Many companies are pondering the dilemma of how to manage talent retention while wages are climbing higher and higher. By a large margin, employers believe pay is the biggest driver of turnover today, resulting in many companies throwing money at the problem by increasing promotions and paying higher-than-market rate wages. No wonder some are already dubbing 2022 the “year of the worker”.
Yet while pay clearly remains a key element of the deal (particularly for lower-wage workers), early results from Mercer’s 2022 Global Talent Trends Study indicate that, for white collar workers at least, they want more. Meaningful work and purpose are critical drivers of desire to stay or go. And the results confirm that employees are willing to trade a pay raise for more control over their work week and to better align their efforts to what is important to them.
This year we asked people if they would forgo a pay increase in return for certain benefits. More than 80% of those surveyed say they would forgo extra pay in return for parts of the deal that are not compensation-related – be it unlimited vacation, time for volunteering or free financial planning. Globally, the top ask is for the ability to work a fully-flexible or compressed work schedule (something one in three employees would trade more pay for). Additional well-being benefits and the ability to work from anywhere are close runners-up.
More than 80% of those surveyed say they would forgo extra pay in return for parts of the deal that are not compensation-related
These top three desires are consistent across the generations. But there are a few material differences. A pay increase is most critical for Baby Boomers: 32% of this cohort say they would not swap more pay for any other offsets (compared to 14% on average for the rest of the workforce). Millennials are the most interested in lending their time to ESG/sustainability pursuits (20% say “I would trade a pay rise to spend time on CSR or environmental activities”). Regionally, higher quality medical care is a more prominent request among employees in the US, India and China. Meanwhile a desire for time to pursue education is higher in China and South Africa.
There are a few conclusions to draw from the trade-offs people are willing to make:
- The things people value that top the list reflect the desire for new work standards that reinforce the primacy of well-being at work. In the same vein, employees in our study this year say the future of work is about having a better work/life balance, that is work that allows them to also dedicate time and energy to family, hobbies, health and learning – something they struggle with today.
- It is clear that the experience generation – Generations Z and Millennials, largely – want these desired benefits right now. After a difficult two years, people want rewards they can redeem today (such as a four-day work week), rather than waiting and banking them for the future (like sabbaticals, which rank #10 out of 11 possible offsets). Hence the timing of benefits and pay has never been more critical – something HR leaders need to weave into rewards next year.
- Most interestingly perhaps, while some of the trade-offs have the effect of increasing take-home pay (e.g. additional wellbeing benefits) the fact that one in three employees would swap more pay for a fully flexible work schedule indicates just how much people crave more control over their lives. They want more influence over when and how they work and to be liberated from what they see as rigid and outdated schedules of prior years.
COVID-19 robbed many of their freedoms, so it’s no wonder workers want to take back personal control today. What is concerning is that both employees and HR leaders fear that opting to remain remote will damage future promotion prospects. We are already hearing stories of micro-aggressions around remote working, such as managers asking their direct reports why they have not yet managed to get back into the office, undermining progress in this area. With a stronger worker voice, this will drive quit rates upwards. Many workers have spent the last two years reconfiguring their lives around their new workspace. Certainly they miss the camaraderie and innovation of in-person working, but they also fear going back to the lives they had before the pandemic. People don’t want to feel coerced back into the workplace or feel like they are losing much gained ground, even if they don’t believe that organizations have fully figured out the future yet.
A wage race is happening as many economies rebound from the pandemic faster than forecasted. But people are also craving a reset of their employee experience to bring better work/life (and learning) integration into their lives. Focusing on people’s wellbeing, mental health, future financial security and sustainability concerns will create a sense of loyalty far beyond the return that sign-on bonuses can have. Top talent is looking to employers to adopt a total rewards strategy, to see how they’re thinking about structuring work in 2022.
Would you like help determining how these challenges relate to your organization? Reach out to us a 1-866-605-1031 or via email at firstname.lastname@example.org.