Keeping your people

Workers are forcing employers to reckon with their investment in human capital. In 2022, directors must set the standard for workplaces that achieve retention while restless employees keep careful score.

The hope for normalcy and economic recovery might be top of mind for company directors in 2022, but a major challenge is going to be employees whose motivations have fundamentally changed. In many cases, seriously fatigued employees will be quietly planning big changes and organisations will need to be one step ahead. These are some of the important HR trends that will make their presence felt in the year to come.

Resignations on the rise

Significant numbers of people will be looking to leave their job post-pandemic. Buoyed in the knowledge of a tight labour market, particularly in sectors such as finance and marketing, employees have a fresh perspective on what matters, and resignations are expected to be high on the agenda. This prediction was highlighted by Gartner Group, which notes an avalanche of resignations could be a major headache for managers. “For many workers, 2020 was incredibly tough — some people have been putting in 14 hours of productive work for companies that have either struggled or thrived during the pandemic, and they will want to just take the rest of the year off,” says Gartner vice president, research and advisory Aaron McEwan.

“As Australians observe positive indicators for economic recovery, many have been waiting for recognition for their efforts or a change of pace from their employer that simply has not materialised,” he says. “Many workers haven’t been anywhere for almost two years and have accrued leave. They are relatively financial stable and will be craving a real break.”

Gartner research reveals that 24 per cent of Australian employees are actively seeking other employment. The proportion of employees showing high discretionary effort — willingness to go above and beyond for their employer — has fallen to 16 per cent in Australia, below the global average of 16.5 per cent. Overall, just nine per cent of Australian workers are considered “engaged”, showing both high discretionary effort and high intent to stay with their current employer.

Requests for extended leave

Those who still want to keep their job are expected to request six months off to recover from the stress of the pandemic. Organisations should also expect requests for reduced hours, or requests for unpaid leave. “Everyone is exhausted and they’re looking for a change,” says McEwan.

The problem is that a lot of companies aren’t in a position to knock back leave requests given the overtime many employees have selflessly taken on. “Get on the front foot by asking workers directly about their plans for a break so you can plan accordingly and stagger breaks among key staff,” says McEwan, adding companies should also offer company-wide days off where possible.

Sick days will return

According to a report by recruitment firm Hays, just 42 per cent of Australia’s workforce rate their current mental health and wellbeing as positive, down by 63 per cent from before COVID-19.

Sick leave has banked up during the pandemic as employees held it together as best as they could, but they’re now at breaking point, says McEwan, noting a likely increase in requests for mental health days next year. Lingering physical complaints that people haven’t dealt with could also result in sick leave requests.

“People haven’t been particularly focused on their own health while working at the kitchen table on a poor-quality chair for the past 18 months,” says McEwan. “That’s going to come to a head when we get back to normal.”

Cancer Australia also notes that there was a dramatic drop in the number of check-ups during the pandemic, which raises concern of a rise in positive diagnoses in 2022.

ESG-linked pay

A surge toward greater ESG transparency will impact executive remuneration next year, research by Guerdon Associates has found. A growing number of Australian companies are doing more to incorporate ESG measures in executive incentive plans. Typically, around 30 to 40 per cent of total pay is based on short- and long-term ESG incentives, says Guerdon principal Martin Morrow.

“The most common performance requirement for long-term incentives is total shareholder return, followed by earnings per share measures. But there’s been an increasing call for ESG metrics around what companies are doing about climate change.”

Employees demand greater flexibility

Stand-offs between employees and employers over flexibility are on the way. Despite reports around burnout or excessive hours, says Culture AMP senior people scientist Tina Salameh, “the reality is we’ve had 18 months of being at least somewhat successful in remote work, so old arguments that technology can’t handle it or work can only be done in the office is no longer viable.”

After spending months planning and consulting with its people to better understand how they like to work and how best to support them, nib Group decided to build a distributed working policy. The new policy encourages its 1200 employees to work from home at least four days a week and only come together at local office “hubs” for a purpose, such as meetings or social events.

A $1200 work allowance to contribute to costs of working from home has also been extended to each staff member.

“While COVID-19 has presented its challenges, it’s also given us a unique opportunity to redefine the way our employees work at nib,” says chair David Gordon MAICD. “Unlike some companies that have directed their employees to return to the office, we believe there will be no return to our past work practices beyond the pandemic.”

A big part of the motivation has been the ability to tap into much larger talent pools in a tight labour market, with the idea that a flexible working approach will be a drawcard.

“It’s a direct reflection of what our people have asked for, so it was a sensible decision to support at a board level,” says Gordon. “We hope to tap into much larger talent recruitment pools with the idea that our flexible working approach will become a drawcard for potential candidates. Our teams are starting to be made up of a mix of people from all different locations, which is great for encouraging diversity of thought.”

Rather than wait for employees to question if they can work from home permanently, Salameh urges organisations to conduct an anonymous engagement survey to help map out considerations, such as required office space for 2022.

Life comes before work

The pandemic has changed our perspectives, shattered our routines and forced introspection, resulting in new life and career goals, says Salameh. “Many people are downsizing their career paths so that their personal lives can play a bigger part than their careers. This is partly due to the burnout factor. Being asked to do so much more outside of their position description has many employees seeking a new path.”

Many will feel work shy — and have the financial means to take a pause. According to Commonwealth Bank analysis, many in all age groups have boosted their savings and reduced credit card debt since the pandemic struck, easing personal financial pressure.

Loyalty tops the list

A lot of companies were forced to make hard choices through the pandemic, but failed to understand or respect employees when making those choices, says Salameh. Whether this was poorly communicated restructuring, a lack of empathy during long days of balancing work with home schooling, or the loading on of extra work, that lack of empathy has resulted in a loss of employee loyalty.

“Lack of empathy with how these changes were made, or not being supportive of wellbeing and flexibility when it was needed the most, is seen as a lack of humanity at work,” says Salameh. “Employee loyalty is a two-way street and organisations need to ensure they’re communicating transparently and openly to improve trust.”

Communicating internal pathways for career pivots may improve retention rates, she adds.

Redundant skills

Critical skills and competency development is a top priority for 59 per cent of HR leaders, who say they can’t build skill development solutions fast enough to meet evolving skill needs intensified by the humanitarian crises triggered by the pandemic.

According to the annual Gartner HR Trends and Priorities report, employees need 6.3 per cent more skills for a single job in IT, finance or sales than in 2018. The report also found that HR leaders are trying to predict the skills their employees will need to ensure organisational success, but this predictive approach often results in organisations investing in the wrong skills.

And it will be a tough sell, with employees less interested in career and skills development opportunities than ever before.

Salaries on the rise

Companies will fork out larger salaries in 2022 as they face mounting challenges attracting and retaining employees, the latest salary budget planning report by Willis Towers Watson shows. Almost 45 per cent of companies expect their business performance to be ahead of target, and employers are expecting an average salary budget increase of 3.4 per cent for 2022.

Media, pharmaceutical and health sciences, and manufacturing sectors are where companies have reported the highest average salary budget increments — at 6.5 per cent, 4.2 per cent and 4.1 per cent, respectively.

Beyond competitive salaries, companies also need to focus their spend on a set of diverse health, wealth and career programs to drive employee engagement, the report found.