Tag Archives: workforce mindset study

Benefits: One Size No Longer Fits All

Overview

Across the developed world, leading businesses are facing new workforce productivity challenges. Many recent graduates lack the skills necessary to succeed in today’s quickly changing workplace, while economic uncertainty has forced many experienced workers to delay their retirement. Companies need to consider the impact of these trends and the ways they can differentiate themselves as they wage the battle to find and retain top talent. 

Winning the battle for talent is about more than compensation. To remain attractive to multiple generations of current and future employees, businesses are shifting their focus to a broader array of benefits. A healthy person at the beginning of a career, for example, is more likely to want flexible benefits that support an independent lifestyle. In contrast, a long-time employee who is nearing retirement is more likely to favor a more predictable structure weighted toward retirement savings.

The reality is that there will be five generations of employees sharing the workplace by 2020, and the best places to work will be defined by their ability to meet the increasingly diverse needs of their entire workforce.

So what can employers do to ensure they are offering a competitive range of benefits that attract and retain the best talent?

In-Depth

Workplaces are evolving — and not always in ways that support business goals. Employee trust in employers is at an all-time low, according to the Aon Workforce Mindset Study, and one-third of employees are seeking to change jobs in the next year.

With populations aging and the pool of local, fresh talent stagnant, businesses can’t afford to ignore these realities. They need to develop innovative ways to attract and retain talent, including workplace flexibility, according to the Workforce Mindset Study.

Benefits packages, in particular, stand out as one area that can be made more appealing.

Craig Dolezal, senior vice president of Aon, believes offering a wider range of benefit choices tailored to each generation’s needs can become an important differentiator for attracting and retaining this talent.

One model that could become a powerful vehicle for achieving both of these aims is through what Dolezal calls “a total rewards exchange,” where an employee gets to create a benefits package, prioritizing compensation, bonuses, time off, medical, dental, wellness and child care (among other rewards).

Essentially, it’s like creating “a marketplace where people can make their own decisions about how they want to be compensated,” he says, “whether they want life insurance at this level or they’d rather have it in a sabbatical. It’s up to them to decide.”

Learning From Health Exchanges

Such an arrangement can appeal to prospective employees who desire greater individual control over their benefit options and care choices. But, according to the Workforce Mindset Study, employees also want to see more honesty and transparency from their leaders, which ranks as their top suggestion. Further, consistent with other aspects of their life, they expect to be able to access information on their benefits when and where they want.

Mike Christie, senior vice president, Exchange Market Strategy at Aon, says health exchanges, which are becoming popular in the U.S., represent a significant step in this direction. Private health exchanges are competitive marketplaces where consumers can shop across multiple products — often from multiple providers in an efficient manner. Their purpose is to combine cost-accountability with meaningful control over health benefits for individual employees. They also arm employees with information to make smart choices based on their health needs and tools to evaluate their options.

“What the health exchange does is in a very overt way show employees what the employer contribution allows you to purchase,” Christie says, so it brings more cost transparency about what the company’s contribution provides them.

New thinking about benefits

The high cost of health care in the U.S. is one of the key drivers of the private health care exchange market. But the U.S. experience with private health exchanges does have potential applications in other countries.

Today’s workforce is more global and diverse than ever before. In almost every country in the world, there is a greater range of age groups, ethnicities and nationalities, as well as more women, more people working remotely and more hiring in other countries and time zones.

“Private exchanges give employees a wide range of options so they can decide which plan is best suited for them,” Christie says, and this has broad appeal in markets around the world.

In the competition for talent, businesses offering benefits that employees crave is only part of the challenge. Businesses should consider using a more consumer-driven benefits approach to create incentives for healthy behaviors and encourage people to make smarter choices about the health insurance, supplemental benefits and retirement products they need to prepare and protect themselves and their families for the future.

For example, strong retirement packages might have greater appeal to people in their 60s than to people in their teens — and a working parent might prioritize child care, while someone just beginning a career could be interested in tuition reimbursement. For many, a balance of reward options is a precondition for employment, and as the battle for talent becomes more competitive, perks such as travel vouchers and free lunches could become differentiators.

The Future of Employee Rewards?

At a time when skills shortages are on the increase globally and workforce demographics are changing, 70% of employers say they are going to be revising their total rewards strategy to accommodate the changing needs and demographics of their workforces in the next five years, according to the Aon 2015 Health Care Survey.

