A Week in the Cays—Or a Bigger 401(k)?
Would you rather have an extra week off each year or a little more money in your retirement account?
Most Americans say they’d like the week off. In fact, according to an interesting new survey and infographic by the consulting company Mercer, short-term benefits tend to trump long-term benefits in the eyes of most U.S. workers.
“Employees in many countries place greater value on certain reward elements that actually offer them less value, over time, from a financial or wellbeing perspective,” Amy Laverock, a partner with Mercer Marsh Benefits, remarks in the survey’s introduction. In a longer version of the report, the writers state that the “fact that most employees are not saving enough for retirement and value their 401(k) programs lower than an additional week off is alarming.” They add: “Employers need to consider their roles in educating employees to think more long term in making benefit choices.”
Peter Drucker always warned against short-term thinking, which he considered to be a plague in business and economics. On this topic, he liked to refer to the economist Joseph Schumpeter. “Schumpeter . . . knew that today’s short-term measures have long-term impacts,” Drucker wrote in The Frontiers of Management. “They irrevocably make the future. Not to think through the futurity of short-term decisions and their impact long after ‘we are all dead’ is irresponsible. It also leads to the wrong decisions.”
Giving into short-term thinking also caused Drucker to fail (in his own view) during an early stint as an academic administrator. “I thought I’d win friends and influence people by giving them some short-term goodies,” Drucker recalled.
But Drucker also cautioned against dismissing choices or preferences that differ from yours as irrational (a foible for which he cited “economists, psychologists, and moralists”). To condemn the choice of vacation over a 401(k) contribution is to assume that an extra week off is something that no employee could rationally prefer. But in a nation where leisure time is scarce, that’s a bold assumption.
As Drucker put it, “You have to start out with knowing what the customers really consider value, what is important, before you communicate, rather than with telling the things you believe should be important to the customer.”
How much long-term benefit would you sacrifice for the sake of an extra week of paid time off?