We surveyed companies with a combined total of more than 1.8 million employees to better understand 2022 business trends. Specifically, we questioned 125 senior human resource (HR), diversity and inclusion (D&I), reward, and people professionals - including those from 12 FTSE 100 companies - on topics related to their employee strategy to create our Outlook 2022 report.
We learned a great deal about how companies have reacted to the Covid-19, including pandemic-induced changes. Plus, how HR teams and people managers plan to become fairer, more diverse and competitive employers in 2022.
Let’s get right into the data:
First, we wanted to discover what the strategic focus for HR teams will be in 2022. While people managers obviously have many strategic focuses, we hypothesised that the volatile job market might have triggered a shift in the top priority. To achieve this, we asked respondents to rank 12 focus areas in order of importance.
Here’s what we found:
As you can see, attracting top talent (9.51) and retaining talent (8.81) will be the top two strategic priorities for HR teams in 2022. This demonstrates a marked change to our previous 2021 research, which found that attracting top talent was the HR team's third highest priority (7.2).
Why might this be?
This is a clear reflection of the recruitment and retention challenge businesses will face over the next 12-18 months. Although the so-called “Great Resignation” has become somewhat of a buzzword in the business community of late, new data goes some way to suggest that it is just not anecdotal.
For example, according to data analysed by Chief UK Economist at Deutsche Bank, Sanjay Raja, British workers are resigning at the highest rate since 2009, with, Raja said: “historically elevated levels of workers leaving the labour market entirely”.
Companies and their people managers will need to navigate the knock-on effects of the pandemic and re-evaluate how to keep and attract the best people. Especially because over half of the companies we surveyed said they will be looking to increase their headcount in 2022.
It would be no understatement to say that the “war on talent” is on. We have already learnt that attracting talent is the most important strategic priority for HR teams in 2022. The next step in our research was to understand exactly how the UK’s biggest businesses plan to entice the best people in the talent pool.
This is what we discovered:
First, we found that businesses are considering paying above market rate to both attract, and retain, talent. Specifically, we found that to attract talent into the business, 44% would consider promising above market pay to prospects. Interestingly, 17% of businesses said they already offer above market pay to attract talent and 4% of companies said they will implement this in 2022.
To retain the best people, more than half (52%) of the respondents we questioned said they would consider offering their employees above market pay. 14% of companies said they already offer above market pay to employees as part of their retention strategy and 9% said they will implement this in 2022.
Second, our research showed companies will use retention bonuses as a key tactic to keep hold of their best employees in 2022. In fact, 45% of companies are considering retention bonuses in 2022, 4% said they will definitely be bringing retention bonuses in and 28% said that they already have this in place.
Third, although sign-on bonuses are nothing new, our data shows that we could see an increase in companies offering them to attract talent in 2022. For example, 37% of companies said they would consider implementing a sign on bonus and just over a fifth (21%) said they already pay one as part of their talent attraction strategy.
At first, these statistics may come as a surprise. After all, paying above market pay is unprecedented and committing this high level of monetary reward is almost unheard of…
However, there are a couple of reasons for this:
One, companies recognise that ‘The War for Talent’ - a term coined by global consultancy firm McKinsey & Company back in 1998 to describe an increasingly competitive landscape for recruiting and retaining talented employees - is now real and urgent in 2022. Great talent is scarce, so companies are revising pay plans and raising the financial stakes.In fact, in the war to retain employees, senior professionals can expect a pay increase of up to 25% in the first quarter of 2022. That’s according to a report by recruitment firm Robert Walters.
Two, it is no secret that the cost of living has increased. And companies may be raising pay to keep up with inflation. However, pay raises may not be enough to keep pace with soaring prices. There is a danger that higher prices and rising pay will feed into each other and cause a wage-price spiral
Our next step was to drill down into how else, aside from financial incentives, employers are looking to attract and retain talent in 2022.
