How can employers form a reward strategy that reflects the current talent market?

Need to know:

  • The effect of the Covid-19 pandemic on the talent market will be felt for a long while yet; employers that are recruiting have had to adapt to virtual, remote methods.
  • The reward package has long been used as a talent attraction and retention tool, but the major changes to workplaces this year means that employers have to use different means of appealing to potential candidates.
  • Offering extensive wellbeing benefits and holistic flexible working will help to differentiate an employer from its competitors.

In the midst of the Covid-19 (Coronavirus) pandemic, the employment market has been hit hard; Office for National Statistics (ONS) figures in July 2020 showed that in June, the number of employees on payrolls was down around 650,000 compared with March 2020. Although the decline slowed in May and June, the ONS suggests this is mainly because there are fewer people moving into payrolled employment. The ONS also reported that vacancies in the UK in April to June are at the lowest level since 2001.

Pressures on employers to control budgets and rebuild businesses means that pay freezes and redundancies will continue for the foreseeable future. The impact on recruitment strategies has been monumental, but there are areas of growth. Mark Ramsook, senior director, health and benefits at Willis Towers Watson, says: “It has had a huge impact, it’s an absolute handbrake on the majority of activity, with the exception of certain sectors or industries, principally within the technology space, for example, communication businesses, certainly those involved in collaboration and or video-related app tools. It’s tipped a lot of [employers] to redirect their spend, and as a consequence, they’ve had to rapidly get new people on board.”

The pandemic has certainly changed the face of the talent market. Although the market is very different, employers need to adapt and react quickly to the changes, says Kristofer Karsten, head of people and culture at Ceridian. “We are going to see what’s absolutely going to be a changing world of employment,” he explains. “We need to be ready to mobilise and adopt new technologies such as video interviewing, virtual onboarding, and really embrace flexible and remote workforces. There’s absolutely going to be a greater utilisation of technology, and that’ll allow remote interviewing of candidates and onboarding of staff that expect to see an increase in flexible and remote-working opportunities in terms of best practices.”

The enforcement of home working has fed the digitalisation of workplaces, thereby widening the net for those employers that are looking to recruit. Sarah Jefferys, head of reward consulting at Total Reward Group, a Gallagher firm, says: “As we move forward towards recovery or the new normal, this experience will have changed the world of work in many, if not all, sectors. In all places there are going to be some differences, that’s going to cause, ultimately, an explosion in talent mobility, where employees are able to work much more flexibly.

“So there’s a wider pool out there for employers in terms of looking for talent; location is no longer a limitation in terms of finding the right people for an organisation. For employees, the world just got a whole lot smaller, and but equally, it’s got a whole lot more competitive.”

New employee experience

How does this changing recruitment landscape feed into an employer’s reward and benefits strategy? The rules of work are being completely rewritten and this presents employers with an opportunity to refine the way they communicate the organisation’s culture and values through the employee experience or employee value proposition (EVP). “The value proposition has to stack up for an organisation, it really needs to be thinking about exactly what it is that it’s offering for its employees,” says Jefferys. “We’ve talked to a lot of HR directors about what the importance is of their organisation’s purpose, and about being able to express that purpose to employees and prospective employees.”

The EVP and reward strategy in the new talent market need to reflect the current demands and requirements of employees, which may be considerably different to even six months ago. Tim Kellet, managing director of Paydata, says: “Five years ago or so [employers] might have reviewed their benefits proposition every few years, but now everyone’s reviewing it every year. That’s because employees are looking for the overall package, they’re not just looking at the pay line.”

Flexible working has always been seen as a very attractive part of an employer’s value proposition to employees; now that it has been mandatory for many of the nation’s workers, how can an organisation promote it as a hook for differentiating itself from the competition? “Some [employers] said this is going to create a step change with the way they approach their EVP, they’re going to really try and market it going forward,” says Kellet. “Others think they might revert back and that’s a danger; we might revert back to the traditional culture of presenteeism.”

To be offered as a perk by an organisation, flexible working needs to have more of a holistic approach. “Not just ‘can I work from home?’, it extends beyond that now to providing true flexibility for employees and supporting them in terms of the things that are important in their life at any point in time,” says Jefferys. For example, flexibility for employees that have childcare or eldercare issues, or perhaps if they want to volunteer in their community.

Adam Coleman, chief executive officer (CEO) at HR Locker, adds: “What Covid-19 has done is almost like a crash training course in how to work remotely. The [employers] that decide to take it on as a practice after Covid-19 will benefit massively. Those who don’t adopt a model like that will be at a disadvantage because if other employers are offering this and it’s making people’s lives easier, people will respond accordingly.”

Repackage benefits proposition

In difficult times, employers do not have the money to feed into a benefits package, so what can they do to appeal to prospective talent? It can come down to the promotion of benefits and the way they are offered to employees in order to meet a requirement in their lives.

“In difficult economic times, employers tend to have less of a budget and we’re seeing more pay freezes than usual,” says Kellet. “We’ve seen things like total reward statements become more popular in difficult times, because they are seen as a key way of engaging with employees and retaining key talent.”

Employers need to redefine what benefits are and how they are packaged in order to appeal to employees, says Jefferys. “When framing benefits: ‘this is what you get when you work here’, we find that’s quite powerful and holistic,” she says. “Benefits have merged now with the employee value proposition: ‘the full package that you’re offering me that’s going to help me, that’s going to improve my life in some way, what’s the bigger picture?’ That’s really what we think employees are going to be asking of their organisations as we move forward, so that they need to be focusing on the things that will genuinely change and enhance people’s lives, be inspiring to them, and to attract them into their organisations.”

The types of benefits on offer will depend on understanding the demographics of an employee base; with five generations in one workforce, possibly working remotely for a long while yet, constant communication is essential. “I think many employers are really looking at their existing benefits spend now more than ever. Is it fit for purpose? Is it appropriate?” says Ramsook. “As ever, there is an absolute need and desire to have more virtual and digital solutions, to support employees across all aspects of wellbeing. But in order to do that, I think there’s a huge part around employee listening, both with current employees and also prospective hires, in terms of expectations.”

The work-life balance conundrum is evident now more than ever, with the lines between home life and home working continually blurred. “We are already seeing a significant knock-on [effect] in terms of people not taking exercise, people struggling more with mental health, as well as social interactions,” says Ramsook. “I think for many employers, there’s two aspects to this and one is absolutely trying to promote a more virtual, digital, trust-based environment. But the flip side is they need data evidence to really start to assess, monitor and measure where the workforce is, both mentally and physically, and from an engagement perspective. Wellbeing has never been more important from an employer perspective.”

Willis Towers Watson’s 2020 Covid-19 benefits survey, published in June 2020, found that 61% of employers are looking to communicate benefits and wellbeing programmes as a priority over the next six months and 58% plan to enhance mental health services and stress management.

While we are still working under a certain degree of uncertainty over the fallout of the pandemic, it is recognised that for future workforces, personalisation of their benefits package is key. As Karsten says: “Offering flexible benefits that are of true value to our workforces is going to be the differentiator. Those that are able to offer those differentiating benefits are the ones that are really going to stand out.”