Applying the health exchange approach to employee benefits could prove a valuable model for rethinking how to administer these benefits. It can “take away a lot of the corporate decision making employers have to do when trying to choose the right plans,” Dolezal says, allowing organizations to focus their energies on value creation rather than administrative functions. Employers can also find significant cost savings through this model because of the reduced in-house administrative burden.

By giving employees more choice, an exchange-style approach answers the increasing demand for benefits flexibility from employees. By expanding this approach beyond healthcare to a fully flexible benefits offering, organizations can offer a rewards package that meets the needs of employees as individuals, rather than attempting a one-size-fits-all approach.

“We actually think that will be the next wave of innovation,” Dolezal says. “Moving beyond healthcare exchanges to total rewards marketplaces.”

Talking Points

“By shifting the role of the employer to that of financier/facilitator and empowering employers with a true consumerism model — one that brings together competition and consumerism, a private health exchange brings a host of incentives to bear to exert positive influence on the market, including reduced costs and higher consumer satisfaction.” – Private Health Exchanges and the Consumerism Movement, Aon Hewitt (White Paper)

“We’ve seen individuals move to plans that are close to what they’ve had in the year prior, however, there are individuals who increase coverage or try to secure lower premiums. The exchange model lets people decide which plans and which insurance companies are best suited for them and their situation.” – Mike Christie, senior vice president, Exchange Market Strategy, Aon

“We believe this new approach to medical coverage better meets the needs of our diverse workforce and provides our company with increased efficiencies in our health careofferings.” – Dean Carter, chief human resources officer of Sears Holdings

Further Reading

Beat Brain Drain: Boost Your Talent Pool

Overview

Shifting demographics are starting to reshape the workforce. As baby boomers retire, in most developed markets there will simply be fewer people of working age to fill positions. Not only is the pool of locally available replacement talent shrinking, but competition for their talent is on the rise.

The people shortage is exacerbated by the lack of growth in graduates with science, technology, engineering and math (STEM) degrees. This is happening at a time when, because of rapid advances in technology, the demand for these skills in the workplace is on the rise.

At the same time, businesses are also finding that the leadership and experience of the baby boomers are being sorely missed. As they leave the workforce, baby boomers are taking decades of knowledge with them, while younger generations often have yet to build up the experience and leadership skills needed to maintain successful businesses.

So how can businesses respond to this confluence of demographic and training challenges to avoid being hit hard by a skills shortage that could be even more pressing than the one the world is already facing? With an emerging challenge this great, this is not just an HR issue – it’s core to future business strategy.

In-Depth

How are business leaders coping with the rising demographic, technological and human resource challenges they face as experienced staff retire and new technologies disrupt industries and require new skillsets?

The first step in addressing these challenges is to understand staffing as part of a holistic business strategy. Organizations need to identify the critical skills and roles needed to support overall goals and objectives and build a sustainable talent pipeline.

Aligning talent strategy to business strategy in this time of rapid change requires taking a long-term view. It’s not just about hiring for the positions you need today but about identifying the critical skills needed to help your business adapt over the long term.

How to Tackle an Emerging Talent Shortage

At a time of increasing competition for qualified people, what many of the firms are focused on now is creating a culture that is attractive for people to join and stay with. With as many as a third of employees thinking about leaving their current job within a year, according to Aon’s latest Workforce Mindset Study, this isn’t just about attracting new staff — it could be about preventing existing employees from being lured away by a competitor.

Both mature and fast-growing industries are focusing on developing a culture to help them compete for scarce talent and become more attractive to their current and future workforce.

When it comes to culture, here are a few things organizations can do:

  1. Develop leaders who are engaging and serve as role models — With corporate leaders increasingly high-profile (and with leaders as a top driver of employee engagement), select and develop people who can act as internal and external role models and create an environment in which people are appreciated and motivated.
  2. Establish a clear employee value proposition — To stand out from the employer crowd, think about how to make your corporate culture feel more distinctive and attractive by offering support in career development and continual training, as well as competitive compensation and benefits.
  3. Develop and articulate a sense of purpose — With workers increasingly wanting employment that means something beyond just making money, explaining what your business stands for can be a powerful tool to attract like-minded talent and drive long-term employee engagement.

In addition to culture-building, planning for tomorrow’s workforce is key. Talent shortages are likely to remain a feature for years to come. Ensure your business has the qualified staff and skill sets needed by adopting a long-term program for attracting, training and developing the people who will drive its success over the long term — not just for this year’s needs, but for five to 10 years.

