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Survey Report

Flexible Work and Rewards Survey: 2021 design and budget priorities

Highlights of key findings, Western Europe

Health and Benefits|Future of Work|Talent|Total Rewards|Bienestar integral
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January 29, 2021

At the end of a year which upended the rule book, employers across Western Europe should seize the opportunity for a longer-term rethink.

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The key priorities for organisations

  • The COVID-19 pandemic has rapidly accelerated the trend towards flexible working. In three years’ time, companies in Western Europe expect that 29% of their employees will be working from home (three years ago, only 6% were). Organisations that see this as an opportunity to reset how they work will gain a competitive advantage.
  • Flexibility may have become the new normal overnight, but in many cases, companies’ policies, working environments and cultures have not yet caught up. This employee experience should be the focus over the next 12-18 months.
  • In particular, companies should put policies in place to support flexible working, consider how to reallocate their rewards and benefits spend in order to motivate staff who are working from home and think about how they can make the increasingly fluid talent economy work for them.

About the survey respondents

Research findings are based on responses from 279 organisations across Western Europe, employing 2.63 million employees. The survey fielded between October 6 and 21, 2020.

Respondent profile:

  • 15% domestic
  • 30% international
  • 55% global

Overview

The onset of the COVID-19 pandemic meant that working from home became the new normal for many people overnight, and employers do not expect traditional working habits to resume once the crisis is over. This change will have momentous implications for organisations, spanning everything from how people are motivated and rewarded, to how work gets done and what workplaces of the future will look like.

Workplaces were already becoming more flexible before the crisis hit; however, the pandemic has rapidly accelerated the pace of change. In three years’ time, companies in Western Europe expect that 29% of their employees will be working from home (three years ago, only 6% were doing so).

This is a huge opportunity to renegotiate the employment contract. It is a chance to reset and engage people in a new and meaningful way.”

Hazel Rees | Senior Director, Head of GB Rewards

“This is a huge opportunity to renegotiate the employment contract,” says Hazel Rees, senior director and head of the GB rewards business at Willis Towers Watson. “Companies that get it right will gain a real competitive advantage. It is a chance to reset and engage people in a new and meaningful way.”

When the pandemic hit, organisations had to move to remote working very quickly. Companies may have addressed the immediate logistical challenges, but many are yet to implement other important changes which are needed to support a flexible working culture. So, what should companies consider over the next 12-18 months?

A key priority is putting policies in place to support flexible working. At present, companies still have work to do, according to the survey findings. Over a third have not yet written a formal policy or set of principles to manage alternative work arrangements. However, it is an important priority for most: over three-quarters of organisations that do not have a formal policy or set of principles for working from home or flexible working are planning to or considering adopting one in 2021.

Working environments are unlikely to return to their pre-pandemic norms. Therefore, companies should think about how to rewrite the rules of their relationship with employees. With people working in a variety of environments, employers should think about what will keep them motivated. Three in ten of our survey respondents believe that new work requirements will necessitate a hybrid reward model.

One way to frame this discussion is by looking at reward budgets within the context of companies’ overall costs. In future, companies expect the shape of their costs to change. Most organisations expect a decrease in commuting and real estate expenses in 2021. Over a quarter (36%) expect that their working-from-home allowances will increase. Overall, the majority of employers (63%) expect their overall costs to stay the same.

Some of the savings that employers expect to make on real estate could be reallocated to reward programmes. “Companies should consider how to optimise their reward spend so that it has the greatest impact on employees,” says Ruchi Arora, senior director, talent management & rewards practice leader at Willis Towers Watson.

Highlights and trends

Workplaces are becoming more agile

Companies are bidding farewell to traditional hierarchies and defined job roles. Instead, they are seeking to bring in skilled help more flexibly when they need it. Organisations are also looking inward, seeking to build a better picture of the expertise that already exists in-house and to deploy it more effectively.

