How have reward strategies changed in 2021 and what might the new year bring?

  • Ultimately in 2021, reward professionals had to keep on the pulse of what employees wanted and needed more than ever.
  • Employers can offer discount schemes and salary sacrifice schemes to those looking to keep costs low and boost their financial wellbeing, as well as providing support for those wanting to bolster their mental health by exploring more flexible working options for those wanting a better work-life balance.
  • Organisations need to be able to stand by their values and see them flowing through the people experience.

The year of 2021 has been difficult for many people across the world; employers may be spending some time reflecting on the impact of their reward strategies throughout the year, deciding if any aspect needs amending or updating, while also considering what they will be implementing or planning to achieve in 2022.

Key issues throughout 2021

2021 has been a year of both challenge and opportunity for HR professionals, with issues around wellbeing, mental health and total reward arising.

Stuart Hyland, associate partner at Aon Reward Solutions, says many organisations have been facing unprecedented levels of staff turnover, with employees often leaving for pay increases. “We have seen lots of out-of-cycle pay increases, but this has been challenging for reward professionals who are having to work hard to ensure the integrity of the reward cycle and processes is maintained,” he says. “We have also seen organisations talk more about the importance of wellbeing, and they have then looked to reward professionals for solutions to deliver this. This is new ground and it is a struggle to keep up with approaches and to develop organisation-specific solutions.”

Since the start of Covid-19 (Coronavirus) and the first lockdown, there have been varying responses by HR professionals to reward.

Dr Duncan Brown, principal associate at the Institute for Employment Studies (IES), explains that a frequently seen immediate response was to understand and implement furlough schemes and homeworking digitally, and to support staff with new and extended benefits, such as home schooling help and mental health support apps. “Another response was a focus on improved and extended employee assistance programme support, as well as mental health online counselling and [help with] related issues such as financial wellbeing.”

Setting out an attractive employee value proposition following the pandemic has seen many employers looking beyond just salary to benefits and the whole staff experience.

Sarah Jefferys, head of reward consulting at Gallagher, notes that organisations have recently been arranging more health-related benefits such as improved sick pay and leave policies, access to online gym classes and wellbeing apps. “The best employers are really integrating these things and going beyond the traditional wellbeing offering, particularly in the context of remote, hybrid and agile working,” she says.

At the beginning of the year, the focus was still on keeping staff engaged and well during lockdowns, be it remotely or in person.

Jamie Mackenzie, director at Sodexo Engage, states that engagement and wellbeing remained a key focus as workplaces reopened, while hybrid working practices were being introduced. “Ultimately in 2021, reward professionals had to keep on the pulse of what employees wanted and needed. They were keeping on top of these desires, figuring out how to address them while still aligning to budgets and putting it all into play during hybrid or remote working.”

How reward and benefit issues were tackled

When experiencing reward and benefit challenges throughout 2021, many went back to the foundational building blocks of reward.

Hyland states that organisations are looking at their practices from a total reward perspective. “This includes looking at pay approaches and equality in a hybrid and remote working model, looking at the definition of performance and links to pay in a world that is not currently running on an annual business cycle,” he says. “The four core mantras that seem to underpin just about every conversation we have had with clients this year are simplicity, flexibility, transparency and equality. These principles are underpinning just about every evolution and design that we are working on with our clients and we expect this to continue into 2022 and beyond.”

Many businesses faced challenges in learning how to support employee work-life balance during the lockdown. Mackenzie says that finding wellbeing solutions that worked from afar was key. “There was the challenge of mapping out which benefits and rewards were still popular. We swiftly learnt that the broader the offering, the happier the employees, but it was vital we kept tabs on these rewards and benefits, checking regularly on what was working and what wasn’t.”

When considering how to tackle employee engagement issues, Salesforce is intentional about its culture, explains senior director of employee success, Terri Moloney. “We invest in benefits and programmes to keep our employees and their families happy and healthy. This includes our wellness reimbursement programme that provides employees £100 each month to use any way they want. This is attractive to all of our employees, but is also particularly enticing to younger generations that want to work for values-based businesses.”

Lynn Smith, chief people and operations officer at Wealth Wizards, believes that the reward and benefits issues the pandemic created were not wholly negative. “We’ve since learnt how much employees want to feel supported by their employer and the renewed emphasis they’ve placed on their own wellbeing, whether that’s mental, financial or a combination of both,” she says. “Building reward and benefits packages around these two factors has helped us to tackle most issues we’ve been confronted with and given us a deeper insight into what really motivates our people.”

What to expect in 2022

Brown believes a range of factors will remain at the forefront for reward professionals next year, including people strategies and workforce planning, health and wellbeing, diversity, equality, inclusion and fairness, and re-engaging the workforce.

Hyland expects the conversation and impact around total reward to intensify. “Organisations cannot keep throwing money at the issue to retain potential leavers and they will instead need to leverage their total reward approach and wider value proposition to help retain and attract talent. We are expecting another year where the only constant continues to be change, with reward acting as a bridge between the two by aligning personal success with business success.”

Wellbeing and hybrid working are likely to continue to be a key focus for many going into 2022.

Mackenzie believes that it is vital for businesses to consider wellbeing from all aspects. “Offer discounts and salary sacrifice schemes to those looking to keep costs low and boost their financial wellbeing, as well as providing support for those wanting to bolster their mental health by exploring more flexible working options for those wanting a better work-life balance. Mapping out a way to equally reward those working in person and those working remotely will be key, as all employees are valued and shouldn’t be forgotten just because of proximity bias,” he says.

Smith expects personal finance to emerge as a key issue for 2022. “The pandemic had an impact on most people’s finances and the importance of financial wellbeing took on a renewed importance. It’s likely that more people will look to their employers for support and guidance on matters of finance, and businesses should prepare for this,” she says.

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Those who are reviewing their reward strategy should ensure their policies and practices are fit for a changing world.

Jefferys is of the opinion that one should start with a holistic review of reward strategy. “To take it one step further than that, we believe that the whole people experience is important and that business leaders need to have a good understanding of their priorities across all of the employee touch points, including reward, culture, working environment, wellbeing, career and communication. Organisations need to be able to stand by their values and see them flowing through the people experience,” she says.