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What impact has the Great Resignation, and the wider ramifications of the pandemic, had on employees’ attitudes to reward and benefits?

By 26/01/2022February 18th, 2022No Comments

By John Backhouse – Head of People Science – Principal Consultant at WorkBuzz

In the WorkBuzz State of Employee Engagement 2021 research, we spoke to 300+ organisational and HR leaders. The research uncovered many things we had seen coming from the opinions of employees themselves, in the thousands of employee surveys we run.

Benefits

The major benefit that many employees are looking for today is flexibility – in both location and work pattern. The Covid-19 led many employees into reconsidering their priorities – switching careers (or thinking of doing so), re-evaluating the importance of a high-flying career versus wanting a better work-life balance/spending more time with their family, and there was also a greater focus on health and wellbeing.

When asked in an employee survey ‘what one thing would make the biggest difference to you at work, outside of pay?’, many of the comments received were around more breaks, more paid leave, and or flexibility/hybrid working. Many organisations have faced huge challenges in just ‘keeping the lights on’, especially those who had to be on site/deliver a service in person. Right now, there are a lot of very tired employees out there who need respite to recharge, but at a time where we need energised workforces to bring us back out of Covid-19. It’s become clear that basic benefits are most needed, like rest and wellbeing support.

Pay

Given the points above, the most common conversations we are having with our clients at WorkBuzz following their employee surveys is the issue of pay, or the fact that what you have to do for that pay has changed. Many employees have faced unprecedented challenges over Covid-19 through rapid disruption in the basics of delivering their jobs – many moving to remote working where possible, technology changes, ‘pingdemics’, huge resourcing issues, furlough, job security concerns, having to inspire/lead manage remote workforces, plus much more. Employees are increasingly reflecting on if their pre-Covid-19 pay levels are now adequate for all these additional challenges. Just doing the day-to-day job is so much harder for many.

There is now a new and growing challenge added into the mix: retention/attrition/attraction. Pretty much every one of our clients are flagging increased attrition, sometimes at significant – even business critical – levels, along with it being so much harder to recruit and backfill. Many managers are having to devote much of their time backfilling operationally, leaving less and less time to have those informal discussions with others in the team to check in on how they are feeling, or even run the formal career and PDR type discussions. In our surveys, managers are the ones flagging the greatest risk of burnout and the highest wellbeing/work-life balance issues. This group are the ones we need energised to inspire and motivate our teams, but also to spot attrition risk or wellbeing issues in others.

Have employees shifted their views on what they want from their employment experience? What is important to them now?

In addition to the points above, or as a graphic representation of the State of Employee Engagement 2021 research, mentioned:

Much of what’s discussed above is relevant for what employees’ need right now and is covered in the question below about attraction/retention, as in all our analysis, the drivers of engagement are also the push/pull factors of attraction/retention/attrition. The takeaway here is also that the stated reasons are often different from derived reasons i.e., ask a person why they are leaving, and many will say pay/lack of career/lack of appreciation, but derived analysis looking at the differences in opinions between those who left and stayed between one employee survey and another, uncovers a slightly different set of reasons:

  • Wellbeing/work-life balance being compromised
  • Level of support from the immediate manager (remember the points above about managers themselves having little time now to offer support)
  • Career opportunities
  • The day-to-day job is so much harder now, more stressful, more complicated (all impacting on wellbeing and making employees question if the pay is worth it anymore)

Ultimately, employees are looking for their leadership to rapidly acknowledge their plight and do something about all those challenges. They need a light at the end of the tunnel.

Have some benefits become more or less important? Which are in and out of favour?

Hygiene factors are far more important right now than higher level benefits, due to many employees being on the edge of burnout. Breaks, paid leave, wellbeing support, more holidays, improved efficiencies in doing the day-to-day job, critical headcount resources, allow employees to better switch off after work. These employees should also be given flexibility in location/work arrangements, hybrid working where possible.

How are employers using reward and benefits to encourage people to join them, or conversely to retain people who might otherwise leave? How have employer attitudes changed in how they see reward/benefits?

It’s been proven in many studies that pay is a temporary motivator. From the perspective of retention, if employees are working too hard, are at risk of burnout, under resourced, not supported by managers who are even more resource pressured…with a pay rise…will all those things impacting wellbeing have changed? So, as pointed out above, is it pay, or what you now must do to earn that pay?

