Sustainability is changing employees' expectations says Mercer's David Wreford
Sustainability policies very much link up with pay and benefits and are key drivers in the way organisations are redesigning their reward frameworks. Sustainability is now a major influence on how the employee value proposition (EVP) is evolving. At the front of HR and reward and benefits professionals’ minds is the extent to which an organisation’s EVP evolves, lives, breathes and is relevant to its employees.
Rethinking the employee experience
Shareholders increasingly demand that organisations are sustainable. And the leaders of companies are beginning to understand that they must take a multi-stakeholder view of the world if they are to innovate and perform to the greatest of their abilities.
We have seen it during the pandemic: those organisations that took a more sustainable and resilient view – supporting their employees even if they didn’t have much work for them – are now reaping the rewards in reputational terms as they begin recruitment activities.
For organisations, there are two symbiotic aspects to sustainability. If companies do the right thing for their staff, they will become more sustainable, and sustainable organisations last longer, tend to have better attraction and retention rates, more resilient staff and are better prepared for tomorrow than those that haven’t focused on these issues.
This means rethinking the employee experience, including reward and benefits, with sustainability in mind. Organisations must provide competitive foundational pay and benefits with a fair baseline, as well as career and workplace benefits that encompass flexibility at work and flexibility from work – for example, paid sabbaticals.
But there is a real tension between increasing standards because companies think that is the right thing to do and what it is going to cost them. A lot of engagement needs to go on in this area; this is the way an inward-looking approach to ESG policies is heading.
Sustainability and the employee experience
Over time, personalisation and flexibility has influenced the design of the employee experience. Then Covid-19 changed the way that fairness in the EVP needs to adapt and develop in line with the organisation’s changing priorities.
Increasingly, it is diversity, equity and inclusion (DEI) and justice that are affecting the employee experience. At the moment, DEI policies and environmental, social and governance policies sit across the employee experience and are mapping onto each other to frame a lot of the issues and changes that are going on within organisations.
For example, that would include a living wage analysis and organisations asking themselves ‘How do we ensure that around the world we are paying people a decent minimum wage that affords them a decent lifestyle?’.
Trends in sustainability
We have seen an emergence of organisations publishing sustainability reports, which tend to be a retrospective view of things they’ve done to be sustainable. This represents huge reputational collateral – companies want to show the world what they do.
What we are seeing now is the flip side of that, whereby sustainability policies need to be more planned. Let’s have a strategy that says what we need is a series of priorities. Some of these will be internal – focused on DEI, wellbeing and minimum standards. Some will be external – examining what impact the company is having on the outside world.
We are also seeing a growing trend for organisations to create a foundation – an institution that is set up to do good and is mostly linked to the organisation’s purpose. People connect very strongly with the fact that they’re working for an organisation that may have one purpose but is also saving lives or the environment. And that’s how organisations can unite people with a much bigger purpose.
For more on how sustainability is changing reward and benefits download our Sustainability is driving business change report.
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