There are a few things organizations should consider doing to help with their long-term talent needs:

  1. Establish apprenticeships — Not only does on-the-job training help you cultivate the skills your business will need, it can help promote loyalty and long-term engagement. With training and career development opportunities as strong pull factors for modern workers — especially from younger generations. Making training a continuing part of your business from the early stages of employees’ careers can be a powerful proof point in your commitment to employee development.
  2. Work with schools — Encourage changes in the educational system that support the development of needed skill sets in the long term. Ensure students are made aware of career opportunities in your industry and of the true value and potential a career with your organization can bring.
  3. Commit to workforce diversity — Women and minorities still have significant under-representation within the managerial ranks of many industries. Organizations should be reaching out to qualified minorities, not just because practicing equality in the workplace reaffirms your business’ commitment to fairness, but because diverse workforces are a proven driver of innovation. Not only have organizations with greater gender equality proven to perform better, but being seen as promoting gender equality in the workplace can be a powerful attractor for talent.
  4. Globalize your hiring — Developing countries around the world are producing well-qualified staffing for accounting, data analysis and other financial services, while in healthcare a majority of newly qualified healthcare professionals (including nurses and general practitioners) are graduating from schools in these countries. In a globalized world, the competition for talent is also increasingly global, so you increasingly need to look where the talent is, not just where you would like it to be.

Talking Points

“Rather than focusing on salaries alone as the cure-all for attracting employees, corporations would be wise to look closely at the wider expectations and demands of their candidates, if they are to draw in the best talent. … While increasing the flexibility of the job offer can provide an effective short-term solution to draw in the best candidates, ultimately even these measures won’t resolve systemic talent gaps that have a significant impact on the long-term health of the business.” – Tara Sinclair, chief economist, Indeed

“The struggle to fill vacancies is holding back growth and opportunities for business, and it is essential that both government and industry work together quickly to identify ways to plug this gap.” – Mike Hawes, chief executive, Society of Motor Manufacturers & Traders

“Companies looking for sophisticated skillsets are starting to look to foster skills and relationships with future employees among high school age students.… If you’re not already thinking five to ten years ahead for your talent needs, you need to.” – Usha Mirchandani, partner, talent analytics, Aon Hewitt

Further Reading

Are Our Working Patterns Outdated?

We didn’t need Dolly Parton to tell us that the classic 9-to-5 office routine can be a draining experience. The routine developed at a time when only one member of a household, typically the husband/father, held a full-time job; today, it is far more common for both partners in a relationship (regardless of gender) to work. So a 9-to-5 approach can create considerable challenges for those caring for children.

With childcare costs rising and services in short supply, workplace flexibility is increasingly important to working parents. Today, lack of workplace flexibility is pushing some parents out of the job market, which is especially bad for the still-struggling world economy. Women, in particular, are more likely to rank flexible working and work-life balance as important considerations, according to Aon’s 2015 Workforce Mindset Study. The same study found that a flexible work environment was the second most important factor in deciding whether to take a job, and a-top five-most-desired area for improvement. Confirming this, three of the top six factors causing full-time workers to quit their jobs were because of difficulties in maintaining a work-life balance, according to a recent EY global survey.

Now that the world’s working-age population is on the decline, according to the latest World Bank figures, maximizing the number of people on the job is set to become an increasing concern for governments. With the proportion of women participating in the workplace also in decline over the last decade and the percentage of women in the global labor force stagnant at around 40%, making it easier for women to work could add $12 trillion to global growth, according to McKinsey.

At the same time, the world is experiencing a growing global skills shortage, meaning that businesses are eager to discover new ways to attract and retain top talent.

Introducing more adaptable ways of working to enable people to fit their careers around their non-work commitments could be a solution to all these challenges — maximizing workforce participation, reducing gender inequality and boosting global growth and productivity. This is part of the reason why the U.K. introduced a legal right to request flexible working in 2014.

But with a combination of the rise of new technologies and an increasingly globalized workforce, there are a number of ways to reduce the barrier to workplace participation.

In-Depth

Thanks to the huge changes in communications technology that many have predicted could revolutionize the way we work in the 35 years since Dolly Parton’s hit song and film came out, there are now more alternatives to 9-to-5 than ever. Here are some of the most popular:

Flextime

Employees work a set number of hours over a given period but can choose when they start and finish work (usually agreed in advance with their employer).

  • Pros: Employees can arrange their workday around non-work commitments such as childcare; employers can increase the hours during which they have staff working without increasing their workforce.
  • Cons: Ensuring clear communication and arranging meetings when employees are on different flextime schedules can be complex, while employees’ preferred hours may not fit client/customer needs.

