The Employee Equation The Employee Equation

READ ARTICLE

The Employee Equation

Striking a balance between building employee resilience and increasing business success

RESOURCES

CONTACT

THE 'NEW' NEW NORMAL

WALKING THE TIGHTROPE

MEASURING VALUE

RESOURCES

CONTACT

THE 'NEW' NEW NORMAL

WALKING THE TIGHTROPE

MEASURING VALUE

RESOURCES

CONTACT

LATEST NEWS

Discover your organisation’s DNA to maximise competitive advantage.

KNOWLEDGE HUB

Take a deeper dive into our industry research.

EXPERT REPORTS

Explore our on-demand webinars and upcoming events.

EVENTS

CONTACT

RESOURCES

CONTACT

RESOURCES

Partner, Head of Employer Consulting

NICK GRIGGS

Partner, Head of Platform& Benefits

JULIA TURNEY

Partner, Head of Business Development

JANE RALPH

Principal, Head of Management Analytics

ALLAN ENGELHARDT

Partner, Head of Benefit Consulting

DAVID COLLINGTON

CONTACT

RESOURCES

Partner, Head of Employer Consulting

NICK GRIGGS

Partner, Head of Platform& Benefits

JULIA TURNEY

Partner, Head of Business Development

JANE RALPH

Principal, Head of Management Analytics

ALLAN ENGELHARDT

Partner, Head of Benefit Consulting

DAVID COLLINGTON

MEASURING VALUE

WALKING THE TIGHTROPE

THE 'NEW' NEW NORMAL

MEASURING VALUE

WALKING THE TIGHTROPE

THE 'NEW' NEW NORMAL

MEASURING VALUE

WALKING THE TIGHTROPE

THE 'NEW' NEW NORMAL

MEASURING VALUE

WALKING THE TIGHTROPE

THE 'NEW' NEW NORMAL

Introduction from Julia Turney

Partner and Head of Platform and Benefits at Barnett Waddingham

The past four years have been the most turbulent in the corporate world since the 2008 financial crash. Businesses have had to grapple with significant shifts in employee demands prompted by the Covid-19 pandemic and its acceleration of hybrid working, as well as an environment that has presented continual economic challenges. Decision makers, already required to juggle costs and profits, now need to exert an increased focus on addressing employee demands – a balance which is leading to a squeeze on resource, time, and effort. Finding the equilibrium between cost and benefit in relation to employee spend is a fundamental component of leadership. Identifying strategies to enact reward and benefit propositions, and effectively manage these, will be at the forefront of planning in 2024 and beyond. Whether this means overhauling business practices, prioritising – or deprioritising – employee values and demands, or changing employee spend, there are a variety of factors which will be key to success over the next year. Of course, each business is different, and will require innovative solutions to unique sets of challenges.

For employers, understanding the ‘DNA’ of their business is the key to unlocking practical, sustainable ways to positively impact employee retention as well as maximising return on investment.

The 'new' new normal

The pandemic heralded ‘the new normal’, accelerating changes in employee demands and ways of working faster than anyone could have predicted. The working landscape has since changed permanently, and employees are more empowered to strive for increased flexibility, better benefits packages, and more of a focus on values and purpose.

Research from the Chartered Institute for Personal Development

The appetite to grant flexible working could change once the impacts from the wake of the pandemic and economic uncertainty begin to subside. This, alongside the emergence of three stand-out trends, is putting more businesses under pressure to increase spend to address employee demands and improve, or at least maintain, loyalty and retention rates. The ’great resignation’ has perhaps been the most prevalent shift across the workplace, with many employees re-evaluating their priorities and leaving their roles in droves. While this trend has started to subside in the USA, it is still prevalent in the UK.

Our research found over a third of employed people planned to look for new, or additional, work to combat the cost of living, rising to almost half of those aged 18-34.

But it’s not just about money - the shift to more flexible ways of working and a higher focus on company values is a critical consideration. Employees require more than just increased pay to stay in a role, with research from LinkedIn suggesting over a third would leave their role if they were required to return to the workplace full-time. For professions where hybrid or remote models are not an option, such as doctors or factory workers, company values and additional work place benefits such as development and training support will be decisive factors. This has also contributed to the two other people-first trends – quiet quitting and the war for talent. Quiet quitting involves employees losing interest and essentially putting in the bare minimum amount of effort to carry out their job which can also lead to increased absenteeism. The war for talent is perhaps a more challenging factor for businesses, especially those with weaker retention rates. With an increase in employees looking to change roles and searching for jobs armed with a robust list of demands, many companies are struggling to find and retain adequate talent to fill vacant roles. While offering higher salaries may seem like a straightforward solution, it is simply not feasible if we hope to keep a lid on the UK’s inflation. For many companies it may be a case of adjusting to a new environment. This means it is not necessarily about increasing employee spend, but instead reviewing how and where it is spent to be more effective. This is where investigating Employer DNA can highlight and map-out areas requiring investment, and where spend could have more of an impact.