Here’s what we found:
Environmental, Social and Governance (ESG) will be an important pawn in recruitment strategies in 2022. In fact, our research revealed that 56% of companies already share their commitment to ESG in a bid to attract talent into the business. Plus, 15% who haven’t used this as a recruitment tactic already, plan to do so in 2022. And, nearly a quarter (24%) of companies said they would consider it. Not only that, our research also showed that companies will be implementing and promoting flexible working, offering additional wellbeing benefits, and enhancing staff perks as part of attraction strategies in 2022.
What does this data tell us?
First, ESG is more important to corporate strategies than ever before.
Second, companies have recognised that monetary reward alone is not enough. Recent studies have shown that businesses that fail to implement genuine ESG policies are at greater risk of losing talent. In fact, new research by recruitment firm, Robert Hall, has claimed that nearly two in five (38%) employees would look for a new role if they thought their organisation was not doing enough on ESG issues.
Interestingly, the same study found that businesses that fail to implement genuine and sustainable ESG policies are at greater risk of losing younger talent, with 47% of 18-34 year olds saying they would look for a new role if they thought their employer was not committed to the cause.
Quite frankly, ESG will dominate the business agenda in 2022 and beyond. Now, employees will vote with their feet. People want to see genuine commitments that truly make an impact. Those companies that pay lip service to the ESG agenda will risk being shunned by those they need most. No doubt, the ‘war on talent’ will trigger even more 2022 business trends.
Our next step was to drill down into how businesses will approach remote working in 2022. Specifically, we wanted to analyse the impact of the pandemic on remote and hybrid working policies. It is no secret that remote and hybrid working has become the norm for many businesses in the UK. But, the big question is, is that shift here to stay? To get to the bottom of that question, we asked HR managers what their approach to remote working was in 2019, and what their approach to remote working will be in 2022. Here’s what we found:
First, hybrid working models, where employees are remotely based but are required to spend a minimum amount of time in the office, will be the norm for 40% of companies in 2022. This is in comparison to 2019 when only 5% of companies had this model.
Second, not one of the companies we surveyed said they will enforce an entirely remote way of working.
Third, in 2019, more than three-quarters (76%) of companies required their staff to work from the office 100% of the time. In other words, there was no flexibility. But in 2022, just 2% of companies said their employees must work from the office.
Finally, we also discovered that in 2019, just a fifth (10%) of companies said they offered their employees complete flexibility in the way they worked. However, more than 42% of companies said they will offer their workforce complete flexibility, that’s total choice of where they work from, in 2022.
What does this tell us?
Well, we know that a major blocker for recruitment and progression has long been the restrictive nature of the 9-5 workplace. However, companies now have a rare opportunity to embed these models long-term. Demanding employees return to the office full time may only exacerbate turnover rates. Employees expect flexibility in the way they work.
Plus, by implementing a hybrid model, companies appear to recognise the value of having a physical workspace.
Why might this be?
Hybrid models have many benefits. However, managing a hybrid workforce can be complex. For example, some employees find at-home working isolating, others have struggled with video-call fatigue and there has been a loss of organisational culture in some businesses. Not only that, but it has been suggested that ill-conceived remote working models could also play a part in worsening D&I strategies.
Let’s not underestimate that this is a huge shift for many companies culturally and striking the right balance will not be easy. It will be interesting to see if the intention to implement remote working models in 2022 will remain beyond the year.
Investment in the mental wellbeing of employees will continue
We do not yet know exactly what the full mental health impact of the pandemic will be. However, existing studies have started to paint a picture. In fact, research from the Office for National Statistics showed that around 1-in-5 adults experienced some form of depression in early 2021; more than double than before the pandemic when one-in-ten adults experienced the same.
As for our own research, we wanted to find out whether companies will be increasing the mental wellbeing benefits they offer their employees as a result of the pandemic. So, we asked respondents about the mental wellbeing benefits they had in place before Covid-19, after Covid-19, and, if they enhanced existing mental wellbeing benefits.
