employers can support employees by offering Health Savings Accounts (HSAs) and emergency savings accounts to help them prepare for unexpected healthcare costs. Moreover, the survey found that while many employees want less taken from their paychecks, they often have limited funds for unexpected healthcare expenses, with 28% having less than $500 set aside.
4. Benefits Impact on Attraction and Retention
The survey underscores the critical role of benefits in employee attraction and retention.
Compensation is always foremost, but benefits are a close second. Over three-quarters (78%) of employees feel valued due to medical benefits provided by their employer, and 82% feel valued due to non-medical benefits like 401(k) plans, flexible work arrangements, and life insurance. Employers must provide a mix of salary and benefits to meet the expectations of candidates and retain current employees in a tight labor market. The right benefits package can significantly impact an employee’s decision to accept a job offer or remain with their current employer, making it a key factor in workforce stability.
5. The Need for Flexible, Personalized Benefits
Employees increasingly desire flexible, personalized benefits that address their unique situations. The survey found that 75% of employees expressed interest in receiving personalized recommendations for benefits. Despite feeling valued by their employers due to medical and non-medical benefits, voluntary benefits are underutilized. Employers can maximize the value of their offerings by prioritizing benefits that fit employees’ actual needs, fostering a more satisfied and engaged workforce. Additionally, the importance of mental health benefits varies by generation and gender, with Gen Z and women placing higher value on these benefits, highlighting the need for diverse and inclusive benefit options.
ADP’s TotalSource Benefits Employee Survey highlighted the evolving priorities of employees regarding their workplace benefits. Employers who understand and act on these insights can create compelling compensation packages that attract and retain top talent in today’s competitive labor market. By offering a balanced mix of compensation and benefits and tailoring these offerings to meet the diverse needs of their workforce, employers can build a more engaged, loyal, and productive team.
Check out the full survey here.
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In his role with ADP TotalSource, Muhammad Fahmy oversees one of the nation’s largest professional employer organizations (PEO), providing clients with full-service HR, including benefits, payroll, compliance, talent strategies, a dedicated HR professional and more.
Before stepping into this role in September 2024, Fahmy served as the Senior Vice President and General Manager of ADP® Comprehensive Services, a market-leading HR outsourcing solution. He led this business through a transformative period that resulted in record setting revenue, client retention and Net Promoter Score results.
Fahmy holds Bachelor’s degrees in Finance and Political Science from Rutgers University.