What is responsible reward, why does it matter and how does it interlink with employee wellbeing?
Much of the initial traction around the idea has been driven by investors, keen to see organisations they are investing in doing the right thing, particularly when it comes to Environmental, Social and Governance issues (ESG). This push has been accelerated further by younger generations who appear to have higher expectations for corporate and social responsibility than many of those currently heading up organisations and government. So why does it matter?
ESG isn’t just something that matters to investors; it impacts all of us. There is increasing evidence that following a strategy committed to ESG reform is beneficial not just for businesses but for their employees too. Embedding environmental, social and governance factors create better outcomes for people. The challenge that many organisations face is understanding how the abstract concept of ESG relates to them on a day-to-day basis. Thus far, much of the focus and targets have been on environmental issues and commitments to reaching zero carbon emissions or improving targets on waste management. However, with nudges in the right direction, the focus is now rightly turning to measuring the ‘S’ component, with organisations demonstrating more than ever to both internal and external stakeholders how they are doing the right thing.
Employee wellbeing and social measures
Employee wellbeing is a fundamental indicator of how motivated, engaged and productive your employee population really are, and how you treat your employees is a key component of responsible reward. How you take care of your people and look after their overall wellbeing is becoming more transparent, and there is an increased pressure to demonstrate what focus you are placing on mental health, what proportion of your employees are on zero hours contracts, how you are managing your contingent workers, what your commitment is to diversity and inclusion and so on.
Doing the right thing when it comes to wellbeing is good business sense. We all know that effectively managing health and safety, absence and attrition by focusing on the wellbeing saves the business money in the longer term. At Innecto we have been developing thoughts on Hapiness levers with our parent company Personal Group, looking at measuring how well we manage financial, physical, social and mental aspects of wellbeing to establish an overall wellbeing benchmark for our business.
However it is important that your responsible reward strategy focuses not just on the benefits you provide, but also how you support your employees with their application, and make sure that they continue to be relevant, especially now in such challenging and fast moving times. For example, most organisations provide traditional financial support in the form of life assurance or pension provision, which ticks boxes in supporting employees in the longer term. However, there is increasing recognition that many people in work are struggling to manage their finances on a day-to-day basis, which ultimately impacts their overall wellbeing and productivity. Supporting employees with access to services such as employer-backed loans, access to salary earned relief funds (eg: a capped amount of salary paid early to cover emergencies) and financial education helps to support daily financial issues. Also, by providing access to insurances or support with savings, employers can have a significant impact on employees’ financial wellbeing and resilience, and ultimately your bottom line.
Likewise, whilst mental wellbeing has traditionally been ‘covered’ by employee assistance programmes (EAPs), a truly responsible reward approach focuses on more than the provision of one benefit. There has been more promotion of such EAP schemes due to the mental health challenges the pandemic has thrown up, however are you monitoring how the scheme is used? Do you know what aspects that causing employees most concern? Are you checking how many absences are mental health related and do you understand if your work environment is a trigger?
Again, thinking about physical wellbeing, many organisations offer gym discounts or memberships, but a responsible reward strategy will also consider aspects such as providing health and nutrition workshops to promote healthy living and long-term good health. This is particularly important at the moment given that diabetes and obesity are factors for COVID-19 complications.
Thinking about the whole employee
Finally – and for me, most importantly – is consideration of social wellbeing, thinking about the ‘whole’ employee, including the fact that their wider social and family life forms a critical part of their overall wellness, as well as their connections and relationships with colleagues. Employees who feel supported and valued are happier, more productive and engaged, and feel aligned to organisational values and purpose.
A truly holistic approach to wellbeing from a responsible reward lens is one that focuses on each of these levers and doesn’t just ‘provide a benefit’; it monitors, reviews and ensures a return on investment both financially, as well as in terms of the employee lifetime value. Although the wellbeing of the individual should be supported and measured, it is intrinsically linked with measuring and understanding the wellbeing of the organisation in its entirety.
The author is Justine Woolf director of consulting at Innecto Reward Consulting.
This article is provided by Innecto Reward Consulting.
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