Employment is changing. We have an ageing work population and workforces are becoming more diverse. Someone who starts work tomorrow will almost certainly go through several changes of career before they reach retirement. Contributor Hazel Rees, GB Leader, Rewards – Willis Towers Watson
As well as working for longer, employment styles are also changing. There will still be a place for full-time employees, but more and more will choose more flexible ways of working, with many opting for short or long-term contracts and self-employment.
Alongside this change, the UK economy is expected to continue to grow steadily, which means more people are working and fewer people are out of work. While this is of course good news, what does this mean for HR? And what should they be doing now to prepare for the future as they compete to attract increasingly job-savvy employees?
Average earnings have been increasing as UK firms continue to contend with a tight labour market, which could tighten further in coming months. The latest Office for National Statistics figures show the number of people in work continued to climb, with a record 32.6 million employed between October and December 2018, with an employment rate of 75.8%, the joint highest since records began in 1971. The jobless rate, remaining at 4%, is at its lowest since 1975. This trend is set to continue as employers look to plug a widening skills gap in the race to adapt to an increasingly digitised business landscape, which is already dramatically disrupting traditional business models and roles.
Data provided by a number of job search websites and analysed by the BBC showed that the number of searches for UK jobs from other European countries fell from 17,513 per million in 2015 to 14,701 by July 2017, with Brexit uncertainty being seen as playing a key part in making the UK a less attractive option.
This compression on what is already a competitive war for talent is also being compounded by a shift in employees’ expectations, with money no longer necessarily the most effective way of rewarding staff or appealing to new talent.
As a direct result, the ways in which companies decide to reward our work will have to change. There simply isn’t going to be a place anymore for a one size fits all mix of rewards. This won’t work anymore with the new dynamics of employment. So what should take its place, and what are the likely impacts on both employee and employer?
A growing economy means workers have a lot of options; the way to win the best talent is to become the employer of choice. Leading companies look at benefits beyond financial incentives in order to attract the best talent. Today’s employees want personal and professional growth opportunities, career mobility, flexible working schemes for a better work-life balance, comfortable and collaborative work environments with a positive culture and clear purpose, and the right mix of compensation and benefits to make them feel secure.
It’s no easy task to communicate total rewards in a way that is meaningful to each candidate or employee at a large company. And it would be no surprise if the idea of a more complex and personalised mix of rewards sets alarm bells ringing amongst HR and Rewards professionals, not least about the amount of time and cost needed to administer such schemes. However, the rapid growth of new technologies has the power to take much of the pain away.
Not only can technology streamline the process of managing fragmented, multiple reward offers, but it can free up time for HR to concentrate on strategic talent issues. As automation takes over these processes, HR will need to develop new skills, especially around the analysis of the data which technology now has the power to generate and which can lead to better informed decision making.
There is also a growing move towards using technology to communicate more effectively with employees about their rewards, and to give them greater control over the choices available to them from pension contributions to holiday entitlement. Employees are using mobile technology on a daily basis to manage and organise their lives, but all too often there is a disconnect between the experience an employee has of consumer technology (such as online shopping and banking) and that offered by their employer.
This is changing, and there are many exciting innovations in how companies are communicating with their employees. If the technology route is really to work it needs to mirror the same level of interface employees have when using consumer technology, as well as reflecting the brand and culture of the employer.
The power of the data which technology provides also offers an opportunity to re-evaluate the mix of rewards companies provide. Analytics can allow you to ensure that as an employer you are getting the optimum return from the rewards provided – and gain greater understanding of just what impact these have on the business as a whole. In many cases what employees might value highly are relatively low cost options, for example, the ability to undertake additional training or access financial advice. So don’t make assumptions about what rewards are most important. Instead research these. Using techniques like total rewards optimisation tools to gather data directly from employees – digging deep into that data – enables employers to respond accordingly. Greater flexibility or segmentation of your mix of rewards need not necessarily come at a higher cost.
Though the future may be moving towards a more diverse range of rewards, it’s important not to lose sight of the way these impact your overall talent value proposition and the overall image of your business – and its attractiveness as a work destination. Rewards say a lot about who you are as a business and what you value, so they still need to be aligned with your strategy and reinforce the behaviours that will lead to success – as well as attracting the best talent to you.
So be prepared to review your approach to rewards – using technology to understand what your employees value and effectively deliver your rewards to maximise engagement and appreciation. But never lose sight of the need to align rewards strategy with your business strategy and culture. One size no longer fits all, especially as our workforce becomes more diverse, but that doesn’t mean that greater segmentation and employee choice shouldn’t add up to one exciting offer.