People Business » Why employees’ changing expectations could be good for salary budgets

Employee expectations of their workplace are changing, according to a new survey, and many employers are shifting their approaches to manage business impacts.

According to the Aon Benefits and Trends Survey, 97% of organisations say that employee expectations of the workplace are rapidly changing. Now, more than ever, it’s a company’s approach to employment practices that is making a difference to employees – 98% of employers say employees expect more flexible working hours; and 89% say they expect agile or home working to be available.

And beyond flexibility, 79% of employers said employees expect better awareness of mental health issues, 65% are looking for better approaches to diversity and inclusion and 63% are looking for improved maternity/paternity/parental leave policies. Access to financial education also featured for 54% of respondents.

It’s my view that any recruitment and retention difficulties faced by employers now will become increasingly problematic, impacting all job roles not just hard-to-fill ones. It’s easy to see why: a tight labour market is forecast over the next ten years, largely because of a reduction in birth rates in the noughties impacting the Generation Z’s on their way to employment. Indeed, data* from the ONS says there’ll be 15% fewer entering the UK labour market than the previous three generations. And Brexit’s impact on migrant workers is also a factor.

Because recruitment and retention are already such a focus for employers, it wasn’t surprising to learn that employers are reacting to the changing situation. But just how many, why they’re doing it and their realisations of what they need to do, is interesting.

The survey showed that 60.5% of employers say that their businesses are either already changing or are expecting to change in the next five years, and that it’s essential for them to evolve their offering because they are now competing for talent within different market sectors. Just 29.5% said that they don’t expect any change.

Tech-driven change

There seems to be a particularly rapid pace of change right now, much of it driven by technology. This impacts an organisation’s workforce model and has consequences on role fulfilment, the types of people who fill those roles as well as the organisations they compete with for talent.

Ordinarily the laws of supply and demand would mean prices go up – ie salaries get hiked to attract and retain people. The survey, therefore, showing that it’s far from just salary that’s important to employees, especially younger generations, is potentially good news for employer budgets.

Alongside this, employers readily acknowledge that their current benefit programmes are not set up to meet the needs of their people – half said that their current benefits don’t meet the needs of all generations. Eighty-nine percent believed they would need to change their benefits offering to meet the needs of future generations.

Indeed, when it comes to employee demographics, age is unlikely to define people but there are external factors that differ and continue to change, so the issues that one generation faces are often quite different to the generations before and after them. For example, Baby Boomers largely enjoyed final salary pensions and are likely to be relatively better off in retirement. Owning your own home is much less common among 25-34 year olds, especially in London, while the ‘sandwich generation’ is emerging with people having caring responsibilities for both their children and their parents.

Value proposition

As advisers, we’d noticed over the last couple of years, so many changes across our client base, and they too were interested in other employers’ approaches to issues. It was the crux to adding deeper questions to this year’s survey; we were particularly keen to find out about benefits strategies and whether a wider view is being taken of their EVP, or Employer Value Proposition, which is the whole employee experience of working for an organisation, rather than just the benefits package.

We’ve seen that many organisations have become more joined up in designing and managing their benefits in the context of an overall EVP. However, according to the survey results, they are still in the minority, with only around a quarter having established a clear one.

But there are signs of a significant shift; half of all employers are planning to develop one. Somewhat surprisingly though, almost a third of those with an EVP don’t actually communicate it to employees. Even so, the overwhelming view is that the EVP has a positive impact, with 65% looking favourably on it for employee engagement, 70% agreeing it supports recruitment and 63% saying it supports retention.

And this is where the heart of it lies. It’s apparent that the entire employee experience increasingly matters, so an EVP with the right approaches can truly engage people. The good news for employers is that investing in the wider EVP may be cheaper and more sustainable than pushing up the wage bill.

 

 

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