Here’s what we discovered:
More than a quarter (26%) of companies are now giving their employees the opportunity to take additional days off to help with home pressures that have arisen as a direct result of the pandemic. Such as, home-schooling or time to care for family. We also found that companies have upped training around, and awareness of, mental health. For example, as a direct result of Covid-19, 20% of respondents brought mental health training into the company, 18% have put mental health first aiders on the ground, and 19% are now promoting mental health awareness-raising activities.
In addition, there are many companies who had mental wellbeing benefits in place prior to the arrival of the Covid-19 pandemic. In fact, 56% said they already had mental health first aiders on the ground, 56% already did mental health awareness raising activities and nearly half (49%) already offered mental health training. However, 20% said they have enhanced their mental health awareness-raising activities and 14% have enhanced their mental health training.
All-in-all we can see that many companies have expanded the mental wellbeing support they offer to their employees in the wake of the pandemic. This is in line with a Gartner research that shows most organisations made significant investments in their well-being initiatives in response to the Covid-19 pandemic in 2020. Whilst there is evidence to suggest that these additional benefits help those who use them, there is a risk that the uptake is limited. For example, Gartner research has also shown that although 96% of organisations say they offer mental or emotional wellbeing benefits, only 42% of employees believe their employer provides them.
If one thing is for sure, we know that the company approach to employee mental wellness will continue to evolve. It is one of the 2022 business trends to pay real attention to.
There has long been debate over the benefits of a shorter working week. Early studies have shown that four-day working weeks can make for more productive and happier employees. And momentum around this new way of working has started to pick up. Around 30 UK companies are taking part in a six-month trial of a four-day week in a bid to measure whether employees can operate at 100% productivity at 80% of the time. And it’s been making headlines in other ways recently: more and more businesses are announcing their commitment to a shorter working week with 100% of the pay as part of a commitment to employee wellbeing and bettering work-life balance. For example, five star hotel, The Landmark London, is one of the latest to introduce a four-day week.
So it would be fair to say the four day working week is a 2022 business trend. However, our own research suggests that the four-day working week is a long way from being adopted across the board. In fact, just under 5% of the companies we questioned said they have moved to a four-day working week since Covid-19. And, only 2% said they had already moved to a four-day week pre-pandemic. Our findings chime with those from another survey undertaken by the Chartered Management Institute.
Although more than half of UK managers in the survey said their organisation was considering the idea, or would do so, nearly three-quarters (73%) said they thought it very unlikely they would adopt it. Despite most businesses clearly not thinking a four-day working week is practical, momentum for this new way of working may soon pick-up pace. Why? Because the same data from the Chartered Management Institute showed that almost 80% of senior managers below the age of 35 liked the thought of adopting a four-day working week, compared with 56% of those aged over 55 who thought the same.
Only time will tell whether the four-day week will take its seat at the table. There’s no doubt, it is one of the key 2022 business trends to watch.
Next, we wanted to uncover how committed businesses are to reporting D&I data externally. To achieve this, we asked respondents which D&I characteristics they have already reported on, which they will be reporting on in 2022, and 2023, and which they have no intention to report on.
We questioned respondents across six characteristics in total: gender, ethnicity, age, disability, LGBTQ+, and social economic.
Here’s what we uncovered:
First, 76% of companies said they have already reported their gender pay gap. Now, this is no surprise given organisations with 250 or more employees are required to report gender pay gap data by law. However, our research also showed that the majority of companies who sit below this threshold have no intention to report (13%).
Second, only 16% of companies have already published their ethnicity pay gap. And although nearly a quarter intend to report in 2022, and 16% intend to report in 2023, a shocking 40% said they have no intention to report.
Third, despite all companies having easy access to this information, more than two-thirds (67%) have no intention to disclose data on age externally. In fact, just 9% of companies have reported pay gap data on age.