Key concerns for C-suites and HR directors

Of course, the ‘new’ new normal in 2023 was the economic environment, a drastically new world of high inflation and high interest rates.

As a result, costs have been the standout challenge for businesses, and that trend is set to continue in 2024.

These factors coupled with other elements outside of abusiness’s control, makes creating an effective balanceof power a more challenging task as employees lookto take greater control.

As a result, some employers have taken steps such as mandating a return to the office or reducing current flexibility. 42% of HR directors said they plan to offer less flexibility to their workers despite flexible working being a key demand. This highlights the conundrum faced by many executives looking for ways to maximise retention and productivity. A critical element to achieving a successful balance for businesses will be finding a way to offer workplace benefits that have a return on investment (ROI) for the business while ensuring employees remain satisfied, resilient, and supported.

Which of the following areas, if any, have you made changes to in the last year?

Source: www.cipd.org

DISCOVER MORE

Operational costs

e.g. energy bills

e.g. products

Supply chain costs

Concerned

Not concerned

Concerned

Not concerned

Financial support

Educational support

Wellbeing support

To respond to changing demand over the past few years, employers have invested in their businesses to offer more flexibility, better benefits, and support throughout the cost-of-living crisis. Many have introduced new ways to support employees, which encompass company values.

Walking the tightrope between employee spend and ROI

According to our research, making a one-off payment to employees has been the most common added level of support businesses have taken to help colleagues with rising energy bills, stagnant high inflation and an increasing cost of living. Others have introduced new or improved financial training (27%), offered loans to employees to support through the last 12 months (24%) or improved pension contributions (19%). As well as avoiding short-term measurements, businesses should be careful with implementing short-term changes. While some changes, such as a one-off costof living payment, may seem beneficial in the immediate future, some could have a long-lasting impact on a company. This is especially true if they are changes which are financially unsustainable. For example, higher salary costs, higher benefit costs (where they are salary related), and higher pension costs will need to be thoroughly assessed against longer-term implications of salary increases and the increase in risks this creates. Business leaders will need to have a firm steer on flexible benefits, which have a lasting impact on employees and are a core part of the proposition. This means business leaders will have to strongly weigh-up cost versus benefit, and estimate how much investment is needed to achieve individual business objectives and positive ROI.

If the spend costs more than the value of a productivity increase, it’s not going to be an effective strategy.

33%

increased wages more than usual

offered one-off payments towards cost of living

29%

offered employee loans towards cost of living

24%

improved pension contributions to employees

19%

introduced or invested in DE&I strategy

17%

introduced or invested in values and purpose

24%

introduced new/ improved financial education programmes

25%

introduced new/ improved training programmes

27%

introduced new/ improved healthcare solutions (e.g. private health insurance)

22%

introduced hybrid working

26%

offered more flexibility to staff(e.g. flexi-hours)

31%

Investing in employee resilience

Why does it matter? Looking at employee resilience at an individual level, how resilient someone is can have a measurable impact on how they cope with difficulties in the workplace – a particular sensitivity for employers when it comes to introducing change. Measuring resilience We identified a group of individuals showing traits of high levels of resilience, based on responses to questions Barnett Waddingham perceived as good indicators. When compared to a group that expressed opposite traits, we observed notable differences in their productivity and approaches to challenges.

What, if anything, would be your main coping strategy/strategies when you are faced with a setback?

On average, what percentage of your working hours are productive?

Identifying individual needs It is vital for employers to understand what being resilient means at the individual level and how it impacts on people’s actions. Knowing which groups of people require support in specific areas and the time and circumstances under which this might be required, an organisation can improve its people’s sense of belonging and their loyalty.

Our data suggests a significant proportion of businesses are unsure how to tackle investment in their employees. More than a fifth of businesses (21%) still don’t have an employee value proposition (EVP), and 22% said this is because they do not have sufficient insight and analytics to decide on a suitable EVP, meaning a swathe of employers across the country could be providing more adequate solutions which would drive productivity, sentiment and retention.

What is an EVP?

How many firms have one? 74% of UK firms have an EVP, according to our research of senior leaders – 21% don’t, and, worryingly, 5% don’t know…

This further highlights why understanding a business’s DNA is so important to shaping investment. Much like humans, businesses are made up of their DNA. No two are the same and each will have a unique set of requirements, challenges and needs. Every business will have its own strategy, employees, processes and values that shape it, meaning there is no one-size-fits-all to navigating employee spend. While offering more flexible working options may suit one business, it could be the opposite for another. This is what our Employer DNA approach is built around. Identifying the core of a business, recognising and measuring its needs, and evaluating the potential impact of changes forms the basis of the Employer DNA methodology. By gathering and analysing data, we bring insights to the surface that reveal a business’s unique DNA. This can then be translated into effective, people-first specific actions to help a business evolve and thrive.

