This article was first published by Mercer here.
We are in the midst of a workplace revolution. The pandemic has altered almost all aspects of the employee experience, changing everything from where people work to how they interact with clients, colleagues, and customers. Now there are strong signs that employees’ core expectations about work are changing. In recent months, an unprecedented number of employees have quit their jobs in search of opportunities that are safer, saner, and more sustainable.
Considering the size and scope of these changes, now is a critical time to determine if your employee value proposition (EVP) is still compelling and if your total rewards strategy is aligned with the current and future needs of your workforce.
The evolving employee contract
All EVPs and talent reward strategies are based on an implicit psychological contract that defines the relationship between employer and employee. For much of the 20th century, the loyalty contract was common. Compensation systems and EVPs were based largely on extrinsic motivators and financial incentives. Organizations provided pay, benefits, and job security in exchange for a lifetime of commitment from employees.
By the start of the 21st century, the limitations of this approach were apparent. A growing body of research—including our own—shows that while pay and benefits are important, employees also want jobs that are intrinsically motivating and provide a sense of meaning and purpose, community and camaraderie, and growth and development. This research led to the emergence of the engagement contract. Over the past two decades, many organizations started focusing on their employees’ psychological needs by providing compelling jobs and meaningful work experiences.
Engagement will continue to be important in the future. But it will not be enough to attract and retain top talent in a post-pandemic world. This is because the pandemic has reset employee values. A decade ago, work-centrality—the relative importance that people place on their work—was high. Stable jobs, good bosses, and promising careers were all coveted signs of success.
But now, after two years of lockdowns and layoffs, remote work and virtual meetings, and widespread illness and anxiety, many people have a different outlook on life. In one of our latest studies, we found that employees were significantly more concerned about their physical health, their work-life balance, and their emotional well-being than their job security, their boss, or their professional development. These findings reflect a trend we are seeing across organizations. Employees are looking for a new deal— one that promotes their health, fosters their wellbeing, and supports their lifestyle.
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