Seven priority areas for HR and reward in 2022

Author: Duncan Brown

The coronavirus (COVID-19) pandemic has highlighted the importance of how people at work are managed and engaged. Duncan Brown looks at just what HR has achieved over the past two years, and gives his advice on how it can continue to build on this through his seven priority areas for HR and reward.

According to the Office for National Statistics, fewer than 10% of us think that the pandemic will end and "life will get back to normal" in less than six months, with the majority anticipating that it will take more than a year. But from a HR and reward management perspective, do we want a return to the old, pre-coronavirus world of work?

On-demand webinar: the role of pay and reward in the HR function in 2022 and beyond

In this webinar, independent pay and reward commentator Duncan Brown investigates how reward professionals should respond to the new challenges now facing HR, such as hybrid working, skills shortages and escalating pay inflation, and the great resignation.

Covid, HR and reward heroes

Perhaps one of the most surprising outcomes of the enormous economic and social disruption and human tragedy caused by the pandemic has been for HR professionals and functions. As one of the respondents to HR & Compliance Centre's annual survey of the roles and responsibilities of HR almost 12 months ago put it - with seemingly eye-rubbing amazement - "HR are the true heroes!".

Other opinion and research backs-up this assessment. In one research paper based on international academic studies of the crisis, the authors write that: "[This] pandemic is a human crisis. HR leaders have been central to the response in organisations globally… driving operational and strategic success during the COVID-19 pandemic." PwC, based on its research and consulting work over the past two years, agree that "HR matters now more than ever".

The pay, benefits and reward agenda has been central to the speedy and generally effective response to the crisis by HR. And HR, as PwC admit, has generally delivered thus far.

Initially and immediately, HR put in place the furlough schemes and procured the personal protective equipment to protect employees and their incomes. They then moved on to address broader considerations of maintaining wellbeing and performance, providing often home-bound employees with everything from financial education to home-schooling support; before finally securing recognition that the mental health agenda is every bit as important as the physical, along with the resources to help to address it, covering everything from mindfulness apps to online therapy and coaching.

Twice as many employers have increased their benefits spend during the pandemic, often significantly, as have been forced to make cutbacks, an unthinkable outcome when society and the economy essentially shut down for the first time in April 2020.

The future: Back to normal or build back better?

But now, as we stutteringly emerge (hopefully) from the pandemic, the agenda has shifted once again, and with incredible speed. The UK has moved from economic recession to rapid gross domestic product growth; from home to hybrid working; from layoffs and pay cuts to extensive skills shortages and escalating price and pay inflation and the "cost of living crisis". And we have apparently morphed from "the great hibernation" to "the great resignation", or more accurately in the UK, "the great retirement". So how should HR and reward professionals respond, this year and thereafter?

Almost everyone in HR recognises the need to step back from almost two years of being in immediate and crisis-response mode and to set out some direction and plans now for the future. But what direction to go in and how? Are we going to go back to our pre-pandemic HR and rewards agenda, as seems to have happened, for example with the rapid reversal in 2021 of the initial voluntary executive pay cuts that we saw in some large corporates that were apparently designed to demonstrate "we (really) are all in this together"?

Or should we, as McKinsey advocate, take advantage of the disruption and learning from coronavirus to recognise the importance of HR in building the new normal? Should we rethink and redesign many of our traditional, market and cost-driven reward practices on a more engaging and productive basis, and "build the organisation of the future"? One recent survey found that two-thirds of employers plan to retain for the future the enhanced sick pay, mental health support and flexible working improvements they put in place in response to coronavirus.

Seven future HR and reward priorities

Whatever the unique and challengingly complex environment we all now are facing, my own research suggests HR can take advantage of the tremendous opportunities that now exist to "build back better" workplaces, through attention to seven priority areas:

  1. Developing detailed strategic reward and workforce supply plans, to avoid the reactive pay hikes that some employers have been making recently to try to recruit workers who simply aren't there anymore post-Brexit.
  2. Continuing to invest in the health and wellbeing of the workforce, investments that deliver huge pay-offs in terms of organisation and employee performance.
  3. Focusing on skills and progression, shifting the emphasis further from external recruitment to internal development and providing genuine career and pay progression opportunities for all, especially the low-paid and minority groups.
  4. Building fairer and more equal workplaces that provide genuine opportunity for all, through a continued focus on diversity, equality, inclusion and fairness.
  5. Further developing employee voice and involvement, having been forced by homeworking to develop new forms of employee communications and more engaging managers; and now recognising that there are huge benefits to be had from a more autonomous and involved workforce.
  6. Producing and reporting better data and evidence to justify and demonstrate progress across all of these areas, from cost-benefit analysis of our expanded employee assistance programmes, to more comprehensive human capital reporting including ethnicity and disability pay and representation statistics.
  7. Re-uniting and re-engaging our disrupted and often exhausted workforces after two years of the pandemic.

Now, with the right investments in people and a focus on evidence-based HR practice, and with attention to the seven priority issues and areas my research has highlighted, employee engagement levels can be improved on a widespread basis; and thereby individual and organisational health and performance also enhanced significantly through the most effective and impactful HR management.

With traditional practices, budgets and controls still disrupted by the crisis, as the IPA's director and engagement guru Nita Clarke puts it: "If ever there was a time to experiment to create happier, healthier and fairer workplaces, that time is NOW!".