As the war for talent intensifies, reward and benefits strategies are at the forefront of attracting, retaining and engaging talented people.
A flexible, inclusive benefits strategy sits at the heart of the employee value proposition (EVP), which in turn should connect to corporate purpose, values and organisational goals.
But the short-term shocks of the last few years, coupled with longer-term trends such as automation and digitisation, have driven a disconnect between reward and benefits and the EVP, and business purpose.
Reward and benefits strategies must keep pace with business needs in order to attract, retain and engage the whole workforce.
Agility and resilience are now essential for business survival as organisations rapidly and continually reposition themselves in changing markets. That has a significant impact on skills needs, both for reskilling and upskilling existing employees, as well as attracting new talent. To attract that talent requires rethinking reward and benefits.
Employees’ expectations and relationship with the workplace are also changing. Mercer’s Global Talent Trends research found that people now want to work with a company, not simply for a company, as a partnership. People put greater emphasis on flexible working, genuine commitment to wellbeing and demonstrable support from their employer in their moments that matter.
In meeting these changing needs, the benefits package is just the starting point. For employees to see real value from their benefits, those benefits need to be embedded in the culture of the whole organisation.
For example, REBA and Mercer’s Aligning Corporate Cultures and Human Values research found that while there is close alignment between the board and HR over values such as employee mental health, the same alignment is not always evident throughout the rest of the organisation.
Line managers were much less likely to see mental wellbeing as a concern than HR teams – and in extended employee networks, such as supply chains, it is rarely even considered.
The relationship between company ethos and reward and benefits is also becoming more important. At a high level, this means, for example, ensuring that pensions investment strategies align with the organisation’s own sustainability principles.
It also requires consistency within reward and benefits. Rewarding long-hours and burnout culture while claiming to support employee mental health within the same strategy risks disengaging employees and potentially damaging corporate reputations.
Reward and benefits are at the heart of the employee value proposition (EVP). As businesses transform their talent management strategies and HR policies, it is crucial to reassess the EVP – and by association reward and benefits strategies.
However, the era of a one-size-fits-all EVP is over. Employees value benefits that fit their own personal needs and life stage: exceptional retirement support might work for older employees, but is unlikely to attract younger talent for example.
Flexibility, personalisation and choice are the new watchwords for future-looking EVPs. Mercer's Employee Benefits and Technology Trends research found that, although 66% of employees say the benefits they are offered are highly relevant to them, that still leaves a third of the workforce where benefits spend is not adding value.
The relationship between reward, benefits and the EVP can also mean overhauling legacy benefits. Removing outdated, unsuitable benefits that employees do not want or use frees up budget for a more focused, digitally enabled strategy capable of delivering better return on investment as well as improved employee engagement.
In the past, employee benefits strategies might have focused on rewarding seniority or providing support for traditional male breadwinners with stay-at-home families.
That thinking is no longer relevant or appropriate for the needs of diverse, modern workforces – but is often still embedded in legacy benefits offerings.
Benefits strategies need to reflect the diversity of ambition and lifestyles in future-looking workforces, be fair by design, and communicated in ways that are representative of the workforce.
Pay, plus core offerings such as pensions and health insurance, will remain at the heart of all reward and benefits strategies. However, employers have an opportunity both to make core benefits more inclusive, and to create flexible offerings that recognise different needs within the workforce and provide genuine value both for employees and employers.
That can mean challenging providers to think differently, by extending health insurance cover to address changing needs within the workforce, or reviewing communications so that they engage a more diverse workforce. While that might sound like an impossible task for all but the largest businesses, Mercer can help. We work with market-leading providers to develop new approaches and product enhancements that are then exclusively available to our clients of all sizes.
Understanding the range of employees’ benefits needs means analysing current and planned workforce demographics, listening to people and acting on their feedback. This will form the basis of flexible, personalised offerings fit for current and future purpose.
Creating a digital first, data-driven approach to reward and benefits means that future strategy and spending decisions are based on robust data and effective analysis. Being able to tell a compelling story both to internal and external stakeholders supports the business case for benefits, and is also vital to continuously track whether changes and innovations are effective.
Mercer’s Employee Benefits and Technology Trends report found that data analytics for reward and benefits is still work in progress. Over two thirds (69%) of respondents said it would take them more than a week to find out their highest costing benefit, suggesting that data quality, transparency and analytics support could all be improved.
The era of a one-size-fits-all employee value proposition and benefits offering is over. Removing outdated, unsuitable benefits that employees do not want or use frees up budget for a more focused, digitally enabled strategy.
