Flexible Work and Rewards Survey: 2021 Design and Budget Priorities

About the survey respondents

Research findings are based on responses from 344 organizations in North America employing 4.83 million employees. The survey fielded between October 6 and 21, 2020.

Respondents by industry

Respondent profile:

• 52% domestic
• 17% international
• 32% global

Overview

Employers pivot to flexible work arrangements and rethink approaches to Total Rewards

In the face of the uncertainties wrought by the pandemic, employers responded by embracing workplace flexibility and prioritizing organizational resilience and agility. Our Flexible Work and Rewards Survey: 2021 Design and Budget Priorities, which fielded between October 6 and 21, 2020, takes a close-up look at the current and expected future state of flexible work arrangements as well as the implications for rewards and benefit programs.

Respondents to the survey indicate about six in 10 workers (59%) are currently telecommuting/working from home, and they expect over half of their workers (52%) to be doing so through the first quarter of 2021. Yet despite this significant pivot to flexible work arrangements, over one-third (37%) of organizations do not have a formal policy to manage these arrangements, and a quarter (25%) have just put such a policy in place this year.

While safety concerns will remain the primary reason for offering alternative work arrangements into the first quarter of 2021, an increasing number of employers also expect to enhance employee retention, engagement and productivity through these arrangements.

Additionally, alternative work arrangements are prompting employers to rethink their approach to Total Rewards. Roughly half of employers (49%) indicate that the new work requirements necessitate a hybrid reward model, which for some organizations may include paying employees based on where they are located geographically.

Most organizations do not expect flexible work policies to substantially affect pay and benefit budgets over the next three years; however, over half of employers (57%) expect reductions in real estate expenses, and over a third (36%) anticipate a decrease in commuting expenses during this period. While some of these savings will be offset by increases in subsidies around items such as computer equipment and wireless devices, organizations have an opportunity to reinvest these savings in reward and benefit programs to help meet employees where they are.

The ability to shape a flexible workplace that meets the needs of their employees will help organizations persevere and prosper in an evolving, pandemic-altered world of work.

“As companies continue to evaluate the cost benefits of alternative work arrangements, many indicate that the workplace changes as a result of the pandemic are here to stay. Employers that are able to create and manage a flexible workplace through automation and adaptable policies while reinforcing an enhanced employee experience will not only meet the needs of their employees but be better positioned to compete in the new world of work,” said Catherine Hartmann, North America Rewards practice leader, Willis Towers Watson.

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Employers that create a flexible workplace with automation, adaptable policies and an enhanced employee experience will be better positioned to compete in the new world of work.”

Catherine Hartmann | North America Rewards practice leader, Willis Towers Watson

Highlights and trends

Prevalence

• Employers say that over half (59%) of their workers are currently telecommuting/working from home; they expect this number to remain high, at around 52% through first quarter of 2021.

• Employers say that 25% of their workers are also using “working from anywhere” or flextime options; they expect this percentage to remain steady in the first quarter of 2021.
• On average, organizations currently have a similar percentage of their full-time employees working in person or onsite (45%) as working remotely/from home (44%).
• Employers expect the proportion of their full-time employees working from home to decline by about 30% from current levels in the next three years. However that level (31%), will be almost six times what it was three years ago (5%).

What’s driving alternative work arrangements?

• Most organizations (91%) cite employee safety concerns as the main reason for providing alternative work arrangements.^* Other important drivers include promoting employee retention (47%), maintaining or increasing employee engagement (39%), and enhancing productivity (35%).
• An overwhelming majority of employers (89%) 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 cite employee retention (61%), engagement (53%) and productivity (41%) as important reasons for offering these arrangements in 2021.

• Most organizations do not expect flexible/remote work policies to substantially affect pay and benefit budgets for 2021.

• Over one-third expect budget reductions in real estate (36%) and commuting expenses (40%) in 2021. Over half of employers (57%) expect reductions in real estate expenses over the next three years, while over a third (36%) anticipate reductions in commuting expenses during the same period.
• Approximately a quarter of organizations expect to see an increase in allowances and subsidies for working from home in 2021 (26%) and over the next three years (27%).
• In 2021, 61% 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; however, over a quarter of employers (26%) report that pay will be based on the location of remote workers for all jobs.

Policies and principles

• Prior to this year, more than a third (37%) of organizations did not have a formal policy or set of principles to manage alternative work arrangements; 25% just created a formal policy this year.
• Organizations without a formal policy to manage these work arrangements are planning to catch up quickly, with three-fifths (60%) saying they are planning or considering adopting one this year or next.
• Most organizations (58%) with new policies expect these policies or principles to be permanent.

Eligibility

• Job function is the most common criteria for determining eligibility for using alternative work arrangements, now (62%) and in the future (74%). Interestingly, at some organizations, all employees will remain eligible, now (21%) and in the future (14%).
• Most organizations (55%) do not think jobs that will be performed through telecommuting or working from anywhere are likely to be offshored over the next three years; on average, organizations expect about 4% of the jobs that will be done through telecommuting or working from anywhere are likely to be offshored over the next three years.

Opportunity for improvement

• Only roughly one in five organizations thinks its current job architecture (19%) and job leveling process (17%) supports developing a flexible and agile workforce to a very great extent. Similar percentages say their current job architecture (19%) and job leveling process (21%) do not support these objectives at all.

Organizational effectiveness

• Over half (54%) of organizations indicate that they are effective at recognizing the need to create a more agile and flexible workforce.^**
• 48% say they are effective at retaining critical talent (employees and contingent workers) with needed technology skills.

Manager effectiveness

• Over a third (38%) of employers think their managers are effective at helping workers focus equally on what customers will need tomorrow and what they require today.
• Just 18% think their managers are effective at communicating and leading change around the new combinations of humans and automated workers.
• Only about a third of employers (34%) agree that their managers are effective at removing obstacles to doing work with speed and efficiency.

• Just 14% of organizations have an integrated digital and business strategy that enables new sources of value.
• Slightly more than half of employers (53%) have provided their employees with digital tools, such as mobile and web apps, to help them be more productive.*
• Less than half of organizations (42%) indicate that accountability for the success of their digital ambitions is owned by all leadership.* 
• Only 29% of respondents say their senior leaders are effective at using new technologies and non-employee talent to change the way work is done.*

• About half of employers (49%) recognize that new requirements for work require a hybrid model for rewards and pay.
• Almost a third (29%) of employers are providing additional benefits to promote workplace flexibility (e.g., backup daycare, subsidies for daycare or virtual learning).
• Nearly a fifth (18%) 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.
• Most organizations agree that their retirement and financial wellbeing (62%) and health and wellbeing programs (64%) provide the security necessary to support workers to a great or very great extent.
• However, over a fifth of organizations say that retirement and financial wellbeing programs (24%) and health and wellbeing programs (30%) need to change to provide the security necessary to support workers in a more agile and flexible workplace in the future.

Footnotes

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

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