Telecommuting

Employees work remotely, using the internet and phones to stay in contact with their colleagues.

  • Pros: Reduces the need to maintain expensive office space; saves employees money and time on their commutes; gives maximum flexibility to workers to balance their work and private lives as they see fit.
  • Cons: Unless properly managed, telecommuting can reduce cohesiveness of teams; while vastly improved in recent years, the technology of remote working isn’t yet quite reliable enough, some feel; lack of visibility on colleagues’ availability can lead to frustration and delays.

Shift working 

Employees work at staggered times, allowing multiple people to use the same workspace at different times of the day and night, or on different days of the week.

  • Pros: Employees can work at times that suit them, while employers can maximize the efficiency of their workspaces by running facilities for longer.
  • Cons: Can be complex to administer.

Job sharing

Two or more people share a job, working part-time.

  • Pros: Enables employees with other commitments to continue to work and employers to benefit from different approaches to the same job.
  • Cons: Maintaining consistency and quality levels can be challenging for employers.

Staggered hours 

Workers have different start and finish times.

  • Pros: Employees can set their hours to suit their needs; employers can extend their effective hours of business operation.
  • Cons: Can lead to resentment from employees who are unable to secure the staggered hours that best suit them, and can hurt team coherence.

Compressed hours

Employees work their full-time hours in fewer than the normal number of days, such as working 40 hours in four 10-hour days rather than five 8-hour days.

  • Pros: Employees have more extended periods at home and save money on commuting; employers can cut office costs by closing down on the extra off day.
  • Cons: Interacting with other businesses and with clients/customers on a four-day schedule when they are working to a five-day week can be difficult, and potentially lead to negative impressions.

Annualized hours

A more extreme form of flextime, the employee has to work a set number of hours a year but has some flexibility over when she does it, usually with some guaranteed hours based around peak periods.

  • Pros: Significant employee flexibility, and some benefits for employers with strong seasonal variance in demand.
  • Cons: Can lead to long hours being worked at peak periods, which can lead to reduced quality of work.

Commissioned outcomes

Employees have no fixed hours, just set output targets/deliverables.

  • Pros: Employees have maximum flexibility.
  • Cons: May require considerable project management to ensure that both employer and employee remain happy with the value for money of the arrangement and that targets are hit.

Term-time working

Staff attend the workplace only during school term times, going on leave (or shifting to telecommuting or part-time work) during school holidays.

  • Pros: Enables parents to spend more time with their children and save on childcare.
  • Cons: Means the business has to fit in with school schedules rather than market needs.

Zero-hours contracts

Employees have no guarantee of a minimum number of working hours but are called on as needed and are paid only for the hours they work.

  • Pros: Maximum flexibility for employers and beneficial for some employees who are unable to commit to regular hours.
  • Cons: Have developed a bad reputation and can be seen as exploitative, as the timing of the available work tends to be set by employers rather than employees; can make maintaining quality and training levels difficult.

When considering whether flexible working could work for your company, remember there are potential downsides as well as upsides to most forms of flexible working. What could lead to benefits for one industry, job type or employee could be detrimental to others, and, as with any project, the key is to be clear on what the intended outcomes are and how to measure success.

Talking Points

“The 8-hour work day is not as effective as one would think. To stay focused on a specific work task for eight hours is a huge challenge. In order to cope, we mix in things and pauses to make the day more endurable. At the same time, we are finding it hard to manage our private life outside of work.” – Linus Feldt, CEO, Filimundus

“The benefits of implementing flexible working policies are absolutely clear: happier staff, increased productivity and positive attitudes towards employer and business, to name but a few.” – Manesh Patel, senior benefits consultant, Aon Employee Benefits

“To boost employee freedom while also ensuring productivity, there are numerous flexible working options that businesses can offer… We have invested significantly in changing workplace culture, empowering employees to work from anywhere, while celebrating performance over presenteeism. These changes have led to great results, including a 20% boost in productivity and significant operational cost savings.” – David Langhorn, head of corporate and large enterprise, Vodaphone UK

“Bias toward stereotyping later starters means employees risk being inadvertently punished for taking advantage of flexible work time programs… Firms should be aware that simply introducing flexible hours on their own can have ramifications that should also be addressed. Indeed, without changes to their review procedures and other practices, they may ultimately be counterproductive.” – Sam Kai Chi Yam, assistant professor of management and organization, National University of Singapore Business School

This article originally appeared on TheOneBrief.com, Aon’s weekly guide to the most important issues affecting business, the economy and people’s lives in the world today.”

Further Reading