Posted by Justine Woolf on 18 September 2020
Responsible reward: why does it matter and how does it interlink with employee wellbeing?
What is responsible reward? In basic terms, responsible reward means considering the wider impact of how your organisation does business, and then aligning your reward package to this vision. The aim is to create long-term sustainability by moving beyond purely financial goals and incentivising the business – and its people – to generate a positive impact on society.
Much of the initial traction around the idea has been driven by investors, keen to see organisations they are investing in doing the right thing, particularly when it comes to Environmental, Social and Governance issues (ESG). This push has been accelerated further by younger generations who appear to have higher expectations for corporate and social responsibility than many of those currently heading up organisations and government. So why does it matter?
ESG isn’t just something that matters to investors; it impacts all of us. There is increasing evidence that following a strategy committed to ESG reform is beneficial not just for businesses but for their employees too, as embedding environmental, social and governance factors create better outcomes for people. The challenge that many organisations face currently is understanding how the abstract concept of ESG relates to them on a day to day basis. Thus far, much of the focus and targets have been on environmental issues and commitments to reaching zero carbon emissions or improving targets on waste management. However, with nudges in the right direction, the focus is now rightly turning to measuring the ‘S’ component, with organisations demonstrating more than ever to both internal and external stakeholders how they are doing the right thing.
Employee wellbeing is a fundamental indicator or how motivated, engaged and productive your employee population are in reality, and how you treat your employees is a key component of responsible reward. How you take care of your people and look after their overall wellbeing is becoming more transparent, and there is an increased pressure to demonstrate what focus you are placing on mental health, what proportion of your employees are on zero hours contracts, how are you managing your contingent workers, what is your commitment to diversity and inclusion and so on.
Doing the right thing when it comes to wellbeing is good business sense. We all know that effectively managing health and safety, absence, and attrition by focusing on the wellbeing of employees saves the business money in the longer term. At Innecto we have been developing thoughts on Hapiness levers with our parent company Personal Group, looking at measuring how well we as organisations manage financial, physical, social and mental aspects of wellbeing to establish an overall wellbeing benchmark for the business. However it is important that your responsible reward strategy focuses not just on the benefits you provide, but also how your support your employees with their application and make sure that they continue to be relevant, especially now in such challenging and fast moving times. For example, most organisations provide traditional financial support in form of life assurance or pension provision which ticks boxes in supporting employees in the longer term, but there is increasing recognition that many people in work are struggling to manage their finances on a day to day basis, which ultimately impacts their overall wellbeing and productivity. Supporting employees with access to services such as Employer backed loans, access to salary earned relief funds (eg: a capped amount of salary paid early to cover emergencies), financial education, access to insurances or support with savings can have a significant impact financial wellbeing and resilience, and ultimately your bottom line.
Likewise, whilst mental wellbeing has traditionally been ‘covered’ by EAP schemes, a truly responsible reward approach focuses on more than provision of one benefit, that let’s face it, most employees have absolutely no understanding of! There has been more promotion of such EAP schemes due to the mental health challenges the pandemic has thrown up, however are you monitoring how the scheme is used? Do you know what aspects are causing employees most concern? Are you checking how many absences are mental health related and do you understand if your work environment is a trigger?
Again, thinking about physical wellbeing, many organisations offer gym discounts or memberships, but a responsible reward strategy goes beyond that considering aspects such as providing health and nutrition workshops to promote healthy living, particularly as diabetes and obesity remain to be not only increased factors for COVID-19 complications, but impacting longer term health of employees.
Finally - and for me, most importantly - is consideration of social wellbeing, thinking about the ‘whole’ employee, including the fact that their wider social and family life forms a critical part of their overall wellness, but that they feel also feel connected and have good relationships with colleagues. Employees who feel supported and valued are happier, more productive and engaged and feel aligned to organisational values and purpose.
A truly holistic approach to wellbeing from a responsible reward lens is one that focuses on each of these levers and doesn’t just ‘provide a benefit’; it monitors, reviews and ensures a return on investment both financially, but extends the employee lifetime value too. Whilst the wellbeing of the individual should be supported and measured, it is intrinsically linked with measuring and understanding the wellbeing of the organisation in its entirety.
If you'd like more information on Responsible Reward, download our Responsible Reward guide, or contact us by either calling +44 (0)20 3457 0894 or email justine.woolf@innecto.com.
