Beware of the benefit trap: Cutting back programs can lead to a drop in employee loyalty and productivity

Companies have started trimming back on employee benefits over the past few years as a first-line cost-cutting measure.

But that hasn’t gone over well with workers, who highly value their perks, particularly those focused on flexibility and career growth. And cutting back on benefits could hurt productivity and loyalty, according to a new report released today. 

Around 55% of employees around the world say they would put in less effort at work if their employer eliminated a needed benefit, according to the Pulse of Talent report released by Dayforce, a human capital management software provider. And around 60% said they would be less loyal to their company if their employer made those cuts. (Editor’s note: Dayforce is a sponsor of CHRO Daily.)  

“We are in a period of organizational change, and employers are stuck in this balancing act between how they can still continue meeting the demands of the business, and also meeting the wants of employees,” says Katie Meyers, Dayforce’s vice president of global talent management and development.

Some benefits that employees identified as being most important to them have been cut the most since the start of the pandemic, according to Dayforce’s survey. Respondents ranked flexibility to address personal responsibilities or illnesses, flexible scheduling, and career development opportunities as the most important perks for them. But while 38% of employees say they had that perk before the pandemic, just 24% say their employer currently offers it. And when it comes to perks focused on flexibility for personal issues 33% of employees said they had it pre-pandemic, but only 24% say they have it today. 

Many companies placed a heavy focus on empathy and flexibility during the early pandemic years, only to feel pressure to hone in on boosting efficiency and productivity a few years later, says Meyers, and that manifested in cuts to employee-centered perks.

Luckily for employers, both flexibility and career development offerings are some of the lowest-expense perks that they can offer. Employers should also consider offering personalized career development plans and job shadowing or rotation programs, says Meyers.

“A lot of other organizations out there can offer and introduce programs [that] allow employees to know what, where, and how they might want to move, in terms of the rock climbing wall that are our careers nowadays,” says Meyers.

Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion

Today’s edition was curated by Emma Burleigh.

Around the Table

A round-up of the most important HR headlines.

- Here are five ways to rethink the dreaded work meeting and make them a lot more interesting. —Wall Street Journal

- CVS has been fined $250,000 for understaffing a store in Ohio after an investigation found that at one point, pharmacy wait times were more than a month. —CNN

- The Rooney Rule—an NFL policy which requires teams to interview at least one woman and minority candidate for coaching positions—may be under threat amid DEI pushback. —Washington Post

Watercooler

Everything you need to know from Fortune.

Empty chairs at empty tables. Nearly three fourths of workers feel positive about returning to the office—but one third also believe their offices aren’t ready for their return. —Orianna Rosa Royle

Starting small. Workplace microcultures may be the best way to cultivate better communication, engagement, and productivity among employees. —Trey Williams

Human competition. For most workers, AI won’t take over your job—instead, workers with stronger AI capabilities skills will usurp them instead. —Jane Thier