Employees’ expectations have changed dramatically over the last couple of years, with factors such as the pandemic, higher inflation rates, and an increasing cost of living fuelling a rethink of the purpose of work. With low unemployment rates now making it a job seekers’ market, the reward strategy has a critical role to play in attracting and retaining talent.
It’s a pivotal time for employers, the debate around the future of work is intensifying and those organisations that are able to use reward as a real differentiator will do well.
A Focus on Health and Wellbeing
Employee health and wellbeing is a key focus in reward propositions, with organisations looking to enhance sick pay and extend benefits in this area.
Employees are more aware of their health as a result of the pandemic, and they want products such as life insurance and income protection. Concerns about NHS waiting lists are also driving demand for medical insurance. Being able to access treatment quickly has been highlighted as beneficial to employees and employers.
As well as prompting organisations to review their current offering, this growth in demand for health and wellbeing support is driving a shift toward health and wellbeing allowances. Allowing employees to choose their wellbeing benefits, can drive value and engagement.
But an effective health and wellbeing strategy requires more than products. The culture of the organisation must underpin it. Just offering an employee assistance programme (EAP) to support mental health isn’t enough, educating managers will help to ensure there’s an open culture around mental health in the workplace.
The Financial Squeeze
High inflation rates and the rising cost of living mean many employees also face financial pressures, with the Bank of England warning that households face the worst squeeze on disposable income for 30 years.
Employers need to consider how they can help employees weather this cost of living squeeze. Financial worries affect wellbeing, reducing productivity and increasing absence.
Aside from increasing pay, there are plenty of ways employers can offer support. Benefits such as health cash plans and discount platforms help employees make their money go further.
Salary sacrifice, where employees redirect some gross income into benefits such as the pension, electric vehicle scheme or childcare is another valuable tool when finances are tight. “Salary sacrifice saves on both employee and employer national insurance. Some employers give back the savings to the employee or use it to fund additional benefits for all.
Financial education is also important as it can help employees manage their finances better. Financial education is beneficial in all circumstances but especially where the organisation offers employees choice over their benefits.
More than money
The financial elements of reward are only part of the equation, especially since the pandemic forced many to reassess why and how they work. Organisations need to look at reward as part of the broader employee experience, people come to work for a rich range of reasons; very few are money-oriented.
A variety of influences feed into the employee experience including access to learning opportunities and career development. However, the events of the last couple of years have put flexibility around where and how people work at the top of many organisations’ agendas. Flexible and hybrid working is the main reason why people are leaving or joining a company, putting in place a structure that suits your employees is critical to the success of the reward strategy.
Many would like to see this flexibility taken a step further, with compressed hours, flexitime and four-day weeks all being considered. However, while the majority of employees appreciate more flexibility around where they work, it brings challenges. It’s much more difficult to retain the company culture if everyone’s working remotely. Employers need to consider how they ensure employees feel part of the organisation.
Your Reward Programme can help Demonstrate Commitment
It may be a bigger challenge when people are working remotely but, with employees increasingly looking for organisations that share their values, creating the right culture has become a key objective for employers. Gallagher’s State of the Sector 2021/22 report, found that 53% of employers are prioritising engaging their team around purpose, strategy and values.
Whatever these values are, the reward programme can help to demonstrate the organisation’s commitment to them. An organisation might want to highlight its ESG values through its reward programme by offering green investment options on its pension or promoting an electric car scheme. This can be really effective, but employers need to be aware of competing values. Providing car parking facilities might support family-friendly policies, allowing employees to drop kids at school before work, but it might not align with the organisation’s environmental values.
As well as avoiding mixed messages, authenticity is essential. Stating the organisation is committed to diversity, equity and inclusion means nothing if its policies don’t live up to it. Employers must make sure their benefits are truly inclusive. If an employer offers fertility support, it should also have other benefits in place such as childcare and eldercare propositions.
Taking all of these factors into consideration requires a much more strategic approach from employers than the competitor benchmarking exercise that would have been the norm in the past. But, ensuring every element of reward is a fundamental part of its employee proposition, it will help the organisation stand out in the battle for talent.