The executive talent gap is growing, leaving employers to grapple with retention and retirement readiness amid economic uncertainty, according to an Aug. 11 report from NFP, an Aon company focused on benefits, wealth management and retirement planning.
As baby boomers near retirement, companies are trying to address knowledge and leadership gaps in executive succession, the report found. In response, companies are rethinking executive compensation and benefits.
“Most employers (85%) recognize that they cannot afford to lose top talent,” Tony Greene, president of NFP’s executive benefits division, said in a news release.
“Baby boomers are exiting the workforce, which is driving employers to focus more on their future leaders and creating an opportunity to invest in retention strategies and leadership development programs that will help establish executive pipeline channels for Gen X, millennials and even younger employees,” Greene said. “Talent and succession planning have become a business continuity issue.”
These concerns also extend down the talent pipeline, where companies are facing a supervisor crisis due to leadership burnout, according to an Express Employment Professionals report. Without a pipeline of future leaders, employers may experience a leadership vacuum in coming years, the report found.
In NFP’s survey of 260 executive benefits decision makers, 97% expressed concerns about the economy, and 1 in 5 said economic uncertainty will prompt them to alter the amount or type of executive benefits offered.
Overall, Greene said, “post-pandemic generosity” in executive compensation has shifted to a “more measured, sustainable model” that focuses on flexibility and financial prudence. Benefits decision makers said they’re rebalancing their approach to customized executive compensation solutions.
For instance, 68% said they’re using nonqualified deferred compensation plans for executive retention. Companies are also focused on remaining competitive with peers (53%) and helping participants save for retirement (52%). Nearly 9 in 10 said their plan participants were satisfied with deferred compensation plans and retirement preparedness.
At the same time, only 3 in 10 executive workers appear to fully understand their benefits, the report found. Greene noted a direct correlation between executives’ understanding of benefits and their job engagement, emphasizing that employers should provide clear communication, onboarding tools and financial literacy programs to retain top talent.