Employers in South Africa have lost the upper-hand as employees move to hybrid and working

 ·27 Aug 2022

Professional services firm PwC notes that the world of work in South Africa is vastly changed some two and a bit years post the Covid-19 pandemic.

A majority of employees who worked remotely as a result of the pandemic say that they are more productive and have grown accustomed to better quality and integration of work and life. Where this balance is threatened, and there is no room for negotiation with the employer, they’ll quit, PwC said.

Recent PwC research shows that, in the wake of the pandemic, employees feel empowered by their circumstances and are ready to ‘test’ the market where their salary expectations and working arrangements are no longer met by their current employers.

The truth is, employees with specialised skills and training are in demand — and they know it, the advisory firm said.

“For the most part, it seems that executives have a good grasp on why their employees are looking for jobs elsewhere; in 2021, 34% of executives said that employees were leaving because of a lack of flexibility offered by their current employer.

“In truth, the flexibility required by today’s employees relates not only to how, when and where they work, but how they are rewarded — many companies continue to fall short in what they offer employees in two key areas: benefits and compensation – these were the reasons ranked highest by employees for wanting to change employers.”

The Great Resignation poses a major human capital risk for companies who lag behind; a trend that shows no signs of slowing yet, said PwC. The greatest increase in resignation rates is in the 30–45 age group, with an average increase of more than 20% between 2020 and 2021.

“This is cause for concern as this is an age group in which many employees are senior managers and expected to be entering executive roles. Their resignation causes not only an immediate problem (as senior management is the most costly to replace20) but impacts succession planning, too. Naturally, the importance of retaining talent at this level cannot be overstated.”

A 2020 analysis by McKinsey and Co found that the potential for remote work is highly concentrated among highly skilled, highly educated workers in a handful of industries, occupations and geographies — when considered in the context of resignation rates in the higher ranks if remote working is what these employees want in order to deliver their best, it makes sense to consider it.

What these statistics don’t consider, however, is how a lack of flexibility in working and/or remuneration arrangements affects the employees who stay rather than leave, said PwC.

Employees who feel like their jobs or how they are rewarded are not ‘worth it’ naturally have lower levels of morale; this can have various effects, such as lower levels of engagement, poor communication and diminished productivity.

With rising inflation and a system of inflation-linked salary increases, a monetary value can be attached to an employer’s inflexibility, helping quantify why old arrangements simply no longer work for some employees, the advisory firm stated.

“Naturally, this concept of cost is compounded by the time employees feel they waste travelling to and from the office, when they could use these extra hours – and money – in other, more fulfilling and meaningful ways.”

Employee retention

PwC noted that when it comes to retaining employees, money remains the top factor (71% of employees list it as their top reason for changing jobs), yet money isn’t enough by itself to keep workers, who’ve been almost as likely to cite non-monetary factors – such as job fulfilment, the opportunity to be their true selves at work, wellbeing, choosing when and where they work – as their reason/s for wanting to leave a company.

Managing human capital in the 21st century requires innovative motivational and reward methods, it said.

“We believe that the traditional purpose of total reward — to attract, retain and motivate employees — still holds true, but employees have come to value (and demand) more than just money,” said PwC.

Understanding workplace power – particularly the recent shift in favour of employees – can help employers energise their workforce, tap into the power of their people and accomplish bolder goals. Companies wishing to retain talent must balance their strategic and operational goals with shifting employee expectations.

“This is because there currently exists a unique opportunity to transform work and deviate from the status quo. Only by redesigning work and addressing remuneration issues will organisations be able to continue to drive growth, better anticipate uncertainty and create a workplace that top talent is eager to join.”

For the time being, hybrid work is here to stay, said PwC. Companies must act swiftly to define their hybrid work model, make changes to processes and operating models, revamp strategic planning and, most importantly, re-look at remuneration arrangements, which all together attract and retain talent.

Companies on hiring sprees are refining employee value propositions, focusing above all on corporate purpose and leadership, the advisory specialist said. “While those are important, they should expect candidates to negotiate hard for what they now see as table stakes: competitive packages and perks coupled with flexibility and expanded benefits such as career growth and upskilling opportunities.”

It said that while traditional models of total reward mainly considered market benchmarks, cost analyses, and efficiency in administration, newer models focus on employee centricity, seeking to create synergies of career development, performance, alignment of organisational value, purpose, and allowing a certain level of value-based personalisation of reward and benefit offerings.

“Effective total reward in the future means fully understanding your workforce, defining what matters to the company and them, and tailoring the approach to reward. Modern solutions are built on digital platforms which provide intelligent analysis of employee
preferences in a data-driven way.

“These not only enable hybrid work but can also help ensure sufficient governance processes are in place to manage and track progress over time and help prevent proximity bias when it comes to promotions25 — some such systems offer useful reporting and analytics dashboards to gain insights and aid quick responses to matters as they develop,” said PwC.

Continued investment in technology will go hand in hand with evolving workforce policies, as has been the case for some time.

However sophisticated a total reward model may be, employees can only appreciate the value of the total reward suite if its benefits – and how competitive the unique offering is compared to the market – are clearly communicated to them. Strategies for working arrangements and total reward for the future will require higher levels of engagement with employees than ever before, it said.

“Employers no longer have the upper hand, relying simply on increases in guaranteed pay as their retention strategy — employees of today seek higher levels of work-life integration, and this is a process of negotiation,” PwC said.

Read: Heading into the office three days a week is the new work-from-home normal in South Africa: study

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