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Benefit Plan Trends - Volume 61, Issue 12

Lundstrom Insurance Agency, Inc.

2205 Point Blvd., Suite 200
Elgin, Illinois 60123
Phone: (847) 741-1000
Fax: 847-428-8857
 

This publication intends to provide accurate information pertaining to the subject matter covered, however, it should not be considered as legal or tax advice. It is published and distributed with the understanding that neither the publisher nor Lundstrom Insurance Agency is rendering legal or tax advice. Before taking any action, you should always obtain specific advice and assistance from a competent attorney or tax advisor.


 
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VOLUME 61, ISSUE 12

Employee Retention is Higher When Managers Have Emotional Intelligence


Employees who work with managers with high levels of emotional intelligence (EQ) are less likely to want to leave their organization than employees who rate their leaders as having low EQ, according to a recent study by a researcher at the University of Dallas.

Published on August 30 in the SSRN Electronic Journal, "Emotional Intelligence: Helping Managers 'Turn Over' a New Leaf in Leadership Behaviors," was written by Emmanuel Dalavai, a doctor of business administration. Dalavai observed that because the costs of organizational turnover are high, scholars and practitioners often look for ways to reduce employees' turnover intentions, in part by promoting EQ in managers.

To investigate the question of whether leader emotional intelligence influences employee turnover intentions, the study examined leaders and followers at a health care institution based in the southwestern U.S., focusing on the followers' perceptions of their managers' leadership behaviors. The study sample consisted of 71 hospital administrators, clinicians, and other employees. The research tested four hypotheses of employees' perceptions of the EQ of their leaders on their turnover intentions using two scales: Trait EQ and the TIS-6, or the shortened form of the Turnover Intentions scale.

Overall, the results indicated that higher levels of leader EQ had an inverse effect on follower turnover intentions, and thus reduced followers' inclinations to leave their organization. Specifically, the findings of the analysis confirmed the first hypothesis, showing that the leader's ability to exercise self-control by pulling back on negative behaviors had a residual impact on followers' desire to leave the organization. The second hypothesis on the effect of a leader's well-being was also confirmed, thus demonstrating that leaders' ability to take care of themselves mentally and physically had a direct influence on followers' likelihood of leaving.

The third hypothesis regarding the importance of the leader's sociability was also supported by the data, indicating that leaders' ability to apply networking skills and to influence the feelings of employees affected followers' turnover intentions. Finally, the fourth hypothesis on the level of a leader's "emotionality" was confirmed, thus showing that the followers of leaders who can communicate their feelings to their followers and are empathetic to others' perspectives were less likely to report a desire to leave.

Dalavai concluded by offering several suggestions for how companies and human resources departments might apply these findings to tackle engagement issues and turnover rates. For example, he said, organizations should consider adopting altruistic models of leadership, like servant leadership approaches, rather than relying on the traditional transformational and charismatic leadership models. He also recommended that companies' HR departments invest more concentrated resources in human capital investment, such as soft skills training that includes EQ-based programs.

 

Enabling Employees to Change Jobs Can Improve Retention


As heightened competition in the labor market due to historically low unemployment rates is making it harder for companies to attract and retain critical talent, companies should seek to provide employees with opportunities to change jobs within the organization, a report on the state of the global labor market released by technology consultancy Gartner has recommended.

The findings of the "2Q18 Global Talent Monitor" report, released on September 11, were drawn from a larger quarterly survey that is sourced from almost 20,000 employees in 40 countries. The report found that lack of future career opportunities was the top driver of employee attrition in every major economy, with around 40% of workers surveyed in the U.S. and across the globe ranking a lack of future career opportunities as the most dissatisfying attribute at a previous job.

The survey results showed that there are benefits to creating a more vibrant internal labor market, including a 27% increase in employee willingness to go above and beyond at work, and a 33% increase in employee intentions to stay. The survey also found that managers report internal hires perform better than external recruits across a whole range of measures, such as attendance, collaboration, and meeting expectations—which ultimately add up to 10% fewer regretted hiring decisions.

Researchers observed, however, that cultural norms and a lack of transparency can make it difficult for employees to move within an organization. The survey found that just over one-quarter of employees believe that their organization makes it easy for them to find job opportunities that match their interests, and only 21% believe that it is easy to change positions within their current employer. Moreover, just 37% of managers surveyed indicated that they encourage their direct reports to seek internal opportunities.

The report also pointed out that when employees do find internal opportunities that match their interests, many lack the skills required to fill those jobs, as just 6% of the heads of learning and development and around one-third of the managers surveyed said they believe that the employees in their organization have the skills needed for future roles.

To create an internal labor market, the report recommended that talent management leaders develop processes, norms, and infrastructure that facilitate the internal mobility of employees. For example, researchers said, companies could apply the same technology and tools they use for the external marketplace with their own employees; experiment with different methods to remove the barriers to participation in their internal labor market; and provide employees with structured guidance on internal career options.

 

Retirees Report Having Multiple Sources of Income In Retirement


Along with Social Security, guaranteed income from pensions and annuities are key sources of income for retired Americans, the results of a survey conducted by the Insured Retirement Institute (IRI) showed.

