Julia Howes, Analytics Leader, UK and Europe and David Wreford, Partner

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Disruption is changing how organisations think about their workforce

The concept of ‘thriving in an age of disruption’ is accelerating for businesses.

Organisations are almost overwhelmed by disruption. There has been a lot of talk about automation, about jobs changing and skill scarcity. There is concern about an ageing workforce and how that workforce is changing in its expectations.

Business and HR want to know how to respond to disruption and change.

In recent times we have seen a pivot to a more proactive approach to facing disruption.  Organisations, in particular the HR function, are asking what they need to do to ensure they are thriving, and focusing on what that means.

What does thriving in an age of disruption mean?

Mercer has done a lot of research in the last six months and we have just released a new point of view paper detailing what it means to thrive.

We looked at what thriving means and focused on three areas.

Thriving organisation:  what does success mean to the organisation? We hear a lot about how to be resilient and agile but also what societal impacts do we have as an organisation?

Thriving workforce: how diverse and adaptive is the workforce? How inclusive and growth focused is it? What is the overall commitment to wellbeing?

Thriving individuals:  What does it mean for me working in an organisation in which I choose to invest? How do I grow and contribute, become empowered and connective as well as being healthy and energised?

‘Thriving’ is all those components coming together.

How to build a thriving workforce

Our clients say, ‘that’s great but how do I do it?’

We have come up with a pragmatic approach to creating a thriving workforce and it has four components.

  • Create a future focused people strategy. This involves thinking through the workforce which is required to execute the business’ strategy and then build that workforce.
  • Curate the right value proposition. How does an organisation create a compelling value proposition for employees?
  • Actively work to create the right work environment by determining the select few essentials to build that thriving environment.
  • Develop a data-driven mindset to ensure this is not done in isolation or only carried out once. You can do this in part by having an ‘always listening’ approach towards employees.

Employees want to be treated like the employer’s best customer

We are seeing disruption for organisations, how they are governed, and in the nature of work and jobs.

That is partly driven by employee aspirations but also in the way employees perceive the work that they do and the needs and the wants they have from employers.

We do a research report every year, the Global Talent Trends Report. The latest 2017 report shows a tipping point in these aspects, and an evolution around areas that employees are looking for their employers to support.

Compensation:  Historically this has been second or third in list of priorities behind career progression, or investment in development. While cash is becoming top for most countries, employees are moving away from messaging around pay and performance. They want to be recognised for a much broader range of contributions such as their skills and outcomes, but also exhibiting the right behaviours in line with the organisation’s values and norms.

Health and wellness: Organisations used to see this as providing healthcare arrangements, but employees are looking for more. They want support and proactive initiation from employers to ensure they remain healthy, avoid risk and don’t tip over into being sick or long-term disabled.

Careers: Employers used to have a mantra about providing a framework for employees, to drive their own careers which the organisation facilitated with access to courses and mentoring. There is a sense that employees want more, they want activity and intuition from managers to support their development.

Worrying about money: This often focuses on younger people, but it is not confined to that demographic. It is often around the debt employees are accruing from studying or worries they have from not getting on the housing ladder. Employees would like employers to care more about this. In doing so the employer can also ensure their workforce is not distracted by worries.

Flexibility: Around three quarters of employees said they would like to work on a contract basis; this is a much higher proportion than we have seen historically or would have anticipated. There is an evolving picture around flexible working. Previously the conversation has been limited to time and place: ‘can I work now or later’, or ‘can I work here or there?’ Employers are thinking about that more. For example, can the job be disaggregated and reaggregated or are there other aspects about the intensity of work with people working harder in one year or month and less so in the next. There aren’t the mature frameworks in place around which employers can have conversations with employees about what all this entails.

Take a holistic view of the EVP

To drive change within employers’ propositions, the following aspects of an employee’s deal must be considered:

At the widest part of the triangle at the bottom you have the tangible elements of the deal that need to be competitive versus the open market to ensure you are able to attract people to your organisation. Compensation refers to pay and incentives. Another area where we see huge investment is in particularly well-designed ‘recognition plans’ which help employees acknowledge the contribution they and their colleagues make to the business.