Our heritage in actuarial science, combined with our expertise as a leading independent consultancy, means we are uniquely placed to turn data into intelligence. In the business world, your data is your DNA. The insights it contains can transform the way your business operates.

Understanding your business’s DNA is not only essential in supporting employees in their day-to-day, but is intrinsically linked to business management and understanding future financial, organisational, and people-related risks your firm may face. For example, at an employee level – a group of individuals may express they feel disconnected from business values, making them less inclined to give their all at work. For leaders within the business, this raises a number of questions; what is the cost to the business to resolve this? Could it result in employee resignations if left unresolved? And how will this affect the productivity, and therefore output of the business? The answers to these questions will differ depending on a business’s DNA. By gathering data from sources including employee surveys and manager feedback we can build intelligence to understand, and better tackle, each business’ unique risks.

All that glitters: measuring value

Understanding your business’ DNA can give you the insights and actions that will allow your business to evolve and thrive. Defining the most effective measurements, data analysis, and critical decision points are key to ensuring you aren’t making choices that could have a negative impact on your business long-term. Our research suggests that, across the board, businesses are unsure as to what employee data they should be tracking, and what needs to be prioritised. While 45% of businesses believe they should prioritise tracking job satisfaction, only 22% would prioritise employee stress levels, which could be one of the most important factors for some employees.

Metrics which employers are tracking

While tracking the right data is important, meaningful change does not happen overnight which must be reflected in the way data is measured. Though the board may want value immediately, measurements need to be taken over a longer period to really show effectiveness and results. Snapshots do not tell a full story, and shaping strategies and policies around quick data may have an adverse effect in the long run.

RSPCA case study

As they looked to overhaul their employee benefits package the Royal Society for the Preventionof Cruelty to Animals (RSPCA) approached Barnett Waddingham to advise on the project.

READ THE FULL STORY

Deciding on measurements, timeframes and areas to implement spend are all important factors. But businesses must also make sure relevant changes are adequately communicated to employees, which can often be an afterthought. Make sure your people are aware you are introducing measures to try and improve your business which will also be to their benefit. This helps employees feel valued and gets them onboard with potential changes being made which will make it easier to measure effectiveness and ROI on employee spend over time. Employers must also be mindful that not all changes have to incur a fiscal cost to a business; many employees will value simple aspects, such as honesty and transparency. Being upfront about what the business can offer, and change will help to boost employee engagement and build trust. This is where utilising a specialist communications service can help to support engagement across all levels of a business. Employing a fresh approach to engagement and communication can help businesses drive employee engagement collectively, rather than relying on a top-down approach.

Julia Turney | Partner and Head of Platform and Benefits

Harshil Shah | Principal and Head of Enterprise Risk Managment

The attraction and retention of talent is almost always in the top three (if not the top) risks on a organisation’s strategic risk register. For organisations to ensure they mitigate or ‘control’ this risk, an effective, well-articulated and clearly communicated strategy that includes action and metrics is the minimum requirement.

Linked to this risk, however, is another risk that we’re now seeing make it to the strategic risk registers of many of our clients and that is the inability to enact change (i.e. change management). Prior to the pandemic, this risk featured when an organisation was undergoing a specific change management programme – perhaps associated with a merger / acquisition or restructure. In today’s world, organisations are facing change at an ever-increasing pace (think about the role of A.I. in the workplace). Organisations need to be able to draw upon a diverse and collaborative workforce to be able to demonstrate the skills and abilities to manage these changes. So, it is essential for an organisation to take the step to really understand its DNA and whether it does possess a resilient workforce that is able to enact change.

Employee spend is a hard path to navigate, made more difficult by current financial pressures weighing heavily on business performance. This means investment in employee spend must be carried out with clear objectives, changes and ROI in mind. Targets must be realistic and achievable, while bringing a long-term benefit to employees. Establishing what needs to evolve as part of the EVP on offer, for those who have one, will help to identify what a flexible approach to delivery will really bring to the workplace, and how it will meet the demands of employees and employers alike. Every business will require a different solution, which is why analysing the Employer DNA is such a vital tool to establishing a clear picture for the road ahead. Combining HR expertise with actuarial science allows us to provide analytical methodologies which drive smarter decisions and deliver real transformation to a business.

