In a time of changing work practices, ageing workforces and millennial influx, one of the biggest challenges facing you, the UK’s business leaders, is keeping great people. It may surprise you that your personal focus on health and wellbeing can motivate your employees and retain talent. Director investigates…
The workplace is going through a period of seismic change. Major shifts in demographics, issues relating to physical and mental health and a shortage of skilled workers rank among the biggest challenges facing UK business. But by focusing on health and wellbeing you can motivate employees and retain talent. The IoD, in conjunction with employee benefits firm Unum, recently conducted a survey with CEOs and leaders from across the UK.
The report was designed to examine the following:
- The biggest issues facing British business in the current economic climate, including the impact of demographic workforce trends
- The importance and prevalence of employee benefits, and the role they can play in employee retention
- How employee benefits are chosen and communicated
- Directors’ personal engagement with employee wellbeing
The respondents came from all key business sectors, offering a snapshot of the challenges they believe British business faces now and in the future. In this special report we explore the results of that survey in depth. We also reveal some startling statistics about changes to our workforce, as well as the spiralling cost to our economy caused by a failure to tackle mental health issues at work. We speak to experts in employment, economics and health services, and discover why embracing those challenges can result in a healthier, happier and more productive business. And we find evidence that your personal attitude to health and wellbeing impacts directly on your team.
Landscape: The future workplace
At the end of 2014, employee benefits experts Unum produced a wide-ranging report, titled The Future Workplace.
Unum’s chief executive, Peter O’Donnell, argued that: “The workforce is changing and it is not enough to just think about today. The approach to workplace wellbeing will need to be significantly different in the future – so employers need to start taking action now.
“Leaders’ needs change constantly and rapidly, and organisations will need to adapt their whole approach. The workplace of the future is going to be increasingly people-centric, and organisations competing for talent will need to respond by being more supportive of their staff than ever before.”
Employers who make changes now to shape their business around the needs of their staff are likely to achieve significant competitive advantage. The report makes this important assertion: “Over the coming decades, an increasingly turbulent social, political and economic environment will have an adverse effect on British workers.”
And in light of recent events, particularly relating to Brexit, you could say The Future Workplace was prescient. It adds: “Worryingly, 32 per cent of British workers feel exhausted by juggling career, family, friends, social life, fitness, health and other commitments, and do not think they will want to work later in life. This contributes to higher levels of stress and a higher likelihood that they will leave their jobs. Failing to tackle this could cost British businesses £44bn.”
And here’s the rub. Owing to major demographic shifts not only can British workers expect to work until we are 70, and possibly beyond, but a shortage of skilled workers will mean employers need to go the extra yard to retain staff.
But even though the workplace is changing there is a basic truth that remains the same: businesses that adapt to change are the ones that tend to thrive; those that fail to recognise what is happening around them tend to struggle.
Firstly you, the UK’s business leaders, need to recognise what the challenges are.
The IoD survey
The IoD carried out a survey of directors of UK companies with more than 10 employees. We wanted to find out not only what they consider their biggest challenges but also what they are doing (or not) to tackle them.
The survey had just short of 200 respondents working in companies across a wide range of sectors, with particularly strong representation from business services, IT/telecoms and financial sectors. Around half the participants were chief executives or business owners, almost two-thirds men and nearly three-quarters have more than 50 employees. This is what we discovered:
The business outlook
Managing change, and finding and keeping staff with the right skills are among the most important business challenges facing directors. Skills shortages are expected to continue to be a problem, even in two-to-three years’ time, as will identifying growth opportunities. Identifying new leaders is likely to become increasingly challenging as businesses try to adjust to a sharp increase in the ageing workforce against declining figures among under-50s.
In what is set to become an ever-more competitive job market, a shortage of skills means that retaining key staff will be vital. Ninety-four per cent of organisations surveyed offer some form of employee benefit, seen as a key tool for employee retention and engagement, as well as enhanced productivity.
More female directors than male (by 36 per cent to 25 per cent) viewed employee benefits as being of “critical importance”. Forty-two per cent of business leaders believe they have the greatest impact on staff benefits and 70 per cent think employee benefits are critically or very important. Most businesses actively promote benefits packages when recruiting, with just 17 per cent saying they do not.