Alongside compensation is benefits, such as company cars and healthcare. These are expensive and are typically an area of focus for organisations trying to buy talent.

The next level up is the less tangible elements of careers: what investment is the organisation making in developing skills and capabilities? What is the path they lay out for people to ensure they are going to grow and have exciting, diverse opportunities?

At this stage we also consider wellbeing. There is a huge emphasis on physical, mental and financial wellbeing. In other words, the employer must focus on all the holistic needs of the workforce and consider if they are being supported to ensure employees don’t tip over the health barrier.

At the top of the framework is purpose. For organisations with a social cause such as charities, the sense of purpose is clear and compelling. Organisations that can identify, communicate and live their purpose add a tremendous value to their overall proposition.

It is essential that the purpose is authentic. One means of enabling this is creating greater alignment between the corporate social responsibility function and the HR function, which in turn should actively create good in the community and internally for employees.

Five things an effective EVP must be:

Insight Led. You can’t just ‘get’ an employee proposition. The organisation needs to be informed by evidence and analytics to understand what will work today and what will enable them to achieve their aims in the future; no one size fits all model exists.

Personalised and flexible. The workforce is diverse and the right proposition will allow adaptation and alignment to best fit the different segments of the workforce. Ask yourself: can your employees select and choose what will best suit them?

Holistic and integrated. An employee value proposition is not programmatic; it is not about thinking of specific elements of the deal in isolation. All elements need to be considered holistically with emphasis placed on specific building blocks that are most important for the organisation. For example, it is very important to understand how the career and reward aspects integrate.

Cost effective. We see employee value propositions as being about the optimum investment in people. Thinking about the workforce of the future – how do you build the proposition in the most cost-effective way to target money to yield greatest return?

Authentic and engaging: It is very important that the message that goes out about the proposition is matched by the employees’ experience of it. The EVP should inform the design of business and HR programmes and the communication of them. If there is any misalignment – and social media will catch you out – it is damaging to the organisation’s reputation. Conversely where you have the right messaging and the programme support in place, you can enhance the reputation.

You would expect that these five aspects would feed into how an employer perceives and designs their proposition. However, we have done some research and unfortunately that is not always the case.

  • We find that half of all employers suggest that the experience of working in their organisation does not match the message they use for recruitment
  • Two- thirds (66%) don’t think they are defining a unique proposition, however, when we dig a little deeper we find there are a lot of superlatives about ‘great place to work’
  • Half say they don’t have a proposition at all
  • Most (78%) say that the proposition does not inform their reward programmes
  • Only 25% have more than one proposition; we think there should be many propositions or at least they should be flexible

Everyone is on a unique journey

Traditionally organisations look at things like the experience of millennials, generation X and baby boomers within their workforce. We think it is more complicated than that. It is less about the age and more about the experiences employees go through. Experiences might affect people at different ages when they have different demands on their preferences for holidays or healthcare etc. Those things change over time, but typically propositions are inflexible and don’t adapt to meet peoples’ needs.

We help clients, through data, to understand a little bit more about the people they have in their organisation by creating personas. Part of this is considering gender, age, career levels and a number of different factors that define employees’ needs and interests.

EVP Case Studies

Case study 1: Médecins Sans Frontières

We worked with Médecins Sans Frontières (MSF). Predominantly well known for providing emergency medical services, but they are more than that.

They provide integrated healthcare; it’s not just about flying into an emergency and flying out when they can. They want people to stay.

This means they have different needs for different people based on the predictability of the person’s availability. Two key questions for MSF:

  1. To what extent will our people want to come and go or stay?
  2. In regard to our current mission, to what extent do we want people to come and go, or to stay?

On that basis they have two core segments of the workforce. The intermissioners (those that stay for six months or so) and the vocationers (those that they want to come and stay).

