Boost Future Organizations with Digital BenefitsFSA, EA, MAAA, Mercer Global Partner, China Business Leader of Mercer Marsh Benefits
We are living in a world with fast-developing technologies, emerging subcultures, and diversified values and lifestyles, which all contribute to thousands of different needs. Given the rapid pace of change, do employers still have a standard and effective compensation and benefits strategy that aligns with employees’ needs? Is it even possible to put a label on certain kinds of emerging needs?
Guide for Future Organizations
Imagine the following scenario.
Mark is the marketing director of a medium-sized enterprise in Shanghai. Every Monday, he will communicate with his four team members on project progress. At 10 a.m., he opens the conference cloud right on time, but those who show up on the screen are no longer his subordinates. Instead, they are Ada, an expert graphic designer from Seattle; Serena, a freelance writer who is taking jobs while traveling around the world; Amanda, from the headquarters in Beijing; and Alex, a representative from the branding department, who is in London and currently not available due to the time difference. But that does not matter—he has already entered his work progress and plan into the system, and his analog image will speak for him. During the conference, assistant Xiao Bing will provide simultaneous multilingual interpretation for the participants; meanwhile, he will also make meeting minutes, provide an offline warning, and upload materials.
This is not footage from a science fiction film. It is something we might see in real life very soon.
The Organization of the Future, a book by The Drucker Foundation, notes that the society of employees is disappearing as people attach more importance to the value of the individual. In the meantime, organizations are transforming into more open platforms. Work is no longer done by internal employees only; increasingly, it will be done by diverse people in diverse ways.
In future organizations, it is likely that the working relationship between employer and employee will no longer be maintained by a contract alone. We will see more and more project-based work in the future, in which employees will be more agile and professional. They could be seasoned experts in one specific domain, without being tied to any specific organization. This model is both efficient and cost-effective.
It is also mentioned in The Organization of the Future that the birth of this model is driven by the continuous impact of technology on the relationship between the individual and the organization. Individuals have always craved personality, freedom and creativity. The advances of technology and mobile intelligence and the independence brought about by mobile Internet have increased the desire—and possibility—for individuals to pursue flexible working lifestyles.
The number of formal employees at organizations will be reduced, and those who stay on will likely only be those who are crucial to the enterprise and undertake key positions.
The impact that technology imposes on the relationship between the individual and organization is like a double-edged sword. On the one hand, an enterprise can benefit from the individual freedom created by technology, but on the other, it has to “fight against” such freedom because very few enterprises are willing to see their employees in key positions become free workers.
Understand the Future Workplace in the Age of ‘Me Inc.’
It is estimated that by 2020, the population of Chinese employees will mainly comprise four generations: those born in the 1970s, 1980s, 1990s, and 2000s; by 2030, the number of generations in the workforce will increase further (Exhibit 1).
Employees from different generations have different demands. They also face different pressures. That means we are facing a time when enterprises must manage thousands of different needs. We call it the age of “Me Inc.,” where people put more focus on differences instead of similarities, and human needs are getting increasingly more personalized.
Businesses must accept that, whether in the case of formal employees or free workers, it is only natural for them to look for other employment options if their needs are not met for a long time. And with the help of technology, it is going to be much easier for employees to make such decisions. Therefore, it is imperative for organizations of the future to put more focus on individual needs if they want to retain key employees and build long-term partnerships with top free workers.
The figure below shows the personal need data Mercer collected during its research:
Discovering, exploring, analyzing and designing channels to satisfy individual needs in the future is one of the top priorities for HR. Of course, it will be ideal for enterprises to meet these individual needs at a controllable cost.
Satisfying Individual Needs of Employees through Digital Benefits
Compensation was once the most important lever in retaining employees. However, growth in compensation in Chinese enterprises has declined for six consecutive years, according to a 2016 Mercer remuneration survey. Executives have started to realize that compensation is no longer the most effective and cost-efficient way of retaining employees, especially when it comes to satisfying individual needs.
Flexible benefits through a relevant program can enable enterprises to provide employees with more options while still having overall control of the benefits program. With flexible benefits, enterprises expand their benefits program and also change the original idea of benefits on a certain level. It allows enterprises to multiply the effect of benefits at a controllable cost.
The strategy of flexible benefits perfectly matches the diverse requirements of the Me Inc. workers. This strategy allows employees to choose their own benefits. During this process, their needs are satisfied, and their employers are aware of their needs, so organizations can keep optimizing a flexible benefits program and form a positive cycle.
Digital benefit management platforms make benefit management simpler, easier, more reliable and traceable—all at a controllable cost. Moreover, based on the behavior of employees on the platform, organizations can accurately figure out the characteristics of their employees (such as age, gender, family status and interests), allowing them to provide best-fit benefits for their employees. As it becomes increasingly harder to find commonalities among employee needs, this digital method enables enterprises to manage employee benefits in a more informed and targeted way.
As employees’ needs become more diverse, organizations will need to use technology to increase their efficiency in meeting people’s needs. These developments could mark the beginning of a new relationship between organizations and employees.