The most widely offered benefits are higher pension contributions, life assurance, private medical insurance and company car or allowance. Most businesses review their benefits package at least annually, with reviews driven by employee demand, cost management and the need to maintain parity with competitors. The effectiveness and value of benefits are most likely to be measured by a mix of formal surveys and informal conversations with individuals.
When seeking advice on employee benefits, the in-house HR team is often the first port of call, while existing benefits providers also play an important role. The latter are particularly valued for their product expertise and ability to offer pricing options.
In future, directors want these providers to help identify a more coherent case for employee benefits. They would also like to see a greater range of benefits available.
Leadership: A healthy team is a happy team
A report carried out by the Mental Health Foundation in May of this year revealed some startling facts about the damaging effect that poor employee wellbeing is having on British business.
Results, garnered from sources including the NHS, Mind, the London School of Economics and the ONS, include the following:
• One in four people have considered resigning due to stress
• One in five take a day off work due to stress
• 70 million working days are lost each year due to mental health-related conditions
• Over the past six years the number of working days lost to stress, depression and anxiety has increased by 24%
Our survey reveals that leaders have become increasingly aware of the need to keep the workforce physically healthy, and are willing to invest through programmes such as subsidised gym membership. However, they consider issues relating to the mental health of employees as the most critically important concern in workforce management.
There is, however, a difference between acknowledging the issue and addressing it. Joy Reymond, Unum’s head of vocational rehabilitation services, says: “Senior business leaders are understandably under increased pressure to cut costs and optimise return on investment, and may not immediately understand the business impact of poor mental health.
“Sometimes people have difficulties with business cases for mental health within the workplace because it isn’t something you’re going to achieve in a quarter – then you’re done and you can move on to the next issue. It needs to be part of the DNA of an organisation and that is still some distance away.”
There is nervousness about facing up to mental health issues. Reymond says: “It is still a taboo subject in the workplace – 67 per cent of employees feel scared, embarrassed or unable to talk about mental health with their employer.” That’s not surprising when you consider that 56 per cent of UK adults said they would not hire someone with depression.
“To break this taboo and create an open and caring culture it’s important to get your board onside and take a top-down approach. If they are speaking out on the issue, perhaps even drawing on their own experience, then this attitude will trickle down to managers and then to the staff.”
She is unequivocal about the need for British business to tackle the issue of mental health but is under no illusions about the scale of that task.
“The workplace of the future would have to be one where mental health is as important as physical health and no longer considered taboo, that people could talk about it and address it and manage it as part of the general management of workplace performance.
“Where I’ve seen it really work well is when I’ve seen the leadership do what it should, which is take the lead. The thing that will take us from here to there is leaders embracing it. This is good business for Britain, it’s not simply something that is nice to have or something for CSR. It is integral to the health of your business.
“It is endemic to an organisation and it is something you need to think about for the long term.”
The results of our survey conclusively demonstrate that organisations promote employee wellbeing, with business leaders seen as driving the strategy.
• Eighty-three per cent of organisations have a specific policy to promote wellbeing
• Seventy-six per cent believe the business leader is the main driver or a major influence on that strategy
• More than half of those that promote wellbeing also encourage healthy lifestyles away from work
• Female leaders are more likely than male (by 28 to 17 per cent) to deem it critically important
Employee mental health issues are regarded as the most critically important concern in workforce management, ahead of auto-enrolment pension schemes, physical health, an ageing workforce and accommodating the needs of millennials. Despite this, business leaders are, by 24 to 38 per cent, less likely to feel that they have a major responsibility for mental than physical health. By contrast, 34 per cent of directors believe the primary or sole responsibility for mental health rests with the employee, compared to 24 per cent for physical health.
In most cases, a wellbeing strategy and employee benefits are clearly linked. But one-third of those who consider employee mental health important are taking measures to support staff, for example via stress management training. This compares to 40 per cent taking similar measures to improve physical health.
Reymond concludes: “These findings are very interesting and reveal that business leaders are still more comfortable dealing with physical health rather than mental health. There is still work to do.”