Outside of that core, you have people who want to stay but the organisation doesn’t want them to (willing misfits), and those who don’t want to stay but the organisation wants them to (risky misfits).

MSF: Targeted Value Proposition

MSF doesn’t pay a great deal and we benchmark them below the bottom of any reasonable market because pay is not the reason anyone goes to work for MSF. The benefits they provided were enough to ensure that people were healthy and well enough to get home. They didn’t focus on benefits such as family support because MSF employees are being bombed or work in areas with Ebola, making well-being less relevant. Further, MSF are not big investors in people’s careers.

The proposition is very much anchored on purpose and making sure compensation and benefits are fair; the less you pay the more you are driven to thinking about the fairness of those rewards.

This model worked well for ‘intermissioners’ but MSF needed a compelling proposition to retain its ‘vocationers’. The charity’s EVP re-emphasised compensation and benefits, since these would allow employees to take time off and regroup before returning for another mission.

The EVP also placed more focus on investing in employees’ careers – especially co-ordinators who were out on site – so MSF could develop its future leaders.

MSF was focused on the sense of purpose and creating a proposition that applied to the two core segments of the organisation.

Case study 2:

This organisation came to us with a retention problem. They had escalating turnover and had a problem with skillsets and they were concerned that maybe there was an age demographic component to it.

Rather than creating programmes based around assumptions, they wanted an analytical approach to see what could be done in a cost constrained environment. We used several analytical techniques to understand what to focus on.

We used a survey technique asking employees to rank the aspects of the employee package that they found attractive both from when they joined and for today. This gives a sense of difference of what attracts people to an organisation and what keeps them.

The type of work was important as an initial attractor but still important in their jobs today. In this case it was above base pay which came in at third. It was important to have pay and benefits in there to make sure they were competitive but going forward the organisation were able to leverage the interesting work as the core part of the recruitment and retention strategy.

We looked at work schedule, which ranked as fourth overall as an initial attractor. This meant 27% of employees selected it as one of the more appealing parts of the package. It was even more attractive to hourly and part time employees.

Today work schedule ranked third indicating it got more attractive over time. For hourly paid employees it was the second most important aspect, behind the opportunity to increase base pay. It offered a very high satisfaction across the entire organisation. This finding really emphasises flexibility as important for employees. Since there was such high satisfaction, this was something the organisation could continue to leverage as long as it remained realistic.

Finally, we looked at compensation. Originally third overall in terms of initial attractiveness, it fell to sixth over time.

The turnover analysis we conducted also revealed something interesting. In addition to the survey we looked at those who had left the organisation in the last three years. We ran models and found that those who received a pay increase were more likely to leave. When we dug into this we found that it was inconsistency in the pay increases as well as the communication around them that were causing this behaviour. For example, employees received a pay rise in an inconsistent and ad hoc manner, it was unclear whether they would receive another, and so they felt that it might be a good time to leave the organisation.

The key take-away is that it is very important when thinking of an employee value proposition not to come up with aspirational benefits to advertise on a website or create in isolation as part of a branding exercise. It needs to be authentic. This is even more important in an environment where social media plays a role in keeping us accountable.

If your organisation is not authentic to its proposition, current and past employees will use social media sites to share what they are really experiencing, leaving a trail for potential new recruits to find. If you compare what you say in your website and career pages to social media sites, it can be eye-opening.

Any disconnect that exists can ultimately hurt your brand.

There is real value for an organisation in getting this right. Some of the things we focus on around compensation and benefits require informed investment, as does the whole process, but there are such high returns for the organisations when they get it right.

We have seen that businesses get several benefits including enhanced reputation, hiring and attracting talent, retaining employees and keeping them engaged.

Next steps

Hopefully this has given you some insight into the different ways a distinctive EVP can benefit an organisation and its employees.

The next step is to learn to: Develop Inspiring, Agile and Inclusive Leaders. Enjoy!

No matter what stage of your journey, if you would like to speak to one of our experts about your EVP strategy, please get in touch via the form below, or contact Julia.howes@mercer.com.