The ideal job situation would be:

  • Adequately and competitively rewarded
  • Working in in an environment where the day job is as efficient as possible in terms of process/systems
  • Well resourced
  • Everything works as it should
  • You are cared for and looked after
  • Flexible working is an option
  • You feel loved and appreciated by your employer
  • You are well supported by a manager who gets you as a person
  • Feeling supported and encouraged with your development and any career aspirations
  • Working in an organisation that has a clear and inspiring vision and purpose

If you move to an organisation that has competitive pay, but is compromised on all of the above, you may then fall into the same pattern of pay versus what I must do for that pay? That’s why you often get the boomerang effect in organisations with great environments and cultures, where employees leave for more pay and promises of greener grass, but then the reality kicks in and the promises don’t meet expectations. And what’s the point of more money if you are unhappy all the time?

There is a line though where, irrespective of how good the environment and culture are, people need to survive above the breadline, especially against the backdrop of the rapidly increasing cost of living. Many of our relatively lower paid industry clients, mostly care/manufacturing, have witnessed a significant increase in attrition with employees leaving to take up posts in retail, especially online. These organisations are offering higher pay, but also golden welcome incentives e.g., £1,000 when you join. They can also sometimes offer a slightly nicer physical environment, higher levels of training, and more scope for career development. With scope for career development comes more scope for promotion/higher wages/better benefits e.g., pension/healthcare.

How might this shape up going forward? Could this spell the end for more ‘gimmicky’ benefits?

As you can see from all the points above, foundational benefits are the key to longer term employee engagement i.e., a nice environment, having effective tools/systems/processes, training and career development, a manager who has time to be a people manager and support/inspire their team, flexibility in work arrangements and work-life balance, demonstrable care for wellbeing… etc.

How important is communication here, so employers can articulate clearly what they offer beyond the headline salary?

It’s maybe not communication per say, it’s more about the sold EVP (employee value proposition) matching the real EVP. This includes clear communication of the real pay and benefits, without any small print, almost as a duty of care for those who may not be fully experienced in things like possible earnings versus realistic earnings. The best examples are pre-join itemised personal balance sheets, detailing everything an employee would be entitled to, and the value of each, from pay all the way through to free tea and coffee/parking. There is also a real discussion though about career opportunities, training, flexible working arrangements, how the manager will support you, how the organisation will show they care about you and your wellbeing and growth. And a real reflection, not false promises, or a mirage of what we want to be, rather than what we are. On that point, it is far more costly to sell a false dream, and the person leaves quickly when they realise the reality, versus selling the real deal and even letting the person experience it before they join…then they know what they are signing up for. This is especially true for lower paid roles in sectors like care and manufacturing.

When we look at thousands of employee surveys, there has been a significant increase in the one-to-two-year length of service attrition, but even sooner for some organisations. They struggle to keep new employees past the one-to-two-year point, or even past six months. When you look at employee engagement levels by length of service, there is a significant drop after six months, with the lowest point normally at one-to-two years. In years gone by, this low point tended to be more like three-to-five years. This is the EVP being mis-sold, irrespective of if pay/benefits were the draw. Attrition aspects cited for those leaving quickly is that better pay/benefits are available elsewhere, but it was how frustrating the job was to earn that pay i.e., lack of support from a manager, lack of career discussions (because the manager is too stretched), lack of career pathways, under resourced teams, inefficient systems and processes often due to them being exposed by under staffing (they may have worked when we had 10 in a team, but with five they are a blocker), lack of investment in the work environment, a culture where everyone if sniping at each other because they are under massive pressure to deliver etc. Managers are the ones reporting the worst work-life balance and wellbeing issues, as they have to backfill operationally, and cope with a revolving door of attrition of new starters coming and going, constantly onboarding and exiting people. As do the internal HR teams who have possibly become more like recruitment teams! There is also a growing trend of lower engagement levels for anyone with say, five to nine years’ length of service, especially again in certain industries, where the more experienced employees have to backfill the revolving door of attrition of the newer people, constantly training and coaching new starter after new starter.

Add on top of all of this, the fact that younger people in particular have different views on careers and how long they want to spend in different organisations. Irrespective of how good an employer is, they may perceive their career pathway as spending one-to-three years at an employer before moving on to another, to widen their experiences. So, is it a realistic expectation to keep hold of talent for longer than three years, or, should we be thinking differently about how to set up our organisations for a world where certain generations in particular may only stay up to three years? If companies make the recruitment/onboard/orientation, in flight experience and off boarding as slick as possible, they may come back many years later because of their fond memories and experiences. If one-to-three years length of service is normal, how should we set up differently for that world? The ideal would be engagement levels stay high from joining to leaving. Those who do want to stay longer term are supported in managing the new world of churn. Companies though should be providing a great environment and culture irrespective of length of service, and the career option is there for those who want to stay, but for those who see career as moving organisations, they move on as ambassadors.

The final question is, ‘will throwing more benefits and more pay fix all of this longer term?’ Let us know your thoughts…

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