While 2020 may have been a year characterised by redundancies, remote working and safety, 2021’s focus is on talent and employee engagement. Some employers are embroiled in bidding wars for in-demand workers, while others are focused on retaining the staff they already have with a noticeable trend in high-profile organisations implementing ‘burnout breaks’ so their staff can take a rest.
The UK labour market is suffering from the effects of a global pandemic and reduced numbers of EU workers due to Brexit. Warnings from industry abound.
The Confederation of British Industries (CBI) estimates that businesses will suffer through labour shortages for the next two years, while the British Chambers of Commerce (BCC) predicts that such shortages will slow our economic recovery.
And while sectors such as haulage have been hit most acutely, the entire economy is reeling from a lack of candidates. In September, the Recruitment and Employment Confederation (REC) reported the worst candidate supply on record with IT and hospitality recording the highest rise in permanent vacancies.
Attraction and retention insights:
With all eyes on economic recovery, many employers are willing to do whatever it takes to attract and retain the people they need. The same REC report recorded the fastest rise ever in starting salaries, while retailers and logistics organisations are pulling out all stops to keep supply chains moving amid an estimated shortage of 100,000 HGV drivers.
Both Tesco and the John Lewis Partnership have offered £1,000 joining bonuses for new drivers with the latter also increasing the hourly rate for its 900 existing drivers.
In fact, a survey by Adzuna in August found that almost 5,000 vacancies across the UK were offering joining bonuses. But is the simple lure of money enough?
“We don’t believe in attracting people solely based on money. And, if people choose to leave us, I don’t want them to stay because we made an attractive counter offer,’ says Ben Wharfe, chief people officer at home fitness company Fiit.
“This approach might get a short-term decision like ‘do I take the job?’ or ‘do I stay?’ but it doesn’t achieve the actual goal – having
great people who love what they do and do a great job.”
Joey Tait, managing director of Develop, believes wage inflation can also harm career progression: “Inflated salaries can lead to problems down the line for employees too, where, for example, mid-level developers are being paid as seniors then can’t make the next career move because no one recognises them at that skill level.”
The current challenge in this labour market is that certain groups of workers – whether through Brexit, COVID, or the pre-existing skills shortage – simply aren’t available.
“Engaging in a wage-bidding war for a limited number of lorry drivers will drive up labour costs, which might not be supportable going forward as both the economy and the labour market returns to normal,” says Charles Cotton, senior performance and reward adviser at the CIPD.
“Employers might be better off listening to the views of those already working in the sector to investigate what else can be done to make the job more appealing. For instance, in response to a recent CIPD inquiry, a HGV driver suggested that firms prioritise the health and wellbeing of their drivers as well as promoting job security, development and recognising professional, and key worker status. While money was important, so too was respect.”
Pay can wait
With pay only one part of the equation, many employers are taking proactive steps to ensure their benefits programmes give them the edge. Research by Reward Gateway found that 83% of HR leaders believe they’ll need to adapt what they offer employees in order to attract the best talent in a post-pandemic world.
“If you spend all your energy and budget on paying the highest salary, you’re neglecting the things that are really important to most employees,” says Wharfe. “You need to have a strong mission that can excite and engage people.
"You need to pay people well, so pay is not an issue. Then you need a holistic reward and benefits offering that makes people feel appreciated and looked after. But also one that reinforces and reiterates your company values. You should know what every single benefit is trying to achieve and if you don’t, why offer it?”
According to Zofia Bajorek, senior research fellow at the Institute for Employment Studies, fundamental to any benefits offering is an alignment with organisational culture. “If my office provides me with a head massage, why are they doing that in the first place? Is it because I’m stressed?,” she asks.
“If they’re not changing the culture that you’re working in, then giving you a head massage once a month isn’t going to make any difference, you’re still going to be stressed, you’re still going to be overworked, and you’re still going to be demotivated.”
It is that alignment between benefits and organisational values and culture that is the challenge, particularly in a period of such seismic events. We’re now a far cry from the halcyon days of pool tables and free fruit.