The survey was completed in August 2018 by 820 Americans aged 65-85 with investable assets of at least $50,000. The survey report, "Retirement, Income, and Risk," is part of a series of studies examining the retirement experiences of people who have been living in retirement for a meaningful length of time, with this year's report focusing on retirees' reliance on guaranteed sources of income.

The survey found that relatively few respondents have taken a significant "pay cut" since retiring, with 43% saying their income is either the same or has increased, 32% indicating that they have seen a 25% reduction in income, and just 21% reporting that they have seen their income decrease by one-half or more.

The results also showed that more than 90% of respondents are collecting Social Security benefits, and that of those who are not, about half are eligible but have not yet filed. Among the survey sample, the average married couple receiving Social Security benefits reported receiving $28,080 per year. Almost half of respondents said Social Security accounts for less than 25% of their household income, and just 16% said these benefits account for 50% or more.

Meanwhile, 81% of the retirees surveyed reported that they receive at least some income from a pension, with 64% saying they depend on a pension for at least 25% of their income, and 40% saying they rely on a pension for 50% or more of their retirement income. The survey also found that one-third of respondents reported owning an annuity, although just 15% said they are receiving lifetime income payments from an annuity.

When retirees who have defined contribution plan accounts were asked about the frequency of their withdrawals, only 39% indicated that they are taking systematic withdrawals from their balances. Of those who reported making systematic withdrawals, 59% said they are doing so to satisfy the Required Minimum Distribution rule, and 66% said they are withdrawing 6% or less of the funds in the accounts annually. Moreover, 59% of these respondents reported that their withdrawals are in line with their expectations, while 21% said they are withdrawing less than anticipated, and just 20% reported that they are withdrawing more than expected.

The results further pointed to the importance of financial advisor relationships for retirees. The survey showed that 72% of respondents who retired with at least $100,000 in investable assets said they either have or had a relationship with a financial advisor, with 63% reporting that they continue to work with a financial advisor.

The survey also found that very few of the retirees polled are working, with 73% saying they receive no income from employment and only 4% saying employment accounts for 50% or more of their income. Of those respondents who said they are receiving no income from employment, just 15% said they have ever looked for paying work since retiring from a full-time occupation. Moreover, most of the respondents indicated that they have not moved in retirement: 63% said they are still living in the same home they lived in prior to retirement, while 25% said they have sold their home to move to a smaller place.

In addition, the survey showed that most of the respondents feel relatively secure in retirement, with more than one-half saying they believe they are better off financially now than at the point of retirement, and 36% reporting that they are about as well off now as when they retired. Interestingly, 72% of respondents said they feel more financially secure in retirement than their parents were or are.

Researchers cautioned, however, that many retirees may be underestimating the risks they face from high medical and long-term care costs. They noted, for example, that while there is a 68% chance that an American aged 65 or older will become disabled in at least two activities of daily living, only 25% of respondents said they think it is likely that they will need long-term care. Thus, researchers warned, "the risk of exhausting financial assets due to a long-term care event is quite real, and underappreciated."

 

Lack of Sick Leave Benefits Linked To Financial Worries


While many Americans worry about making ends meet, the threat of financial insecurity is even greater for working adults without paid sick leave, according to the findings of a recent study by researchers at Florida Atlantic University (FAU) and Cleveland State University.

The article, "Working U.S. Adults without Paid Sick Leave Report More Worries about Finances," was published on October 15 in the Journal of Social Service Research. Even after controlling for education, race, sex, marital status, employment, and insurance, the researchers found a positive association between not having paid sick leave and worrying about both short-term and long-term financial issues. The lead authors of study, Patricia Stoddard Dare, associate professor of social work at Cleveland State, and LeaAnne DeRigne, associate professor of social work at FAU, noted that according the Bureau of Labor Statistics, nearly one-third of all workers in the U.S. lack access to paid sick leave.

The study's findings were based on the responses of a sample of 17,897 working adults aged 18-64 who participated in the 2015 National Health Interview Survey. The analysis found that workers without paid sick leave were more likely to say they worry about both short-term financial issues like housing expenses, as well as long-term financial issues such as retirement or future bills for an illness or accident. The results showed that compared to workers who had paid sick leave, workers who lacked paid sick leave were 1.59 times more likely to report being very worried about their normal monthly bills, and were 1.55 times more likely to report being very worried about paying rent, mortgage, or other housing costs.

In prior research, DeRigne and Stoddard Dare demonstrated that workers without paid sick leave benefits also reported a higher level of psychological distress: compared to workers with paid sick leave, these workers were 1.45 times more likely to report that their distress symptoms interfered a lot with their daily life and activities. Their previous research also showed that working adults without paid sick leave were three times more likely to have incomes below the poverty line, and were more likely to experience food insecurity and need welfare services.

"The costs of providing sick leave benefits may be lower than employers think when taking into account the costs of workers coming to work when they are sick or performing sub-optimally," said Stoddard Dare. "Both employers and policy makers should consider the potential cost savings associated with offering a few guaranteed paid sick day."

 

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

 

 

 



 
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