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How will you reward, engage and retain your talent this year?

Uncover the evolving, future needs of both employees and employers

Total Rewards|Talent

By Hugues Munaut | March 6, 2020

Hugues Munaut takes a look at the trends that will shape HR professionals’ agendas, and the challenges they must navigate in order to attract the right talent.

Western Europe has seen employment levels at record highs in the last three years. Our own research also shows that one in four of the bloc’s working population has been hired in the last three years. In the UK, this figure rises to about a third. These statistics are striking, yet reflect a familiar experience shared by an increasing number of companies. Recruitment becomes the driving force that shapes the HR agenda. Low unemployment in key Western Europe markets, including the UK, has increased the war for talent, which will make it harder for organisations to find employees with the skills they need.

In 2020, it is therefore not surprising that companies will more than ever have to both engage and retain a significant number of new employees. In order to successfully tackle this challenge, reward will need to be at the centre of an organisation’s recruitment, employee engagement and retention strategies. How effective HR professionals are at communicating competitive reward packages – both in terms of market competitive pay and benefits that promote wider employee wellbeing – will also prove crucial to attracting and retaining talent.

The challenge of budgeting for salary increases in 2020 will be keeping HR professionals busy at the moment. Our research shows that although UK workers are due an average pay rise of 3%, higher than expected inflation will mean a real-terms increase of just 1%. This will be lower when compared to the predicted European average of 1.1% for this year, and lower than 13 other economies across the continent.

Caught in a perfect storm

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A perfect storm caused by low unemployment and slow wage growth means that if companies are to compete for skills they will need to differentiate themselves from their competitors. They will need to make employees feel valued and to make their rewards and benefits packages fit for purpose, if they are to attract and retain scarce talent in this competitive environment. In-depth research by Willis Towers Watson that looked at over 500 companies showed that those with more effective employee experience outperformed their peers for top-line growth, bottom-line profitability and return to shareholders.

Understanding market pay levels is an established and essential part of any organisation’s recruitment and retention strategy. Besides simply outbidding competitors, however, there are equally significant drivers that HR professionals will benefit from taking into consideration when competing for the same talent. Non-monetary benefits tailored to individuals in the workforce, such as flexible working arrangements and a more personalised career development path, are now just as important as cash in ensuring a company’s top talent remains motivated and focused.

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Employee benefits

Last year, the EU adopted legislation – the Work-Life Balance Directive – that introduces a set of minimum standards to help reconcile work and family responsibilities for parents and careers in Europe, thus encouraging flexible work arrangements and improving gender equality. This reflects an increased awareness of governments that employee wellbeing benefits not only the workforce but also the financial health of economies and individual companies.

In 2020, the market will continue to experience this sea change in what benefits are being asked to do. Our research shows that only a minority of employers currently think their benefits are truly effective. Traditionally, benefits have looked to address core health and retirement needs. Today, we now see the workplace, culture, inclusion and diversity, coupled with social responsibility and flexible work policies, increasingly populating the benefits landscape.

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Until recently, organisations have principally based their employee benefits decision making on an understanding and oversight of current plans and employer behaviours. In future, we anticipate a far greater intent to enhance their analysis by also reflecting what employees think of their benefits and how employees use the tools, websites and materials provided.

A key challenge for employers in 2020, therefore, will be to interrogate the status quo and identify what can be done to ensure employee benefits are truly addressing the evolving, future needs of both employees and employers. A human-centric approach that breaks down an organisation’s broad-based strategy into tactical goals that address the basic dimensions of employee experience (purpose, people, work and reward) would help to define a portfolio of employee benefits that are aligned with its culture and market norms.

Programmes should offer core protection, while making good use of flexibility and choice, whilst optimising the financing of benefits commitments to ensure long-term sustainability. Treating employees like consumers will also help to deliver a technology-enabled talent experience that engages employees, and using data-driven analytics insights and reporting to inform decisions will ensure ongoing relevant programmes.

Nine out of ten of companies in Western Europe claim to be having difficulties to attract digital talent.

HR and the digital skills gap

Skills gaps across all industries are set to grow in the Fourth Industrial Revolution, as rapid advances in AI, robotics and other emerging technologies occur in ever shorter cycles. This is changing the nature of the jobs that need to be done and the skills needed to do them.

Inevitably, this has ramped up the demand for technical skills, including programming and app development, along with skills that computers have yet to master, such as creative thinking, problem solving and negotiating. Analysis of our general industry databases reveals that the tech jobs currently most in-demand are positions that focus on IT Architecture, Information Security, Cyber Security, Information Technology Project Management, and Application Development.


High demand for specific skill sets, together with a limited talent pool, creates compensation pressure on those jobs and increased market value. As companies scramble to adapt to a tight digital job market, getting a head start in attracting the top talent and filling this year’s most in-demand roles will be the top-most challenge in 2020 for many companies.

Nine out of ten of companies in Western Europe claim to be having difficulties to attract digital talent . To tackle this issue and be on top of the digitalisation and process, the two key actions companies need to or plan to take are assessment of talent to identify skills gap, and to enable careers that are more agile and flattened.

The power of putting people first

Although many studies and a wealth of data reveal a labour market changing at a rapid pace, increasingly reliant on digital technology and skills, many businesses have been slow to adapt. This inertia is hard to fathom, given the looming skills gap and the urgent need to develop a proactive response.

Business leaders today are faced not only with having to look critically at the technical and ‘human’ skills needed to future proof their workforce, but also with having to motivate and inspire their employees in new ways to retain this talent. As the skills gap widens, businesses that don’t take steps now to tackle the problem will be left behind. By putting their employees first, employers will be far better placed to overcome the talent shortage and succeed in this digital economy.


Hugues Munaut
Director – Compensation Surveys

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