The employers that win the current and future talent wars are those that address talent issues and rewards from a human capital investment management perspective. They make decisions about rewards resource allocation that align with their organizational fingerprint and that maximize return on talent investment.
With an ongoing process of situational assessment, strategy and tactics development, and decision-making, these organizations are moving away from budget-driven rewards tactics and toward strategy-driven rewards budgeting.
Smart Business spoke with Joe Roberts, area vice president of Health & Welfare, Key Accounts, and Keith Friede, area vice president of Talent & Organization Development, at Gallagher, about how employers can move in front of their competitors as a destination for talent.
What challenges are employers facing?
A tsunami of benefits and HR legislation and accompanying regulations during the past few years has inundated employers — so much so that most employers, from a practical perspective, cannot successfully comply with all the requirements to which they are subject. The workforce continues to diversify. A one-size-fits-all approach to rewards, while simpler, is no longer a sustainable approach for employers wishing to attract, retain and engage top talent. Technology continues to change, which can disrupt revenue and profit models. This may result in difficult decision-making and in some cases, reluctance to make changes.
How does this impact benefits and HR?
Employers have to rethink and refocus their strategies. Attracting and engaging top talent is the ultimate goal, so employers should couple competitive short-term and long-term rewards with a strong engagement program. They should also focus on linking local outcomes and costs to employee career and global business success. Two other closely related elements, controlling health care costs and improving employee total wellbeing, require employers to balance increasing health care costs with other total rewards costs by reducing controllable spend. In its simplest form, the process starts with creating a culture of employee health that accounts for a person’s social, emotional, career, community and physical wellbeing.
For regulations, employers must develop a comprehensive human capital risk approach that identifies all types of human capital (not just compliance) risks comprehensively, and then assesses risk potential and degree of severity, determines the appropriate treatment for each risk (across a wide range of possibilities), and finally communicates decisions to key constituents. Too many employers wait for the next wave of legislation/regulation and then react, often in a way that complicates strategic objectives.
Employers should look at customizing rewards and overall employee experience. This isn’t just about generations. It’s about recognizing a range of differences, including life stage, career aspirations, risk tolerance, financial circumstances, family size and situation, health, spouse’s employment, etc.
Most employers utilize technology to address regulatory compliance and administration needs. But the employers that harness technology to help drive organizational and human capital strategy will have a competitive advantage.
What trends have you seen? What do you anticipate seeing this year?
Legislation and regulation will continue to proliferate. Workforce demographics will continue to diversify. Technology advances will result in greater choices and complexity (and cost). Compensation and benefits costs will continue to increase.
In 2018, there should be a bigger focus on employee engagement. Many organizations focus on improving customer satisfaction, increasing the bottom line and achieving other crucial business outcomes. These can be optimized with improved engagement.
Are companies structuring compensation or benefits differently as a result?
Too many organizations try to maintain the status quo — the same human capital investment mix, and with each legislative change, the same compensation or benefit investment within the new requirements. Top-performing organizations are clear about the human capital implications of their strategy, and then make decisions consistent with those implications and their strategy.
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