Increasing pressure from investors, customers and employees are causing CEOs to focus their businesses on purpose, resilience and long-term sustainability. According to a new report from the Reward & Employee Benefits Association (REBA) and Mercer Marsh Benefits (MMB), board priorities are shifting onto people and businesses’ impact on wider society. The report, People risk – why the need for change is urgent reveals a clear shift in business focus away from short term gains in favour of emphasising long term value creation as one way of managing people risk.
The survey data demonstrates just how much businesses plan to focus on people and broader society values in 2021, with the majority of respondents (59%) citing ‘meeting diversity and/or inclusive workforce targets’ as their top challenge. A further 42% say ‘meeting environmental targets’ is a key priority and 41% highlight an ‘increased focus on purpose’. Reflecting the impact of the pandemic, 45% of organisations also believe increasing digitisation capabilities is a key challenge for this year. Though digitisation has been a core business priority for a while, its significance became even more evident as countries locked down, operations moved online and employees began working from home which created a ‘sink or swim’ landscape.
“For most businesses, diversity and inclusion has shot up the agenda in the past year as societal focus on gender inequality and racial protests increased worldwide,” Nick McClelland, Partner and UK Growth Leader at Mercer Marsh Benefits said: “It is encouraging to see that firms plan urgent vital changes to how they build and sustain employee engagement, but for change to be effective it has to begin with the leadership. To drive better workplace engagement and reduce people risk we require more purpose led executives to help create positive environments that attract, motivate and where employees are cared for.”
Key focus areas for HR teams in 2021
The REBA and MMB report also shines a light on how shifting board-level focus has elevated HR to a stronger leadership role and in turn shaped HR plans for 2021. Employee wellbeing is now front and centre to achieving employee engagement and mitigating the risk of high staff turnover, recruitment costs, burnout and low productivity. According to the report, 85% of HR teams say they will increase focus on employee wellbeing and 84% on the use of flexible working. These two areas will be increasingly important as more firms emerge from the pandemic seeking to maintain the health and wellbeing of their workforce.
Diversity and inclusion efforts aimed at Black, Asian and minority ethnic groups and by gender is also high on the list of priorities for HR teams with over 68% and 65% highlighting these respective areas as a key focus. During 2021, almost two thirds (63%) of HR teams plan to focus on applying new organisational structures, demonstrating just how much businesses will continue to reshape over the coming year. However, just as organisations rethink their operational structures to meet changing market demand, so too do HR teams need to rethink collaboration across their own disciplines to meet the challenges of reskilling and new ways of working.
Debi O’Donovan, Director of Reward & Employee Benefits Association commented: “In this time of turbulent change it is crucial that HR not only work more closely with their CEOs and CFOs to drive through business transformation, but within HR they need to remove silos between disciplines and encourage flexibility. For example, Reward has to work with the CSR team, Talent with Pensions, Development with the D&I team, and so on. The interplay today is crucial in achieving true workforce transformation and engagement.”