How can DC plan sponsors thrive in a world of disruption?

AI and big data will be used in the future to further individualize members’ experiences with their benefits and DC plans through personalization and virtual assistants, he said. These technologies can help boost engagement through targeted notifications, provide employers with a deeper understanding into employee behaviour and to improve investment research. But while he noted data can be incredibly helpful, he advised plan sponsors not to see it as their “saviour” or their only path to innovation.

Read: How analyzing big data can help with pension engagement

“Big data, machine learning [and] artificial intelligence [are] great, but all of it actually optimizes past behaviour [and] innovation is about creating the future. In a world abundant with data, of course we’re going to optimize, of course we’re going to be efficient. But in a world obsessed with automation, it leaves little room for magic, for luck, for serendipity.”

Once people are used to having everything from their grocery order to their retirement savings at their fingertips 24/7 in a convenient and digital way, the value of those offerings becomes less significant and more commoditized, said Kanungo. To build better engagement with their employees, plan sponsors need to create a differentiated experience that doesn’t just rely on efficiency. 

“I fundamentally believe in order to better engage with our employees, especially when it comes to their future and their retirement. We might need to push them in different ways and that might require a little bit more magic.”

He pointed to the idea of cost signalling — or the idea that putting in greater effort can result in greater meaning and significance for employees. “With our DC plans, how do we make things more memorable and magical and meaningful for [members]?”

Read: Data, personas and generational focus keys to successful benefits, pension communication

Kanungo also addressed the trend of employees quitting in record numbers throughout the pandemic. He cited a 2021 report from Oracle that found 88 per cent of employee respondents felt the meaning of success had changed for them during the pandemic, with work-life balance, mental health and flexibility becoming top priorities. Another study, by McKinsey & Co., found 64 per cent of employees are willing to leave a job with no backup plan.

He encouraged plan sponsors to see the trend as “the great re-imagination” of work rather than the Great Resignation, with employees increasingly choosing to live out their values. But the resignation trend is also part of a major power shift from organizations to individuals, he noted, as employees realize they have more leverage than in the past.

Read: 65% of employees looking to change jobs due to compensation, well-being: survey

“As employers, we’re always afraid that our people are going to leave. But what I think employers have to recognize is that our employees are rock stars, so how do we enable them to be better rock stars if we can’t control if they’re going to stay with us or not? We have to just empower them to be the best they can be and cultivate this environment of innovation.”

Employers can motivate employees through other forms of compensation, said Kanungo, including stipends for professional development that can help them become better innovators and learning what people are passionate about and encouraging them to pursue those interests.

He also highlighted a growing challenge around risky fear of missing out motivated investing crazes like meme stocks and cryptocurrencies that many plan members believe can make them rich quicker than the traditional financial system.

“This is significant because, as [human resources] leaders, trying to engage our employees around their future, we actually compete against all of these things.”

Read more coverage from the 2022 Defined Contribution Investment Forum.