Invest in Your Most Valuable Asset!

It’s a cliché, of course, but still true: Employees are the company’s most valuable assets. In times of disruption, like 2020, companies are well advised to invest in their employees for the best response to the critical issues they face. Instead, some firms turn to the accounting department to just find cost savings which all too often ends up costing the company in the long run.
Gartner did an analysis of the 2020 earnings reports of S&P 500 companies and found organizations that balanced workforce cost savings with targeted talent investments outpaced organizations that solely focused on cost reduction. These companies’ revenue rebounded from 3Q20, and they have outpaced industry peers that solely focused on cost reduction.
Successful organizations did more than target reactive cost savings to improve performance metrics in the short term, Gartner found. They also optimized costs and funded new investments. This balance between cost savings and talent investment opportunities is vital for protecting an organization’s continued growth capabilities.
As organizations continue to emerge from the turbulence of 2020, leaders charged with managing cost and budget measures should focus on three key takeaways, claims Gartner.
First, companies that not only cut costs in Q1 2020, but also made investments in talent across 2020, realized an average 8.2% increase in Q4 2020 revenue. For S&P 500 companies, this translates to a more than $500 million increase in revenue – signaling a solid foundation for sustained future recovery and revenue growth.
Second, talent investments are a key lever in protecting an organization’s continuing growth capabilities. Throughout 2020, 48% of S&P 500 companies funded at least one talent investment opportunity, placing particular emphasis on two areas: employee benefits and employee well-being.
In fact, employee benefits were the most discussed talent investment measure mentioned in earnings calls, with almost five times higher mentions than before the pandemic. In addition, employee well-being was the next most realized measure, mentioned six times more frequently than it was before the pandemic.
According to Gartner, organizations must not underestimate the adverse impacts that cost-saving decisions have on employee experience, engagement, and overall productivity. As companies continue to work through the lingering effects of the pandemic, organizations must recognize supporting employee well-being is not just the right thing to do, but it’s also good for the overall business.
Gartner’s research shows organizations that provide holistic well-being support can boost employee discretionary effort by 21% — twice as much as companies that provide only traditional (physical and financial) programs.
Finally, company leaders must identify talent investment opportunities centered around supporting employee engagement and well-being amid the new norm to protect the organization’s long-term growth capabilities. This means paying close attention to discretionary effort and/or intent to stay as they navigate post-COVID-19 economic recovery.
To realize cost savings during times of economic uncertainty, HR leaders should:
  • Examine which facets of employee well-being require greater focus by benchmarking workforce cost saving measures and planned talent investments against those of successful peer companies and market leaders.
  • Expand decision-making frameworks from solving short-term cost optimization challenges to enabling long-term employee experience. This includes applying a consistent framework of mitigations that involve both managers and employees.
  • Recognize the quantitative impact of cost cuttinginitiatives on critical workforce outcomes — such as employee performance, engagement and experience — by analyzing internal evaluations on the effects of cost cutting measures that go beyond individual functions.
In another survey, Gartner found that nearly half (48%) of large global organizations will not track the vaccination status of their employees. Only 8% of survey respondents reported that they will require employees to show proof of vaccination.
Ultimately, the majority of organizations are planning for a hybrid workforce. Fifty-nine percent of 241 HR leaders said their organization will let employees work remote occasionally with approval from their manager – a 21 percentage point increase since November 2020.
Other findings include that of 227 HR leaders, 36% plan to have employees self-report vaccination status, but will not require proof. Among 241 HR leaders, 49% will let employees work remote on certain days; nearly one-third (32%) will let employees work remote all of the time. And 20% of 197 responding HR leaders believe that normal business travel will resume in 6-9 months, while 35% admit they don’t know when they will resume employee business travel. Of 208 HR leaders surveyed, 95% have already resumed hiring.
While Gartner research found that only one-quarter of organizations plan to maintain the well-being programs they introduced during the pandemic for the foreseeable future, leading organizations will not roll-back new or expanded offerings. In fact, Gartner recommends that HR leaders use the return to the workplace as an opportunity to re-onboard all employees as though they are joining a new organization. To do this successfully, HR should focus on three main areas:
  • Develop a philosophy on flexibility. Rather than simply creating a static flexible work policy, leading HR departments are determining their organization’s philosophy on flexibility and sharing this with their workforce.
  • Communicate the purpose of the office. Prior to the pandemic, organizations simply described their office as the place where their employees work. Now, leaders must determine the role of their physical workplace – a team or company meeting place, a secure workspace, a social gathering space to support the community – and communicate that to employees.
  • Train managers on supporting employees. With a more dispersed workforce, HR must work with managers on how to manage employees who are working in different locations and at different times.


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