Is it time for a new employee social contract

For today's employers, managing employee expectations against ever-tightening budgets poses a growing challenge. Employees increasingly look for less work-life friction, from deciding where and when they work to accessing their pay whenever they like. In addition to the flexibility they crave, employees expect the consumer-like experiences they're used to in their personal lives to extend to work, from self-service mobile apps to instant access to information.

On the other side, employers are caught up in a great balancing act, trying to weigh these employee expectations with an increasingly complicated set of financial pressures. On the one hand, employees' desire for higher pay, enhanced benefits, and better technology could quickly outstrip available budgets and leave companies in a vulnerable financial position. On the other hand, companies that cut costs in areas like benefits and technology often see decreased productivity, higher turnover, and even lower-quality products. It's even estimated that disengaged employees currently cost the world $8.8 trillion per year in lost productivity. But the question for employers remains: what is the best recipe for balancing a high-quality worker experience against the organization's financial goals?

This question is giving rise to a new social contract that benefits both employees and employers, one that recognizes both the financial and human impact of a supportive work experience. Companies should invest in activities that build trust, inspire loyalty, and drive high performance among their employees. But they should also do so in a way that allows the company to thrive and grow, helping them extend the improved employee experience to a growing workforce.

The new employee social contract

Finding the right balance between employee expectations and financial pressures can seem like a massive undertaking. For that reason, we've focused on three key areas that companies can prioritize for making positive change. These are people, processes, and technology. Here's a look at what organizations can do to write a new social contract with their employees.

People

When it comes to making work life better, there's simply no substitute for a supportive company culture. A positive culture reinforces stability while encouraging collaboration, open communication, and a sense of belonging. Employees who feel valued and part of their company's long-term vision are more likely to contribute effectively. A 2023 report from LinkedIn suggests that most companies are already feeling this need, with 83% of all organizations surveyed saying they want to build a more people-centric culture. Here are some key areas where organizations can nurture a more people-centered culture starting today.

Better communication

To help their employees feel a greater sense of belonging, leading companies can invest in better communicating their mission and job expectations to all levels of worker. This need for enhanced communication is becoming more important with each year. According to a Gallup study, the employee engagement element that declined most between 2019 and 2022 was clarity of expectations. Similarly, our 14th Annual Pulse of Talentstudy found that only four in ten workers feel their employer is good or excellent at communicating change.

Leading companies are meeting this challenge by investing in communication platforms that provide a connected employee experience, offerings workers a single place to find all necessary information, receive important messages, and learn more about the resources provided by their company. These companies are also leveraging these same technologies to run surveys with their employees to ensure constant two-way communication and to maintain a constant awareness of employee engagement and wellness. These improvements to communication are allowing more organizations to keep their workers more engaged, reduce turnover, and improve their bottom line.

Personalized learning and development

Employees around the world are looking for more opportunities to grow their skills and advance their careers, and employers have a great opportunity to harness this momentum. In our 2023 Pulse of Talent study, 84% of respondents said that having a clear career path made them more loyal to their employer, yet only one in ten felt they had a high degree of control over their career path with their current employer. But on the positive side, our 14th Annual Pulse of Talent study found that nearly four in ten workers felt there was a different role with their employer that better matched their skillset. By making key investments, employers can promote internal mobility in their companies, reduce turnover, improve engagement, and ensure they have the in-house skills they need for today and tomorrow.

Luckily, new advancements in technology have made these investments more reliable than ever before. For example, the 14th Annual Pulse of Talent study found that 80% of workers are interested in their employer using AI to recommend internal career and skills development opportunities. The consolidation of LMS solutions and career pathing software into single, streamlined employee dashboards has also changed the game for how smoothly companies can train their workers and ensure that everyone is always put to their highest, best use.