Conclusion

Five questions to ask in your next board meeting

66%

of businesses believe includingflexible working as an option injob advertisements is an important factor inattracting talent

of businesses say they willbe more likely to grant flexible working requests compared to before the pandemic

39%

of employers have seen an increase in requests for flexible working since the pandemic

40%

of employed plannedto look for new oradditional work

the figure risesfor employeesaged 18-34

of employers areconcerned by workerpay demands

34%

43%

79%

of those surveyed said operational costs are their biggest concern

83%

of those surveyed said supply chain costs are their biggest concern

80%

changing needs of customers/ clients

75%

demands for stronger values and purpose

77%

demands for greater working flexibility

78%

demands for higher pay

79%

needing to offer better pension provision

75%

needing to offer better pension provision

24%

changing needs of customers/ clients

23%

demands for stronger values and purpose

23%

demands for greater working flexibility

22%

demands for higher pay

19%

Resilient

Non-resilient

Asked others for help

No strategies

Engage in problem solving

Forget it and move on

Hope the situation resolves itself

Lower expectations

Rely on supportive relationships

Get enough sleep

Get enough exercise

Take responsibility for situation

28%

29%

13%

12%

29%

33%

30%

31%

12%

10%

57%

10%

What, if anything, would be your main coping strategy/strategies when you are faced with a setback?

On average, what percentage of your working hours are productive?

Higher resilience

Lower resilience

have productive working hours of more than 70%

50%

have productive working hours of more than 60%

65%

have productive working hours of more than 70%

24%

have productive working hours of more than 60%

36%

Businesses that do

Businesses that don't

Valued by our employees

34%

Valuable recruitment tool

30%

Embedded in way we work

30%

Improved company operation

29%

Took a lot of time and effort

28%

Wider team doesn't know it exists

17%

EVP already out of date

13%

Don't have insight/analytics to make case for it

22%

Don't think it's helpful

19%

Currently working on it

17%

No plans to create one

17%

Don't have time/resource to create one

14%

Struggles with recruitment

10%

Don't know how to create one

10%

Don't know what an EVP is

None of these

Job satisfaction

45%

36%

Workload levels

31%

Absentee rate

29%

Personal happiness

29%

Retention rate

23%

Financial resilience

22%

Stress levels

19%

eNPS

Not tracking

The RSPCA wanted to ensure that the employee benefits it offered to employees were competitive, promoted inclusivity, remained affordable and, most importantly, embraced sustainability.

Close the story

Modernising employee benefits

Barnett Waddingham took a strategic approach, split into four phases to provide a data-led approach to a benefit audit and review:

A high-level audit of existing benefits to ensure they continued to meet current market standards and aligned with organisational objectives. Also benchmarking of key benefits from existing competitors, and market trend analysis.

PHASE ONE

Audits and benefits survey

Meeting with seven key stakeholders across the RSPCA to set business objectives, benefit options and success criteria. Provided a framework for discussions focusing on attraction and retention, current and future benefits offering, and culture.

Objectivesand opinions

PHASE TWO

Two face to face strategy workshops to allow a variety of colleagues to attend from the different areas of the RSPCA, and share their views in shaping the future of their benefit strategy.

Strategy workshops

PHASE THREE

Presentation of a highly detailed strategy report with analysis findings, survey results, key themes, and strategy session feedback. This report was a great tool for the RSPCA to use to drive change, proving an outline of the value and ROI.

Strategy report

PHASE FOUR

Analysis helped to pinpoint key findings, such as 79% of respondents valuing the existing Health Cash Plan highly and, while there was a keen interest in financial wellbeing initiatives (29%) initially, following the strategy sessions it was concluded that these were not as favourable compared to other potential benefits. Not only did the RSPCA recognise the need for change, but it also agreed with consultancy recommendations which covered new benefits and wellbeing initiatives, which Barnett Waddingham is now in the process of implementing.

What’s at the core of our Employer DNA?

How are we measuring ROI on employee spend?

How can we identify our employees’ needs beyond pay – what metrics should we be measuring?

How aligned is our HR team with our risk team? Can they work more effectively together?

What business objectives are we seeking to achieve though employee spend, and is this the right tool?

The RSPCA wanted to ensure that the employee benefits it offered to employees were competitive, promoted inclusivity, remained affordable and, most importantly, embraced sustainability.

Return to top

For our latest commentary, expert insight and event notifications

demands for DE&I strategy

72%

need to educate financially

72%

demands for hybrid working

73%

need to train and upskill employees

74%

employee resignations

75%

demands for DE&I strategy

26%

need to educate financially

26%

demands for hybrid working

25%

need to train and upskill employees

25%

employee resignations

24%

Exploring the DNA of your business will help you to understand and identify how and where employee spend needs to be allocated to bring benefits to both employees and the business. Though any changes will be implemented with the view to bringing positive change soon, there is another, crucial element businesses should be prioritising - stability. Stability is a pre-condition for growth, and can enable businesses to recruit effectively, maintain good staff retention, invest in research and development, and, importantly, invest for the longer-term. Introducing an EVP is a good way of enabling stability, by providing employees with a structured, clear total rewards package they can understand and access easily. Businesses must also ensure an EVP is specific to them and meets their own needs while also working in the best interests of their employees.