In the first of our two-part exploration of the future of work, we examine the organisational challenges facing employers today, including the changing structure and space of the workplace. The second article will focus on the retention and recruitment challenges faced by employers who are striving to drive change through their people, but are increasingly hampered by a skills shortage across the UK.
Employers are more aware than ever of the impact that employee welfare has on retention and productivity. Flexi-time, freelancing and the promotion of wellbeing are all key ingredients in a reward strategy that can reduce employee turnover and engage your people.
The skills shortage
According to our Spring UK Reward Management survey, employee turnover increased in the last year amongst respondents by two per cent. Employee engagement is pivotal in the renewed war for talent. The Open University’s recently published Business Barometer highlighted the staggering amount of £6.3 billion being spent on temporary workers, recruitment fees, inflated salaries and training because of the lack of skills in the UK market. This threatens to stagnate productivity and is particularly acute in the construction industry.
Pay is a hygiene factor
Competitive pay is a crucial tick box for companies to satisfy in their reward strategy. Only then can the other pivotal motivators at work, defined by Dan Pink’s ‘Drive’ as autonomy, mastery and purpose, be promoted to unlock the full potential of employees. If organisations can pay people fairly, this takes pay off the table and anything extra is a real bonus. Our salary benchmarking services can help you to make informed decisions on salary and benefits in the context of the wider marketplace. The difference in salary can be the deciding factor in keeping key members of staff or inviting established executives into your team.
Getting the basics right can then focus employees on the extra rewards they receive at work – giving the employer the chance to map out career development and the individual’s role in the activation of the brand. Mobilising everyone towards the delivery of the organisation’s vision and purpose can unite employees and overcome the more granular differences in the details around what motivates each generation of employees.
A holistic reward strategy
Work-life balance is a key component in making employees productive. However, the push for wellness has crossed over into the office space too. Millennials value a life and work blend that contrasts to previous generations who valued a more separate ‘work-life balance’. This has translated into mindful practices not only at extra-curricular yoga or meditation classes, but in the approach to work itself. The extension of work into the living space with freelancing, working from home and flexi-time means that the ease with which we can log-in to work requires constant discipline which is challenging the status quo and requiring new modes of thinking.
Former blue-prints of hierarchies and career progression models that have dominated the structure and organisation of businesses are all in flux. Making sense of the constantly evolving environment organisations find themselves a part of requires a nimble and agile approach at all levels of the business. According to Paydata’s Managing Director Fiona Hornsby, “A team has to deliver very complex and detailed work and they’re not going to do that if they’re working in a culture of stress and presenteeism.” Thinking holistically about employee experience will increase engagement, productivity and wellbeing.
Innovating in partnership with your people
Employees themselves are increasingly defining what benefits matter to them. An employee-centric approach is critical. In considering how to future-proof your business, author of ‘The CEO’s Playbook’ Nora Ganescu promotes forming a group to discuss burning issues relating to work and management – ‘a place for ideas, discoveries and revelations’ to inspire and empower people across the organisation, regardless of where they are in the organisational structure. It is their passion and energy that organisations should draw upon to gain momentum for change. Similarly, reward strategies always resonate best when employers have listened to what their employees value during the design phase. The long-term view of retirement and health is not enough. Direct feedback from employees is essential to ensure that you are truly capturing what your employees really want from their work.
Rewarding tenure and performance
Long-term incentive plans and bonus schemes are traditional employee engagement devices aimed at securing employee loyalty and tenure. Staff incentive schemes tend to target senior management levels. LTIPs were commonplace across all sectors amongst respondents to our UK Reward Management Survey, with 45 per cent operating LTIPs, which has increased from one third of respondents in 2017. They are particularly widespread in the construction industry across all employee levels whilst no respondents in the charities, associations and institutes sector reported using LTIPs, in line with the streamlined approach that may be expected from a non-profit organisation.
Interestingly, our UK Reward Management results continue to suggest that loyalty no longer equates to increased pay packets. 49 per cent of respondents to our UK Reward Management Survey said that they had to offer recruits up to 10 per cent more than current incumbents. Conflicting salaries are often driven by a shortage of skills that is becoming increasingly acute.
Sustained employee engagement
Brexit is likely to exacerbate the skills shortage, so remaining responsive to ensure reward packages remain competitive at this stage is increasingly important to retain top performers and attract the best external talent. We are supporting our customers who want to demonstrate their commitment to their employees and reinforce the positive value that their employees derive from work that is not just financial.
Total Reward Statements are an effective and immediate way to demonstrate your commitment to your people’s development. A Total Reward Statement demonstrates the breakdown of the reward package in terms of both the financial and non-financial elements. This in turn improves the opt-in rate as employees become more aware of the full benefits offered to them.
The statements have long been a valuable and effective way to communicate the full value of reward packages. They capture the traditional benefits on offer such as base salary, bonus earnings, pension schemes, alongside additional benefits, including personal development and growth, and environmental factors, covering the culture and physical working conditions.
On a longer-term basis, our reward strategy design and job evaluation services can help ensure that progression is clearly mapped out and can support long-term employee engagement. Our recently published special report looks at the engagement challenges facing employers in more detail.
Get in touch if you would like to discuss how we can help to activate your reward strategy to get maximum engagement from your people.