Youth vs experience: Workforce trends
In 2013, then-chancellor George Osborne said that by the middle of this century Britons will have to work until 70 before they can start to draw a state pension, a prediction backed up by an ONS report published in July 2015 which found:
• There are more than half a million people in the UK over 90
• Between 2004 and 2014 the number of people receiving a letter from the Queen to mark their centenary rose by 72 per cent to 14,450
• Since 1984 the number of over-65s in the UK has risen by three million
• In the 40 years up to 2014, the median age of the UK population increased from 33.9 to 40
The equation is simple. The odds are that you will live longer, so you will have to work longer to keep yourself in the style to which you have become accustomed. That goes equally for employees and employer (see panel on The 100-Year Life).
Seamus Nevin, the IoD’s head of employment and skills policy, is the author of the recent report, Lifelong Learning, that reveals the gap developing between the ageing and emerging workforces. He explains: “Just 69 per cent of 50-to-64-year-olds today are in paid work compared to 83 per cent of their younger counterparts. Ominously, by 2025 there will be 750,000 fewer people aged between 16 and 49, but 3.7 million more people aged between 50 and 64.
“As the ratio of workers to dependants worsens in the coming years due to population ageing it is important that an increasing number of older people remain in employment. To that end, the evidence shows that a more educated labour force is likely to be able to remain in work for longer, owing not just to the greater employment prospects associated with better education but also due to the generally better physical and mental health of more educated people. The UK economy will have to make adjustments to provide and then to capitalise on a greater supply of educated
He adds: “Workers nearing what has traditionally been seen as retirement age will increasingly seek to reduce their hours while still remaining engaged in the workplace. Indeed, the number of people over the age of 65 in employment today stands at over one million, meaning the UK now has the seventh-highest employment rate for persons in their late sixties in the OECD.”
There are also 1.7 million entrepreneurs over the age of 50 in the UK, meaning one in five people in this age group are self-employed. Proof you can’t buy experience is borne out by the fact that, according to Age UK, older entrepreneurs have a better success rate, with 70 per cent of start-ups lasting more than five years, compared to 28 per cent for younger entrepreneurs.
Rather than it being a cause for concern, Janet Morrison, chief executive of the charity Independent Age, believes this longevity should be celebrated. “It is testament to the huge strides we have made, particularly in medical care over the last half century.”
However, she warns that “to prepare for it, as a society we need to take measures such as continuing to improve our health and social care systems, helping older people stay in the workplace for longer and tackling the risks of loneliness and isolation in older age. Otherwise we run the risk of squandering the rich potential of our ageing society.”
Ageing vs millennials
In our survey we asked directors what steps, if any, they are taking to accommodate the needs of both the emerging workforce (aka the millennials) and the ageing one.
Of firms that see an ageing workforce as an important issue, one in three are encouraging older staff to stay on after retirement age, with a similar figure taking measures to improve work-life balance and support lifestyle change.
Of directors who regard the needs of the millennials as important, 38 per cent are most likely to be focusing on the training and development of younger staff.
The 100-Year Life
Andrew Scott is professor of economics at London Business School and co-author of the critically acclaimed The 100-Year Life. He reveals what living for longer will mean for business leaders…
“I’m a macro guy who looks at GDP, short and long-run trends, and I’ve often done talks about the big trends that will shape the world going forward. I felt we were getting it wrong (on age) by just focusing on pension funds and Alzheimer’s. The tone of the book is cautiously optimistic. Once you engage in the positive side of living for longer then you go ‘OK, I’ll make some changes’. We try to make clear that longevity is about all of life not end of life.
Everyone has different motivations and many directors may think ‘when I get enough money I’ll stop and I’ll retire when I’m 65 or whatever’. But if you’re living to 100 it is an awfully long time to spend on a golf course. So then you think about what else you are going to do.
The important thing is to give yourself options. If you are earning a lot but have an expensive lifestyle then you don’t give yourself any option but to carry on working. But if you think a little bit about your expenditure, you not only save more but you make the adjustment to retirement easier.
