How can employers ensure reward and benefits enhance the employee experience?

Need to know:

  • More flexible working hours, agile/home working and better support for mental health are the top employee expectations.
  • Organisations should consider more flexible options including part-time hours term-time work, career breaks and four day working weeks to support their talent management strategy.
  • Reward and benefits can be used to demonstrate an organisation’s values, with examples including environmental, social and governance (ESG) default funds on pensions and electric car schemes.

Changing employee expectations coupled with challenges attracting and retaining talent are forcing organisations to focus on reward and benefits. Rather than simply throw money at the problem, employers are looking at how they use benefits to enhance the employee experience.

There’s been a mindset change with reward and benefits according to Eva Jesmiatka, director, rewards at Willis Towers Watson. “Where it used to be acceptable to say this is the benefits package and simply match the market, employers are now much more likely to ask employees what they want,” she says.

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Great expectations

As well as meeting expectations, the role of reward and benefits within the employee experience has also grown. “Organisations are considering how benefits enhance the employee experience,” says Helen Payne, strategic benefits consultant at Aon. “They’re looking at what will make an employee feel proud about where they work and inspire them to do a good job. It’s a much broader piece.”

Employee expectations have also changed, especially over the last couple of years. The top two expectations according to employers responding to the Aon UK Benefits and Trends Survey 2022, published in January 2022, are more flexible working hours (95%) and agile/home working (94%).

Mental health has also shifted up the priority list, with 82% of respondents saying that employees expected better handling of mental health, up from 38% in 2021. Dr Duncan Brown, principal associate at the Institute for Employment Studies, says this is part of a broader trend around health and wellbeing. “Covid-19 has underlined the importance of health, increasing demand for products such as life insurance and wellbeing. It’s become a hygiene factor,” he explains.

Benefit variety

The new reward regime also recognises that one size definitely doesn’t fit all. Adding more choice can win employee approval and support an organisation’s recruitment and retention strategy.

Segmenting the workforce by age and life stage can help to focus benefits propositions. As an example, Brown says employers should be doing more to retain the older workforce. “Around half a million over-50s have dropped out of the workforce over the last couple of years,” he explains. “Flexible working might help them carry on working, but this is designed around [parents of children] rather than someone who has to look after an aged parent.”

As well as extending the choice of benefits, Payne recommends introducing greater freedom around benefits. She favours wellbeing and reimbursement pots that allow employees to choose what’s right for them. “Offer alternatives,” she adds. “Not everyone wants to save into a pension so offer an ISA too.”

When there’s more variety, the communications programme becomes a key part of the reward strategy. Charles Cotton, senior performance and reward adviser at the Chartered Institute of Personnel and Development (CIPD), says employers need to think about their audience. “Different generations consume information in different ways so factor this into your communications programme to make sure it engages with everyone,” he explains.

Going beyond hybrid

Flexibility has become a key feature of many workplaces, with the pandemic proving to employers that this is possible in terms of where employees work. “Employees are looking for more flexibility,” says Cotton. “They expect they’ll have to be in the office occasionally but they like to be able to work from home too.”

But while 97% of employers are planning to adopt hybrid working according to research by Karian and Box and the Global Institute for Women’s Leadership, New ways of working: the lasting impact and influence of the pandemic, published in April 2021, Brown says employers need to do more. “The research suggests there’s a danger of ‘fake-flex’ as employers focus on remote working rather than fully embracing flexibility,” he says. “Employers need to think more broadly about flexible hours, allowing employees to work different hours or weekends if they want.”

As well as flexing hours during the week, other flexible options could also be introduced that would enable employees to strike a better balance between work and life. These include part-time hours and flexitime, term-time work and career breaks.

There may be space for more flexibility but it needs some controls too. “Employers need to think about career progression, ensuring that middle management is in the workplace to support learning and development,” says Payne. “Organisations must have some structure to support everyone’s needs.”

Value added benefits

As more and more employees want to work for an organisation that shares their values, reward and benefits can be used to amplify these corporate messages. “I’d encourage employers to take a strategic approach with their reward and benefits, looking at what they’re trying to achieve in terms of mission, vision and purpose,” says Cotton.

There are plenty of examples of benefits that align with corporate values. An employer might enhance and equalise maternity and paternity benefits to demonstrate that it supports fairness and a family-friendly workplace.

Payne has noted further trends. “The fastest growing benefit over the last couple of years is electric vehicles, with tax incentives adding to their environmental appeal,” she explains. “We’ve also seen more [employers] introduce an environmental, social and governance (ESG) default fund on their pension – 49% of respondents to our benefits survey have done this or are considering it, up from 33% last year.”

Future trends

Keeping track of employee expectations is a must, with switched on organisations introducing more employee listening projects to ensure they stay abreast of any changes in expectations.

For Jesmiatka, one of the key focuses going forward will be the work life balance, with companies likely to go beyond the hybrid model.  “Companies are beginning to experiment with four day working weeks,” she adds. “The new generations entering the workplace are shifting the focus from living to work to working to live.”

Employers will also need to consider how they’re evolving and how this will shape the workforce they need to attract and retain. For example, many companies have already embraced digital, requiring them to compete with technology firms for talent, and this dynamic is likely to intensify.

These shifts require a much more thoughtful approach to reward and benefits according to Cotton. “Benefits used to be added like baubles on a Christmas tree,” he says. “Today, employers need to continually review and assess what they offer. Everything must add value to the organisation and its employees.”