This labour market is made up of people who have spent most of the last two years working through a global health emergency, perhaps taking the knee, or even explaining to their children who Greta is. It’s not enough to say that ‘things have changed’. More accurately put, people have changed, and if employers are to attract and retain talent, what they offer employees needs to transform too.
Danielle Harmer, chief people officer at Aviva, says that the pandemic helped the organisation to understand which benefits were really valued by employees. “There were a lot of organisations that did things like free fruit. And actually, when we started to work remotely, you could see just how little benefit there was in that type of thing,” she says.
“I think organisations now need to be really mindful about gimmicks. People will see through that.” The term ‘holistic’ is on the lips of many a HR leader right now amid a recognition that employees want to feel supported in a balanced way.
“Employees expect more from their companies than they ever did before,” says Debra Corey, founder of DebCo HR and author of Build it: The Rebel Playbook for Employee Engagement. “It’s not just what you’re doing within the confines of your office, but what are you doing to support the greater good, even from a reward perspective.”
Corey, who previously led reward teams at Gap, Honeywell and Merlin Entertainments, describes it as a meeting of the internal and external. “Before, when we looked at the external world, it was about looking at our competition to see what they were doing,’ says Corey. “Now it’s about looking at what’s happening in the world and thinking ‘how can I weave that into my rewards programme?’ and realising that actually the benefits you have are a statement of who you are.”
"It’s not just what you’re doing within the confines of your office, but what are you doing to support the greater good"
Warnings on the climate emergency and investors’ environmental, social and governance (ESG) criteria are also creating pressure on employers to offer ‘green’ benefits that might help to influence employee’s choices outside the workplace.
Aviva’s focus on the environment is as much driven by its employees as it is by investors. “Our colleagues are asking us questions about flexible benefits like the bike-to-work scheme and whether we can include e-bikes, or whether we can offer anything on electric cars,” says Harmer.
“This year, for the first time, we’re including ESG measures in the long-term incentive plan for the executive team. So it now includes measures around diversity and our net zero carbon measures. We’re coming at it from both ends and really starting to weave the environment into our approach to reward.”
Meanwhile, the Black Lives Matters (BLM) protests of summer 2020 have brought a renewed focus on diversity and inclusion with HR leaders considering the fairness of their reward programmes. According to Cotton at the CIPD, it’s become ever more critical that organisations’ public expressions of solidarity align with internal behaviour.
“Lots of organisations came out with these identikit statements of empathy and sympathy but people were saying ‘Actually in your own organisation, you’re not practising what you preach’,” says Cotton.
The CIPD’s Reward Management Survey, published in March 2021, found that in response to the BLM movement, 22% of employers had considered reward fairness while 19% had taken or will take direct action which included introducing ethnicity pay gap reporting, new pay policies, benchmarking roles and a review of spending on benefits to ensure fairness for all employees.
“I am seeing [employers] who are looking at whether their benefits programme is diverse enough or whether it actually only fits a certain group of employees,” adds Corey. “It’s not just about offering a diverse range of benefits but also building in enough flexibility that they are inclusive and anyone can use them.”
Tait says the rise of employer review sites like Glassdoor is making it easier for candidates to assess whether the pay and benefits they are being offered is backed by a healthy, purpose-driven culture.
Where that’s not the case, no amount of benefits PR will help; just ask Brewdog. An open letter signed by (at last count) 250 former and current staff accused the brewing company of fostering a sexist, misogynistic culture and of failing to live up to its public mission, including not fulfilling some of the employee benefits it claims to offer.
In response, Brewdog announced an independent culture review, as well as a salary and benefits review. Tait says it’s difficult for candidates not to be influenced by these types of stories and the damage caused to the brand.
“Candidates are becoming much more discerning about their decisions because what’s important in people’s lives has been drawn into focus over the last 18 months,” says Tait. “No longer are people prepared to go and work for an organisation that doesn’t align with how they see themselves and their family, no matter what’s on offer.”
This is part one of an article appears in the September/October 2021 print issue. Check out part two here.
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