One of the assets we talk about is transformational assets and the ability to deal with change. You may think ‘I’m a director now, I think I still have something to offer but I don’t want it to be six days a week, 12 hours a day. I want to have something where I’m not the main person in charge.’ So you may consider changing firm, changing sector or even changing your status and that, I think, is a difficult thing for people to do.
It’s not a skill we (as a society) encourage. It’s all about a race, get your head down and, if you keep winning, you get to the top. But the question is what do you do when you’ve reached the top? And in a longer life that problem becomes more acute.
But that’s what we mean by a transformational asset. Your willingness to take on new ideas, try new things and also go through a personal change.”
Go to 100yearlife.com to get a free diagnostic snapshot of your tangible and intangible assets to help prepare you for a longer life
Six steps you can take now…
Although our survey reveals that many leaders are already taking steps to improve wellbeing – both for themselves and their staff – Liz Walker, Unum’s HR director, provides some practical actions you can take now to build a healthier, happier and more productive company
Employee benefits for the future
With skills shortages and talent gaps ranked among the most challenging issues facing business now and in the future, attracting and keeping the best talent means going beyond offering a fair and competitive salary. Seven in 10 directors see employee benefits as critically or very important to their business, recognising them as a tangible way to show staff
they care. But there’s no one-size-fits-all approach. An effective, long-term wellbeing strategy must meet the needs and shape of your workforce and cover three key areas: prevention, early intervention and protection.
Be your own champion
Around a third of directors in the survey place a great deal of emphasis on their own physical and mental health, and around half seek to maintain a healthy work/life balance. Those who understand the link between wellbeing and increased staff loyalty and productivity can make
a big difference, using their influence to raise the issue at the highest levels of the business and taking a top-down approach. Drawing on your own experience is a strategy that can trickle down to managers and then staff.
Communication, communication, communication
It’s not enough to talk about benefits in induction packs with new starters, employers also must keep communicating as they progress and pass various stages in their lives and careers. Only around a quarter of those questioned in the survey are communicating about benefits on a regular basis, so there’s room for improvement. Train your line managers in what you offer to ensure they’re equipped to answer questions.
Encourage flexible working
As the right to request flexible working is now law, giving employees a level of choice in how, when and where they work is a valuable and popular benefit. The option is already offered by 45 per cent of those surveyed, helping employees with dependents by giving them flexibility to work from home or carry out work in hours that suit them.
It is a way of demonstrating trust and reducing the conflict between an employee’s work and personal life.
However, be aware that an ‘always-on’ culture can actually hinder productivity and lead to increased stress levels.
It’s a marathon, not a sprint
We’re all going to be working longer, so what should employers be offering older workers to ensure they are fit and motivated to continue working? Unsurprisingly, support around ill-health becomes increasingly important as we age. The likelihood of suffering a serious illness, such as cancer or heart disease, rises as you get older, so a product such as critical illness insurance may be something to consider. A significant number of older workers also have caring responsibilities so an employee assistance programme might be of use as it offers help to find care for both elderly relatives and children.
It’s good to talk
Despite mental health being regarded as the most critically important concern in workforce management, the survey seems to show a reluctance in addressing the issues around mental health, compared to physical health. We know that many managers fear doing or saying the wrong thing. To break down these barriers, it’s important that senior leadership have conversations about mental health at board level and encourage line managers to do the same, as well as being able to signpost other resources such as peer-to-peer support groups or anonymous helplines. Simply having an open conversation can have a huge impact, helping sufferers to feel supported. For more information, sign up for Unum’s mental health awareness module at unum.co.uk/managing-mental-health-mhf.
There’s a clear understanding that offering employee benefits is vital for improving employee retention, engagement and productivity, as well as creating a more enjoyable place to work for both you and your staff. The workplace is changing and will continue to develop so businesses must have a robust wellbeing strategy that will look after their workforce, both now and in the future. From company culture and leadership style through to flexible working and benefits packages, there are many aspects which should be considered to attract and keep key talent. Get it right, and the benefits will more than pay for themselves.
Unum is a leading employee benefits provider. For more information, go to unum.co.uk