41%
of companies still say it is a significant challenge to integrate works with specialist skills into their work teams

While many organisations recognise their need to create more agile workforces, some are currently being hindered by shortcomings in strategy, systems and other areas. For example, 41% of organisations still say it is a significant challenge to integrate workers with specialist skills into their work teams and only 23% say they are very effective in this area.

It is about making sure you organise work, jobs and skills and have transparent frameworks to help employees understand how they can help develop in the organisation and deploy their skills very transferably”

Ruchi Arora | Senior Director, Talent Management & Rewards Practice Leader

HR leaders should focus on developing a clearer picture of the existing skills in their workforce and identifying any gaps over the next year. “It is about making sure you organise work, jobs and skills and have transparent frameworks to help employees understand how they can develop within the organisation and deploy their skills very transferably, not just in the area they work in but into other areas,” says Arora.

Employers are carefully considering people’s wellbeing

Wellbeing has been a huge challenge for many during the pandemic. Working in more agile and flexible environments will bring its own challenges for employees, such as maintaining a healthy work-life balance and dealing with loneliness. Employers recognise this, with 36% strongly agreeing that their health and wellbeing programmes need to change to provide the security necessary to support their employees in an agile workplace.

36%
of employers strongly agree that their health and wellbeing programmes need to change to provide the necessary security to support their employees in an agile workplace

Employers will need to think more about employee wellbeing in the round, rather than purely in the workplace. Practical benefits are likely to prove popular. These may range from subsidies to help people to make their at-home working arrangements more comfortable, to support with childcare.

In these hugely uncertain times, people’s financial resilience has been tested. Feeling secure about money can contribute enormously to people’s sense of security and wellbeing. Accordingly, many employers are putting financial education at the heart of their wellbeing strategy, helping employees to gain a greater sense of control.

Engagement is evolving rapidly

Employers are changing how they talk to people and rethinking the tools that they use to keep people engaged and retained. The pandemic has blurred home and work boundaries in an unprecedented way, but there have been some upsides.

From children making unexpected video conference cameos to seeing glimpses of leaders’ homes, organisations have had to become more human as a result of the pandemic. This is being echoed in their communications, which are evolving very rapidly at present.

The best companies are engaging with their employees as if they were customers. They are also putting infrastructure in place to help employees feel like part of a team, even when they are working remotely.

In fact, flexible working is itself seen as an engagement and retention tool. While the pandemic accelerated the pace of the flexible working shift, employers are now seeing engagement as an important reason to continue to provide alternative work arrangements.

73%
of employers currently see maintaining or increasing employee engagement as a reason for providing alternative work arrangements

Three quarters (73%) currently see maintaining or increasing employee engagement as a reason for providing alternative work arrangements; this increases to 84% when HR leaders look ahead to Q1 of 2021.

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How to address the challenges of flexible working:

  • The traditional days of working 9-5 in an office are long gone. Flexible working brings its own challenges, but also a huge opportunity to engage employees better, and become more efficient. Employers need to ensure their policies are able to support flexible working, and should communicate their expectations clearly through great employee communications, as well as clear manager briefings.
  • Working from home can be positive for individuals and families – and many are keen to continue with their current arrangements into the future. However, it has the potential to be isolating or claustrophobic, depending on people’s living situations. Employers should think of practical ways they can help people, from supporting them with childcare to making their remote working setups more comfortable and appropriate to enable their teams to work productively.
  • Keeping people engaged remotely can also be a challenge. Companies should treat their employees like customers, checking in regularly and looking for innovative ways to connect as a team. As and when ‘in person’ meets become possible, the winning companies will recognize the importance of social connection in driving engagement, and facilitate sufficient opportunity for informal engagement, as well as working collaboration.
  • With the advent of flexible working and the gig economy, traditional workplace structures and hierarchies are breaking down. To keep employees stimulated, employers should create transparent frameworks to help them to understand how they can develop within the organisation. Employers should help their people to deploy their skills more flexibly than ever before, giving greater opportunities for transfer of roles and personal development.
Contact

Ruchi Arora
Senior Director – Talent Management & Rewards Practice Leader, Western Europe

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