More employers looking at how employee values affect engagement

The struggle to overcome the labor shortage is prompting all kinds of employers to look for creative ways to attract and hold on to talent. Research has shown employees increasingly are looking for employers that share their values. That knowledge is shining a spotlight on the importance of an employer’s environmental, social, and governance (ESG) impacts and causing employers to examine how a focus on values—including incorporating ESG principles into benefit plans—can drive engagement, improve talent retention, and encourage employees to save for retirement.

Examining ESG components

In November 2019, the McKinsey Quarterly explained each component of what has become known as ESG:

• The environmental prong (the E) involves things such as an organization’s carbon emissions and its impact on climate change.
• The S refers to social criteria, such as an employer’s reputation and relationships with people in the community as well as its record on labor relations and diversity and inclusion.
• Governance, the G, refers to the systems an employer adopts to govern itself and make effective decisions, comply with laws, and meet needs of those outside of the organization.

Research from professional services firm Marsh & McLennan, which includes asset management firm Mercer, predicts ESG performance will become more important to attracting and retaining talent as Millennials and Gen Z come to make up most of the global workforce. Among the other findings of the Marsh & McLennan research: