2022 Q1 Gallagher Better Works℠ Insights

Authors: Kathleen Schulz Tom Belmont Jr.


Predictions about when businesses will fully transition out of a crisis mode, after the pandemic resolves, remain speculative. What is certain is that the experience of this predicament has influenced more agile approaches to compensation and benefits. Employers now focus on recalibrating employee expectations, with the support of management training and a new emphasis on courageous leadership.

Decisions about staff and supply chain needs based on only a near-term impact have become a riskier gamble with the potential for long-term consequences. In a hot labor market, compensation is often used as a lever to address both attraction and retention — yet changes tend to have lasting ramifications for employers and a corresponding effect on their customers. Pay increases alone will not sufficiently and sustainably lift morale.

Recalibrating to an evolving reality makes sense in the current climate. Employers create a better employee experience when they put a higher importance on work flexibility and psychologically safe workplaces that value diversity, equity and inclusion (DEI).

The essential relationship between empathetic listening, appropriate actions and productivity

Rising concerns about employees' mental and emotional health include challenges related to workforce civility, productivity and turnover. Beyond workplace relationships, negative behaviors may have a reverberating impact on the customer experience.

As workforce needs and expectations change, management and leadership styles are more successful when they adapt in response. Finding the right ways to show employees they matter instills a greater sense of wellbeing and has a positive effect on engagement, inclusivity and work-life balance. These are the necessary conditions for driving innovation and increasing retention. CEOs appear to be attuned to this priority, with empathy being the skill they desire most in their future leaders.1

Recognizing that the rules of engagement are shifting, many companies are better equipping their managers and leaders to handle the new world of work. They are also reshuffling the focus on key competencies. Enhancing the ability of management and leadership to listen drives alignment with business urgencies, priorities and expectations.

Underlying efforts include assessing and staying up to date on the needs and expectations of employees to determine what is most important to them. For instance, some employers have introduced onsite employee assistance program services such as in- house counselors, demonstrating that mental and emotional health are a cultural priority. Currently, 7% have a counselor or psychologist on staff.2

Sustaining a flexible workplace by setting expectations and examples

Work flexibility is a top retention issue, including workday management, yet many employees in remote or hybrid environments do not voice their expectations for receiving this benefit. Also, a lack of informal interaction with managers, including face time, often leaves them without a comfortable opportunity to discuss concerns. These communication gaps have a significant downside — they may prevent employees from taking necessary breaks or creating healthy boundaries between their work and personal lives.

Positive cultural shifts occur when employers frame, clearly articulate and model expectations for managing work. Simply reminding employees about the importance of taking lunch and exercise breaks or revisiting expectations for email responses can lift the burden of uncertainty.

Enhancing the ability of management and leadership to listen drives alignment with business urgencies, priorities and expectations.

To ensure productive interactions with others, it is also essential to communicate, in detail, how to report experiences of microaggression, discrimination or bullying in the workplace. Whether remote or in person, enforcing respect for employees earns more respect for employers. Leaders often say the right things but do not always do them. By setting an example, they can avoid eroding the meaning and power of their messages.

Allowing greater flexibility and showing more empathy may not feel natural to some managers or leaders. Not everyone is entirely comfortable expanding discussions with employees from practical matters to personal topics. In response, organizational interest in training is growing. Self-awareness tools and 360-degree assessments provide a starting point for those in influential positions to understand who they are in their roles and how they are perceived.

Prioritizing, recognizing and rewarding courageous leadership

Employers are increasingly implementing initiatives that embed DEI cultural standards within their organizations, yet many are newcomers to building a strategy. Goals for establishing psychological safety in the workplace, including addressing microaggressions and harassment, are a given. However, to drive real change, mechanisms that recognize and reward accountability should also be a top priority.

Have Dedicated Staff to Support Employee Emotional Wellbeing with a 13% of DEI coordinators or leaders and 7% of Counselor or psychologist.

A successful strategy requires current data and insights. Evaluating workforce representation for DEI alignment provides a foundation, while closely examining structural weaknesses identifies opportunities for remediation.

Representation often differs across roles. Ten percent (10%) of employers track and evaluate the percentage of promotions received by women or persons of color. Similarly, 6% track investments in the career development of women or persons of color such as training, coaching and conference attendance. Those that have DEI coordinators or leaders on staff demonstrate a systemic commitment to these principles and practices (13%).2

Employers create a highly desirable workforce and culture through highly visible, fully accountable and adequately resourced actions. Although just 11% include DEI goals in executive pay plans, many others are contemplating this move (50%) to help close gaps in hiring practices, pay and career paths.3

These efforts take root only when there is a willingness to break and remake cultural norms. Organizations that challenge the status quo are aware of the inherent risk in placing an institutional value on courageous leadership. Yet they also understand the direct correlation between the strength of their DEI values and sustainable levels of employee and organizational wellbeing. Progress can be measured based on the results of internal initiatives, and claims of sexual harassment or discrimination can offer immediate insights.

Effective workplace policies address disparities. Other essential efforts include integrating DEI principles not only into hiring practices and goal plans, but also into talent promotion at every level, including senior executives and board members. Inevitable changes in workforce makeup are creating powerful opportunities. What may now seem courageous will soon become commonplace as more leaders realize the ongoing advantage of establishing and enforcing DEI standards — a psychologically safe environment and an enduring culture of overall wellbeing.

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