We are in the midst of a workplace revolution. The pandemic has altered almost all aspects of the employee experience, changing everything from where people work to how they interact with clients, colleagues and customers. Now there are strong signs that employees’ core expectations about work are changing. In recent months, an unprecedented number of employees have quit their jobs in search of opportunities that are safer, saner and more sustainable.
Considering the size and scope of these changes as mentioned above, now is a critical time to determine whether your employee value proposition (EVP) is compelling and whether your total rewards strategy is aligned with the current and future needs of your workforce.
The evolving employee contract
EVPs and talent reward strategies are based on an implicit psychological contract that defines the relationship between employer and employee. For much of the 20th century, the loyalty contract was enough to bind most people to their employers for the duration of their careers. Compensation systems and EVPs were based largely on extrinsic motivators and financial incentives. Organizations provided pay, benefits and job security in exchange for a lifetime commitment from employees.
By the start of the 21st century, the limitations of this approach were apparent. A growing body of research — including our own — shows that although pay and benefits are important, employees also want jobs that are intrinsically motivating and provide a sense of meaning and purpose, community and camaraderie, and growth and development. This research led to the emergence of the engagement contract. Over the past two decades, many organizations started focusing on their employees’ psychological needs by providing compelling jobs and meaningful work experiences.
Engagement will continue to be important. But it will not be enough to attract and retain top talent in a post-pandemic world. This is because the pandemic has reset employee values. A decade ago, work-centrality — the relative importance that people place on their work — was high. Stable jobs, good bosses and promising careers were all coveted signs of success.
But now, after years of lockdowns and layoffs, remote work and virtual meetings, and widespread illness and anxiety, many people have a different outlook on life. We found that employees across organizations are significantly more concerned about their physical health, their work-life balance and their emotional well-being than their job security, their bosses or their professional development. Employees are looking for a new deal — one that is empathetic and employee centric.