This year HR has once again shone at helping businesses navigate another turbulent 12 months. Organisational transformation is being delivered against a backdrop of falling employee engagement and a difficult recruitment market. With these themes predicted to continue, we draw on insight from our People Barometer survey 2023 to ask, what learnings can HR take from this year to effectively support the business in the year ahead?
- Preparation for the impact of AI will be the top investment priority for HR
This year, HR has been focused on mitigating the impact of the cost-of-living crisis on employee performance while preparing the business to adapt to emerging technology. Next year, both will continue to be a priority but investment in skills and training to help build capability for businesses to cope with the impact of AI and automation will be the top priority for 55% of HR teams.
To be successful, organisational transformation will require a workforce that’s highly motivated and engaged. That’s going to be a challenge for the majority of businesses that say employee engagement levels are falling (62%).
This means that next year it will be critical for organisations to increase employee engagement with a well thought through plan to recognise and reward employees. The business case is clear, when employees feel valued, and their hard work is appreciated, they are more likely to remain motivated to perform at their best. Engaged employees are more committed to their work, more likely to stay with their employer, and more willing to go above and beyond to achieve company goals. Finally, they are less likely to seek opportunities with a competitor organisation.
While there’s no one-size fits all approach to recognition and reward, most organisations find mixing a strategic approach with short-term tactical interventions to support specific targets is most effective. Whichever approach best suits your organisation ensure your plan motivates staff throughout the year and not just at specific calendar events. And align recognition and reward to behaviours that deliver success for your business.
- Cost-of-living still poses the biggest threat to employee performance
AI may have nudged the cost-of-living crisis down a rank in terms of HR investment priorities, but half of employers say financial worries are still the biggest threat to performance and expect to remain focused on addressing financial wellbeing over the first half of next year.
Last year, four in ten employers received more requests for additional financial support and a third (33%) said their employees had taken second jobs or side hustles to make ends meet. Looking ahead, it’s clear from the Autumn statement that 2024 will be another financially challenging year for many employees. Many people on average salaries have been moved to a higher tax bracket reducing take home pay. After two years of inflated costs, most households don’t have any fat to trim or few savings left to cope with another year of financial stress.
Added to which, spending on public services has been cut in real terms meaning we can expect waiting times for public services – GPs, dentists, hospitals – to grow. As a result, employees may not be able to access healthcare treatment in the early, treatable stages. Working parents desperate for affordable childcare will have to continue paying exorbitant costs for both parents to stay in work. In effect, we are seeing the biggest drop in real living standards since the 1950s.
Few businesses will be in a position to afford inflation-busting pay rises. Instead, HR will need to explore a wider range of low-cost options to help employees save money and boost their overall financial position.
What we’ve learned over the last couple of years is not to assume existing support still meets the needs of the business and employees. Start by reviewing the support you have in place. Does it align with the way the business works or do you need to make changes? Ask employees whether current support is effective. What areas of financial wellbeing do they most need help with? Check your support covers all bases from discount schemes that enable employees to save money on everyday items to Employee Assistance Programmes to help any employees in financial distress.
- A strong Employee Value Proposition is critical to address skills shortages
This has been a tough year for staff retention and recruitment. Nearly, two thirds of employers (64%) said they were struggling to retain staff. Although predictions suggest a shift next year toward an employer-driven market, in turbulent times it pays to have a compelling reason for staff to stay and to make it easier to attract talent and fill high-demand skills gaps.
As a result, we are seeing a renewed focus on Employee Value Proposition (EVP) from organisations that want to ensure their offer is competitive. While it’s important to check your employee benefits offer is competitive and meets employee needs, remember that work culture is as important, and arguably more so than financial benefits.
Remember to review working arrangements. Are you providing staff with the flexibility to manage care and work responsibilities or to balance a career with interests outside of work? Do you offer staff opportunities to grow and develop? Do staff feel valued and appreciated? Do managers and leaders lead inclusively?