Employers pivot to flexible work and rethink Total Rewards approaches

As organisations manage through phases of the ongoing crisis, many are recalibrating strategies and programs tied to work, rewards and the employee experience by embracing workplace flexibility and prioritising organsational resilience and agility.

Our findings reveal that the sharp uptick in the number of employees working from home or using other flexible work arrangements is expected to persist through the first quarter of 2021.

Before last year, only one in four organisations in Asia Pacific had a formal policy to manage alternative work arrangements, and currently three in 10 still lack one; of these employers, 60% are planning or considering adopting one. While job function and health concerns are the most common criteria to determine eligibility for using alternative work arrangements, over one in three respondents said that all employees will be eligible to use them.

The immediate budgetary impacts of these changes are likely to include a reduction in real estate and commuting expenses, but very few respondents expect significant increases in pay and benefit expenses over the next three years.

While most respondents (55%) did not expect to see immediate changes in how people are paid, and only three in 10 organisations recognise that new requirements for work require a hybrid model for rewards and pay, over half of respondents in the region say rewards and pay philosophy are shifting due to new ways of working. Almost half (47%) of employers recognise that health and wellbeing programs need to change to provide security necessary to support workers in a more agile and flexible workplace in the future, and 36% answered the same for retirement and financial wellbeing programs.

In the longer term, the changing workplace will affect the business, which will require changes in the role of the manager, job architecture, and pay and benefits. Currently, only 15% say that their job architecture supports a flexible workforce to a very great extent.

A dramatically reconfigured workplace and workforce will require agile leadership that effectively balances employee and business performance needs, supports new ways of working and powers new sources of organisational value, leveraging digital capabilities and the new sources of value they create.

Highlights and trends

Prevalence

• About half (48%) of workers are currently telecommuting/working from home; close to the same percentage (42%) are expected to continue to do so through the first quarter of 2021.
• Almost a quarter (22%) are also working from anywhere, using flextime options; employers expect this percentage to remain steady in the first quarter of 2021.
• The percentage of workers who are full-time employees working remotely (31%) is already half the percentage of full-time employees working in person or onsite (62%).
• Employers expect the proportion of their full-time employees working from home to be 14% below current levels in three years (26%) but almost 10 times what it was three years ago (3%).

What’s driving alternative work arrangements?

• Most organisations (88%) cite employee safety concerns as the main reason for providing alternative work arrangements.* Other important drivers include security concerns (55%), maintaining or increasing employee engagement (47%), and enhancing productivity (43%).
• An overwhelming majority of employers (86%) expect that safety considerations will continue to be a key driver of alternative work arrangements in the first quarter of 2021. At the same time, an increasing percentage of employers expect security concerns (57%), engagement (57%) and productivity (51%) to be important reasons for offering these arrangements.

Policies and principles

• Three in 10 (31%) organisations do not have a formal policy or set of principles to manage alternative work arrangements; 33% just created a formal policy this year.
• Organisations without a formal policy to manage these work arrangements are planning to catch up quickly, with three-fifths (61%) saying that they are planning or considering adopting one this year or next.
• Nearly half of organisations (46%) with new policies expect these policies or principles to be permanent.

Eligibility

• Job function and health concerns are the most common criteria for determining eligibility for using alternative work arrangement, now (47% and 27%, respectively) and in the future (57% and 30%, respectively). Interestingly, at over one in three organisations, all employees will remain eligible, now (39%) and in the future (35%).

• One in five (20%) do not think jobs that jobs performed through telecommuting or working from anywhere are likely to be offshored over the next three years; on average, organisations expect about 22% of the jobs that will be done through telecommuting or working from anywhere are likely to be offshored over the next three years.

• Most organisations do not expect flexible/remote work policies to substantially impact pay and benefit budgets for 2021.
• About three in 10 expect budget reductions in real estate (26%) and commuting expenses (30%) in 2021. Two in five employers (39%) expect reductions in real estate expenses over the next three years, while over a third (34%) anticipate reductions in commuting expenses during the same period.
• Approximately a quarter of organisations expect to see an increase in allowances and subsidies for working from home in 2021 (20%) and over the next three years (27%).
• In 2021, 76% of employers say they will pay fully remote workers the same as in-office employees regardless of a worker’s actual locations for all jobs. Only 4% of employers report that pay will be based on the location of remote workers for all jobs.

Opportunity for improvement

• Only roughly one in seven organisations think that their current job architecture (15%) and job leveling process (11%) support developing a flexible and agile workforce to a very great extent.

Organisational effectiveness

• Over half (52%) of organisations are effective at recognising the need to create a more agile and flexible workforce.*
• 53% say that they are effective at retaining critical talent (employees and contingent workers) with needed technology skills.

Manager effectiveness

• Almost half of the employers (48%) think that their managers are effective at helping workers focus equally on what customers will need tomorrow and what they require today.
• 36% think their managers are effective at communicating and leading change around the new combinations of humans and automated workers.
• Almost half of employers (46%) agree that their managers are effective at removing obstacles to doing work with speed and efficiency.

• Only 12% of organisations have an integrated digital and business strategy that enables new sources of value.
• Just slightly more than half of employers (51%) have provided their employees with digital tools, such as mobile and web apps, to help them be more productive.**
• Less than half of organisations (47%) indicate that accountability for the success of their digital ambitions is owned by all leadership. **
• Only 34% of senior leaders are effective at using new technologies and non-employee talent to change the way work is done.**

• Over half (55%) of organisations are shifting their rewards and pay philosophy due to new ways of working. Only three in 10 (30%) recognise that new work requirements need a hybrid model for rewards and pay.
• 26% answered they are not concerned where work gets done for most roles in determining pay and rewards.
• 20% of employers are providing additional benefits to promote workplace flexibility (e.g., backup day care, subsidies for day care or virtual learning).
• One in 10 (10%) are setting pay levels by first determining the market value of skills and then applying a geographic differential based on where the employee is located.
• Many organisations agree to a great or very great extent that their retirement and financial wellbeing programs (41%) and health and wellbeing programs (56%) provide the security necessary to support workers.
• However, almost two-fifths of employers agree to a great or very great extent that retirement and financial wellbeing programs (36%) and health and wellbeing programs (47%) need to change to provide the security necessary to support workers in a more agile and flexible workplace in the future.

Footnotes

* Percentages for organisational and manager effectiveness indicate “to a great or very great extent”.

** Percentages indicate “to a great or very great extent”.