Health, safety, compensation … Six key trends to ensure the emotional well-being of employees
The health, financial and social crisis of 2020 following COVID-19 has called into question the well-being of employees in its physical, emotional, financial and social dimensions. This is indicated by the Talent & Rewards area of Willis Towers Watson, after conducting an in-depth analysis using various reports, surveys and studies from own and third-party sources. The findings show how companies around the world have had to reinvent the business model to balance security and business continuity and step up efforts to address inclusion and diversity (R&D), with a greater focus on equity.
The COVID-19 pandemic has underscored the value of health, safety, and people’s contributions to business success. The resulting financial crisis has caused further turmoil and uncertainty. And the simultaneous global protests have revealed many social inequalities both inside and outside the workplace. Faced with this situation, as Constanza Lobo-Guerrero, Senior Director Talent & Rewards at Willis Towers Watson explains, “Compensation teams are evolving to align with wellness, new ways of working and fairness, diversity and inclusion (ED&I), in three axes: remuneration, benefits and careers, with the objective of promoting the resilience of the organization, dignity at work and the sustainability of human capital. “
Six emerging trends in flexibility and well-being in the workplace
1. The compensation function will become more and more aligned with well-being
The priorities for compensation programs have evolved since before the coronavirus crisis and have focused on a greater importance to the well-being of the workforce, a trend that has strengthened in the current context. According to data from Willis Towers Watson, 64% of Spanish companies have already made and / or planned to make improvement changes to their employee benefit programs following the crisis generated by COVID-19. Likewise, 58% said they were working on models to incorporate new alternatives aligned with needs related to emotional, physical and financial well-being.
Many forward-thinking companies have changed or are in the process of modifying the names and / or assignments of their compensation functions to include wellness, as they understand that full compensation goes far beyond the offering of health and fitness programs. They recognize that fair compensation, inclusive benefits and professional fairness have a significant impact not only on creating a healthy work environment, but also on improving employee performance and therefore improving results for the company.
2. ED&I strategy to be executed by the compensation teams to achieve greater equity
With the 2020 crisis, companies are approaching ED&I more broadly across the organization. According to the consulting firm’s analysis, the commitment to equity, diversity and inclusion has been strengthened, through corporate social responsibility policies and the continued adoption of environmental goals, social and governance (ESG). Investors are also attached to these priorities and despite the financial problems () they are facing today, are increasingly betting on the environmental sector and sustainable investment funds. ,
Equity in total compensation has been reinforced by the particular focus on addressing gender inequalities in the work environment and by continued support for progress in all aspects of gender diversity. Understanding the preferences of the diverse set of employees through listening strategies and optimizing total compensation with an equity perspective becomes a top priority in knowing what needs to change and for whom. For Constanza Lobo-Guerrero, “companies have realized that it is essential to create a culture of inclusion and, until they address the issue of equity, they will not be able to move forward with change. real behavior to achieve genuinely inclusive and fair work. and miscellaneous ”.
3. The keys: choice, flexibility and customization
Businesses need to understand and support the differences in their workforce. Data shows us that employees of different racial or ethnic groups often have different needs and preferences for their total compensation. Likewise, those in the final stages of their careers seek different advantages than those who are just starting out, or working parents have different needs than those who do not have children. The only thing in common is that each of these groups wants to be seen, heard and understood, and they all want their needs met according to their particular context.
“In response, companies are taking equity seriously in their total rewards strategies in order to take into account the individual needs of a diverse workforce. This requires a greater capacity for choice, flexibility and personalization, elements that emerge as keys in the employee experience ”, explains Constanza Lobo-Guerrero.
4. Full compensation promotes new ways of working and new experiences for employees.
Willis Towers Watson’s analysis shows that the 2020 crisis has accelerated decades-long efforts by companies to move towards more flexible ways of working. The percentage of employees worldwide who telecommute rose to 65% during the pandemic, from 11% before the pandemic, and although not all employees can (or will want) to work remotely for long periods of time , evidence suggests that after the crisis permanent teleworking could reach 30%, almost three times higher than pre-crisis levels. Hybrid work models are probably much more prevalent for jobs that can be performed remotely and with greater scheduling flexibility.
The increasingly frequent new global compensation models linked to teleworking include new forms of compensation such as skills vs. by value or by geographical differences, among others, and introduce new variables in the measurement of performance and its remuneration, for example, the performance of remote work. This makes it possible to evolve towards the development of a personalized high performance experience for each employee, by placing it at the center of the model. Thus, the employee must be well informed about his compensation model and that, as the study shows, each policies of diversity, equity and inclusion of the company.
5. Greater attention to human capital, including ESG factors
Total compensation increasingly promotes a healthy corporate culture, that is, including programs that help its employees on several levels: physical and psychological safety, protection of dignity, equality, innovation.
According to a study by Willis Towers Watson, the value of intangible assets as a percentage of company valuations has steadily increased since the 1970s. For example, the five largest S&P companies in the market have increased by $ 715 billion. dollars in 1975 to reach $ 23 trillion. in 2018. Companies that follow and operate practices that enhance engagement and positive employee experiences are 93% more likely to report better financial performance than their industry peers.
Investment in ESG is estimated to be between $ 20 trillion and $ 30 trillion in assets under management, which equates to more than a quarter of all corporate assets under management globally.
A recent study by the executive compensation analysis team led by Willis Towers Watson shows that 61% of S&P 100 companies include ESG measures in their incentive plans, with the following percentages:
Human resources and challenges (succession plans, talent development, employee engagement, culture, etc.): 39% R&D: 29% Customer service: 28%. Environment and sustainability: 18% Governance: 15% Employee health and safety: 13% Trend 6- Resilience and sustainability of organizations are here to stay
6. Investing in compensation, the key to employee emotional well-being
According to extensive research by Willis Towers Watson, the percentage of companies that maintained or improved elements of total compensation (such as compensation and benefits) during the most difficult times of the pandemic far exceeded that of companies that had reduced them. In addition, among the companies that downsized, overall, for those employees that remained, compensation levels were maintained and benefit programs were improved. 54% of companies improved welfare benefits and only 5% reduced them. And 30% of companies have increased “health” benefits; while only 4% reduced them. The same has happened with personal care benefits, paid time off, sick leave coverage, life insurance or disability programs, among others.
These investments in total compensation were widely viewed by executives as critical to having more resilient employees able to stay engaged and productive during tough times and to better manage uncertainty. However, your concern about the sustainability of this level of spending continues to grow, so significant effort is being made to develop a model for building financially resilient organizations with sustainable financial performance, growth and value.
For Constanza Lobo-Guerrero, “correctly assess how to implement well-being, new forms of work and equity through total compensation models and take the appropriate measures in each organization, helping to generate greater impact on employee well-being and engagement ”.