It’s Time for the New Employment Deal

Image credit: iStockphoto/Pict Rider

The gap between employers’ and employees’ expectations widened with the rise of future of work. As a result, it has reshaped the relationship between the two parties, according to Gartner.

The research firm last week identified six widening gaps that are crucial for businesses to address. These differences between employees and employers include the demand for a culture of flexibility, being supported and equipped for remote work, the opportunity to be heard, a high level of trust, and a sense of purpose and contribution in their roles.

“If left unaddressed, this division may lead to a critical failure to build trust and employee buy-in for future of work plans,” said Alexia Cambon, director in the Gartner HR practice.

Humanizing employment

Nevertheless, the dissonance between employers and employees appears to be a fundamental divide.

When the goal of the business is to maximize the shareholders’ value, employee experience (EX) is more likely to be compromised than prioritized. It appears to be a constant battle for employers to build trust and demonstrate EX without going back to the fundamental nature of the labor market.

Gartner calls this the employment deal — what employers committed to providing employees and the value they provide in return. Traditionally, employees gave the organizations productivity in exchange for compensation and benefits. But the future of work and the pandemic have reshaped this relationship fundamentally.

The shattering of the 9-to-5 on-site work paradigm, the blurred work-life boundaries, and the rising employee demand for business to take stronger social stances require humanizing the employment deal, said Gartner’s report “The New Employment Deal”.

Three humanized elements

According to the Gartner report, the new humanized employment deal consists of three major elements:

  • Deeper connections
  • Radical flexibility
  • Shared purpose

The pandemic crisis showed that business and society are highly interdependent, and work and personal lives can also profoundly impact one another. The push to build deeper connections with employees underscored this changing relationship. It also humanized the employment deal beyond monetary compensation.

“[Deeper connection] is about viewing employees as comprehensive individuals and actively seeking to improve various aspects of their personal lives,” stated the Gartner report. “A comprehensive approach to helping all aspects of employees’ lives improves their mental, physical and financial health. In turn, employee performance increases, and organizations get better and broader access to the labor market.”

By viewing employees as individuals, business leaders can also readily embrace radical flexibility — giving employees autonomy to choose where, when, and the amount of work.

Such increased flexibility often raises concern of adverse business outcomes, as business leaders have less control over when and how much work is performed. But Gartner suggested this practice builds trust towards the employees and focuses on helping them to make optimal choices, rather than simply monitoring people.

“It is about understanding their needs and giving them the authority to satisfy work requirements in ways that work best for them,” stated the report.

The firm’s research also found flexibility fuels high performance. For example, a typical organization has about 36% of high-performing employees, but this percentage could increase to 55% with radical flexibility.

Purpose drives engagement

When the relationship between employers and employees goes beyond monetary compensation and static working hours or location, the organization is on a firmer foundation to develop a shared purpose with employees around social issues.

The Gartner report indicates that organizations that took action on a social issue can increase the number of highly engaged employees from 40% to 60%.

“Employee co-creation, internal transparency, and dynamic planning improve the engagement of those passionate about the issue and those who disagree but appreciate the reasoning behind the decision,” stated the report.

Developing a shared social purpose within the organization increases employee engagement and drives business performance and profit, according to the book “Purpose, Incorporated: Turning cause into your competitive advantage”.

The fifth “P”

The book’s authors Amailia McGibbon and John Wood called purpose the fifth “P.” While the classic four Ps in marketing (product, price, promotion, and placement) defines the competitiveness for many businesses, they are no longer sufficient.

“Unless you have first-mover advantage, the odds are good that a rival has already optimized those Ps long before you and your product arrive,” stated the book. “This book proposes a fifth P, and luckily for all of us, it is still a largely unclaimed frontier: purpose.”

The book explains businesses that embrace purpose focus on objectives larger than traditional financial returns, like profit, cash flow, and marketing share. Business plans are built with the attainment of both social goals and financial performance.

By incorporating social goals as one of the business objectives, the organization is bridging the ultimate divide by deviating from the sole purpose of simply generating profits for shareholders.

But Gartner also warned this emerging business philosophy is only one of the paths for organizations to differentiate themselves in the new normal.

“In recovering from the crisis, and in discovering a new normal, we will likely see many different, sometimes even opposing, trends,” stated the report “Consider your purpose: reinventing your way out of the crisis”. “There are more paths to success coming out of the crisis than there were before it began.”

While developing a purpose-driven business may not speak to every organization, it could create a shared goal between employer and employees when done right.

“Having a strong sense of purpose is no guarantee that you will always have motivated employees,” stated in the book by McGibbon and Wood. “But connecting them to a cause that’s higher than just this quarter’s revenue or earnings per share can be one strong step in the right direction.”

Sheila Lam is the contributing editor of DigitalWorkforceTrends. Covering IT for 20 years as a journalist, she has witnessed the emergence, hype, and maturity of different technologies but is always excited about what's next. You can reach her at [email protected].

Image credit: iStockphoto/Pict Rider