The timing couldn't be better for these investments, as a study by Korn Ferry has found that by 2030, more than 85 million jobs could go unfilled because there aren't enough skilled people to take them, and if left unchecked, talent shortages could result in $8.5 trillion in unrealized revenue. As with any great challenge, leading companies will prioritize the long-term financial benefit of these investments in employee learning and career planning to become the innovators of tomorrow's employee experience.

Real action on important social issues

The new employee social contract extends beyond the relationship between an organization and any single employee. Research shows that the way organizations respond to social factors like DEI play a key role in candidates' interest and employees' loyalty. In a recent survey, 71% of respondents said the societal impact of an organization is a deal breaker when considering a job. Another study has found that 53% of employees want their organizations to take action on issues they care about. In response to these expectations, leading organizations will invest in innovative technology that can help them both measure and deliver on DEI promises, ESG targets, and a host of other important social considerations.

Processes

Changes to a company's culture are highly impactful, but if these changes aren't translated into new and better processes, they won't have the desired impact on employees' wellbeing or the company's bottom line. For this reason, leading companies will look to the following areas to cement their new social contract in day-to-day operations:

Becoming more data-driven

Companies will collect data to better monitor workforce performance, engagement, and compliance and generate insights from this data. This will be the key to improving the employee experience overall, but also to building buy-in for these efforts by tying improvements to positive business outcomes.

Offering greater flexibility through enhanced workforce management

For years, workers have asked for greater flexibility in when and where they work, and the global pandemic accelerated this trend at an unprecedented rate. For the organizations themselves, flexibility allows them to adapt swiftly to market changes and workforce fluctuations while also enhancing work-life balance and employee well-being. With proper labor forecasting and scheduling, companies can offer better flexibility to employees while improving overall productivity and profitability.

Embracing strategic forecasting and workforce planning

Offering greater flexibility clearly benefits workers, but the benefit to the organization doesn't truly occur unless it can align its available capacity with day-to-day business needs. This is where improved forecasting of labor demand and future talent requirements becomes essential. Once a company can accurately predict when and where it will need the right skills, it can confidently offer workers the flexibility they need. The organization can also invest in learning, talent acquisition, and retention initiatives knowing that the workforce it builds today will continue to fulfill its needs tomorrow.

But with everything we've discussed so far, there remains a looming question…

How can an organization achieve these process improvements without adding an unbearable burden to their managers and administrators? Best practices can only alleviate so much of this burden, and organizations looking to make these changes will require new investments in technology to make sure they make everyone's work life better and not worse.

But how?

Many of the people and process-oriented recommendations outlined above are great ways for companies to balance flexibility and compliance. But when ideals meet reality, the situation for many companies is so complex that it's impossible to achieve this balance without new investments in software and AI. For example:

• If employees want total, on-demand control over their pay, their organization will require a payroll engine with built-in global compliance intelligence and continuous, real-time calculation. Otherwise, you're creating a massive amount of manual work for payroll professionals.

• If companies want to demonstrate a clear connection between KPIs like employee experience, engagement, and productivity, they'll need to leverage best-in-class data collection along with AI-assisted analysis to generate quick reports. Otherwise, you're creating a nightmare for the people analyzing and reporting on this data.

• If you want to manage time, attendance, and payroll for a global workforce comprising many types of employees, you'll need a single platform and data model to do so. Otherwise, you're adding a significant new workload to regional managers using different solutions and the global managers who are responsible for rolling up information from these tangled sources.

• If the organization wants to generate the best possible schedules that accommodate the constraints of hundreds or thousands of employees in different locations, you'll need to use a scheduling engine and AI tools that help schedule the right workers with the right skills at the right times. Otherwise, you're placing an unfair burden on your scheduling team.

As we've seen, creating a new social contract for employees is essential for companies looking to strike the ideal balance between flexibility and financial responsibility. But without the right tools in place, this new social contract could end up significantly harming some employees while benefitting others. The only way for all to benefit, from executives to managers to workers, is to leverage technology that cuts through the noise of complexity and gives people the clarity they need to strike the best possible balance.

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