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29 Sep 2020
by Debi O'Donovan

12 key reward and benefits trends you need to know to thrive in 2021

Reward and benefits is all about getting and keeping the best talent. REBA’s director Debi O’Donovan outlines the 12 key reward and benefits trends you need to know to thrive in 2021

 

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Never before has the reward and benefits profession been in such a vital position to rethink and re-imagine the employee/employer relationship. The huge changes we are experiencing present uncertainty but also great opportunity.

Debi O'Donovan will be delivering her 'State of the Nation' talk at REBA's Employee Wellbeing Congress at 10:40 on Wednesday 30th September. To listen her session register here.

What we do from now on needs to be dynamic, fluid and agile in order to adapt to ongoing labour market shifts, because at its core, reward and benefits is all about getting and keeping the best talent within the labour market.

How the labour market is changing

  • Europe’s working-age population is predicted to shrink by 4% over the next 10 years.
  • The pace of automation is expected to lead to the loss of 53 million jobs across Europe (The future of work in Europe, McKinsey Global Institute, June 2020).
  • Automation will continue to hollow out middle-skill, middle earning jobs with most job growth happening at the highly skilled professional level and at the low end.
  • Workers most likely to be displaced by automation are also those most at risk in the COVID-19 pandemic.
  • The UK government will rip off the furlough scheme band aid and instead focus support where they believe there is hope of jobs recovery or growth.

How should reward and benefits team react?

The challenge for reward and benefits teams is how they plan to react. It is the time to re-consider what to do about talent, skills development and an organisation’s social responsibility to society and other employers.

Many of the leading organisations which spoke at the Employee Wellbeing Congress 2020 have been proactively doing this for a number of years. For example, Vish Buldawoo, VP global benefits and wellbeing at Centrica, spoke about the vision he is working on to create ‘Peace of Mind’ for Centrica employees. Centrica is ensuring it will be flexible for the future world of work by working to its CEO’s three priorities of putting colleagues first, then customers, with cash third.

This increasing emphasis on the ‘purpose’ of a business, superseding the focus on ‘profit’, is being taken extremely seriously among CEOs across the globe. The seeds of the importance of purpose and social responsibility were sown long before the spotlight on compassion and kindness we have seen during the pandemic was shone.

But coming at it from the opposite end, what are the actions that each employer might want to consider about their reward and employee benefits programmes? Because it will not simply be the big picture shifts that are important, it will be collective and individual actions that also create change for the future.

12 key reward and benefits actions that are causing change

1. Responsible reward: reward directors are demonstrating the bigger reward picture across workforces to Remuneration Committees and senior decision-makers to influence fairer reward decisions for executive incentives.

2. Listening to employee needs (not just surveying them): was a strong theme that came out of the Employee Wellbeing Congress 2020.

3. Employees are unique and individual: employers should rethink employee benefits and wellbeing packages to ensure they are far more personalised, compassionate and inclusive of the whole workforce.

4. Get the data: to ensure wellbeing strategies are reaching their intended target (and it’s not only about ROI) employers need to measure impact. Start with a baseline benchmark, no matter how simple and build from there.

5. Financial wellbeing: has taken a big hit due to the pandemic, and the cross-impacts between employment and financial wellbeing is huge. It doesn’t end at pay levels and encouraging people to save more – employers need to focus more on the groups of employees most affected.

6. Physical wellbeing and working from home: employers will need to revisit how they support home offices that will avoid long term physical wellbeing problems such as MSK or eyesight.

7. Women-friendly benefits: More women than men have joined the workforce over the past 15 years or so which means employers are exploring more benefits to support their female talent of all ages. Benefits from childcare to supporting fertility and menopause are on the rise.

8. Reduced commuter travel and inner-city housing costs: is an area to watch. The season ticket loan is no longer a staple of the benefits package for the foreseeable future, while could we see the end of London-weighted salaries for those who now work outside the capital?

9. Shared work spaces: Loneliness or the need to get out of busy, distracting households might see increased demand to join local, COVID-safe shared-workspaces to work alongside others for a sense of community.

10: Need safe exercise spaces in residential areas: there will be demand for places to exercise as the months get colder and exercising outdoors gets harder.

11: Motivation during darker months: during autumn and winter months motivation and mental wellbeing will need extra focus. The options to get out to socialise, be entertained or play sport are severely curtailed. Employers will be crucial to coming up with creative and compassionate ideas.

12. Group insurance costs: employers and insurers are concerned at future costs of medical and risk insurances as well as occupational services. This is due to medical advancements, rises in mental health and Musculo-skeletal claims, plus the impact of stored up illness and injuries not attended to during the pandemic.

Be aware that you might need to remove benefits that were previously considered stalwarts of your package in order to introduce new benefits that are more inclusive and will meet the needs of a wider range of your employees.

Whatever direction you choose to go in, it is worth considering the bigger sweeping trends the labour market is going through as the backdrop to individual changes you may make to reward and benefits packages.

The author is Debi O’Donovan, co-director at REBA.

Debi O'Donovan will be delivering her 'State of the Nation' talk at REBA's Employee Wellbeing Congress at 10:40 on Wednesday 30th September. To listen her session register here.

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