Fourth, just 7% of companies have reported on disability data externally. And, although 17% intend to report on it in 2022 and a further 20% in 2023, more than half (54%) of companies said they have no intention to report.
Finally, 62% of companies said they have no intention to report LGBTQ+ data. And nearly three-quarters (71%) said they have no intention to report social economic data.
What does this research tell us?
First and foremost, companies are (on the whole) not willing to report on D&I data voluntarily. Put another way, mandatory legislation appears to be the only way to get companies to report. This is surprising given respondents ranked D&I as their third highest strategic priority for 2022. And the issue is not just that companies are not willing to report, but it would appear in some cases that progress is sliding backwards. Separate analysis by our team of UK-wide data has revealed that only 64 companies reported their ethnicity pay gap in 2021. This is 50% less than those that reported in 2020.
Quite frankly, these are worrying figures. Without data, it is impossible to build a fair, diverse and competitive workplace. However, change could be on the horizon... MPs have signalled that ethnicity pay gap reporting should be mandatory. Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said the government’s failure to move forwards on ethnicity pay gap reporting is “perplexing”.
“We already have the systems and structures in place to start reporting on the ethnicity pay gap, as well as a clear impetus – tackling inequality benefits not only marginalised groups, but the whole economy. The government has no excuse. All that is lacking, it seems, is the will and attention of the current administration,” said Nokes.
Plus, there are clear incentives for businesses to report D&I data. Research estimates that addressing race and inequality in the UK labour market could boost the UK economy by £24bn a year.
D&I reporting won’t just be one of the key 2022 business trends. How an organisation approaches D&I reporting will shape its future.
Despite greater disclosure rates offering benefits for both the individual employee and the organisation, they have long-remained low. It is true that employee disclosure rates have long lagged behind where they should be. I know from over 20 years’ in the HR industry that companies can find it challenging to gather this data. Afterall, D&I disclosure involves colleagues feeling safe enough to declare their true selves to the employer. However, it is only possible for companies to create fair and equal workplaces if they understand what is happening within their organisation.vAnd to do that, companies need their employees to disclose the information.
Back to our research…
We wanted to know how businesses are fairing when it comes to disclosure rates.vTo answer this question, we asked companies about their disclosure rates for four D&I characteristics. These included: disability, ethnicity, LGBTQ+ and social economic.vThe results of our findings appear to be a story of two-halves:
On one hand, our data suggests that companies are actively engaging with their colleagues around some characteristics. In fact, employee disclosure rates for a couple of the characteristics are higher than we expected. For example, the employee disclosure rate for ethnicity has grown to nearly half (48%). Although, this is perhaps not surprising given the efforts some companies made following the #BlackLivesMatter movement in 2020.
In addition, we discovered that the average disclosure rate for LGBTQ+ is 25%. While, on the surface, this may sound like a low figure, it is higher than we anticipated. This is because disclosing D&I information on what can be sensitive and personal characteristics often requires employees to highly trust their employer.
On the other hand, our data suggests that companies may be overlooking certain D&I characteristics. For example, the average disclosure rate for disability is only 25%. This is a surprise because disability is the largest representative group in the workplace. Our research suggests that very few companies are making the effort to engage with their employees to collect visible and non-visible impairments.The fact is, data on disability will inform policy or decision-making. Without it, it is impossible to truly support individuals.
Here’s the thing: It can be tricky to determine what levels of disclosure are needed before they can analyse the data and self-report their diversity.
So, to support companies across the UK, we have created the Disclosure Calculator. A FREE tool that will enable users to determine what percentage they need to achieve, based on their size and individual characteristics. The reality is: Disclosure rates will become more than one of the 2022 business trends…
Improving disclosure rates will help to create a more equal working world.
In my opinion, these 2022 business trends reveal a great deal about how organisations in the UK are tackling some of the biggest issues of our time.