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  • Writer's picturePaul Hunter

People strategies of the world’s most admired companies in a full employment Economy

In the wake of ‘the great resignation’ and the equally dramatic post-pandemic re-organization of our ways of working, a number of organisations are caught in a tough talent crunch in 2022. The challenges of attracting and retaining talent have never been more real. Combine this with consumer price and wage inflation at levels not seen for many years, and the challenges for organisation’s competing for scarce talent in a near full employment economy become obvious. In today’s tight labour market, employee engagement has moved front of centre as organisations look for better ways to engage and retain the talent they need to be able to deliver on customer and shareholder value expectations. Employees meanwhile are looking for meaningful work and interesting career paths combined with levels of pay and benefits that are both relevant and that are aligned with a fast changing market. This article explores the ways organisations are mobilising to compete more effectively in the market for talent and includes some current data and summary survey observations for both US and UK markets.

How are high performing organisations organising themselves better around engagement?

In the past two years, organisations across a number of industries have seen levels of employee engagement either stagnate or decline, whilst at the same time, many organisations report that attracting and retaining talent has become more difficult. Organisations are in general more concerned now than two years ago with employee engagement and retention and are committing more time and resources to pro-actively manage both of these people elements. Key levers or areas of focus that have emerged and that successful organisations are employing to drive better employee engagement and retention include all of the following:

1. The role and impact of business leaders

2. The role of and impact of managers

3. Pay and benefits

4. The move to remote and hybrid or other flexible working arrangements

The impact of Leadership

Where business leaders have had a positive impact on employee engagement, organisations report all of the following as being important areas: leadership being more available and accessible, leadership being more connected to the business and the people, leadership being more visible in both online and in-person forums and events, as well as leadership being more actively involved in issue identification and dispute resolution. Interestingly, more formal channels for increased leadership involvement, like the employee voice initiative in the UK have made less of a positive impact than hoped for, with a number of engagement survey’s showing low or little impact return from these more formal governance and board-driven initiatives. Rather, it is the more visible and natural people-centric approaches of key individuals in leadership that have had the biggest positive impact.

The role of Managers

Managers have been able to positively impact on levels of staff motivation and engagement, in a similar way. Key factors that separate organisations that show good results and increased levels of engagement from manager interventions from those that don’t, include both increased levels of soft-skills training for managers, as well as improved information and communication infrastructure and technology support. Interestingly, upskilling managers in terms of hard or technical skills has shown very little or no positive impact on overall levels of engagement.

Pay rates are increasing faster than before

Both the US and the UK are seeing compensation increase at rates not seen for at least 30 years. Post-pandemic consumer price inflation is now trickling through into wage inflation and increased wage demands. Increase levels as high as 7% or 8% have been seen by remuneration consultants in some industries and especially amongst the lowest paid workers. More broadly, increase demands in the region of 5% or 6% have become common with many organisations looking to manage annual increases in the 4% to 5% range. The days of a 1% or at best 2% annual pay increase appear to be behind us for the foreseeable future. Pay and wage pressure is often greatest at lower levels of work and where pay equity is a concern, and in sectors where talent and skills are more scarce, in part due to labour re-organizing itself during the two years of the pandemic and the large exodus of workers from some sectors. Historical pay scales that had previously supported the organisation through a number of years are now being critically reviewed and updated as organisations look to ensure that their levels of pay are indeed both fully fit for purpose and truly market related and competitive.

Employee benefits are a key component of Total Reward

Employee benefits, previously often seen as a ‘nice to have’ component part of the organisation’s total rewards offering are also being carefully reviewed and in some cases completely overhauled. The move to remote and hybrid working models has exacerbated and accelerated the change. Benefits that were built around an on-sight working model are in decline across a number of industries, whilst benefits that focus on staff wellness, both physical and mental, and individual choice and flexibility are increasingly being introduced. A well thought out and up to date benefits offering can play a key part in an organisation’s overall employee value proposition and in improved engagement and retention.

Flexibility is key

Increased flexibility in work arrangements is consistently highly valued by a significant majority of employees, across a number of different markets and industries. In addition, benefits to support productive flexible working are becoming more common. Industry factors and the nature of work and client delivery requirements will likely ultimately determine the longer-term preponderance of remote and hybrid working arrangements across different organisations, however, those not able to offer this benefit will need to look to strengthen other areas of their employee value propositions to current and potential new staff if they are going to be able to compete effectively for talent.

The way forward

The time of status quo and a reliance on outdated people policies and practices is over. To be successful in the war for talent, organisations need to dig deep and invest the time and resources required to ensure that they remain relevant and competitive. Evidence suggests that in addition to providing employees with a meaningful days work and valued future learning and career opportunities, organisations need to urgently and critically re-look at how their leadership and managerial talent are being mobilised and utilised, as well as their approach to and levels of reward and in providing the desired flexibility in terms of both the way or working as well as in benefits offered to their people.


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