Good employee welfare: The ESG trend to watch in 2022

Aegon AM’s Laird takes a look at three companies getting employee welfare right

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Georgina Laird, senior responsible investment associate, Aegon Asset Management

The impact of Covid-19 on human health has brought a renewed focus on employee welfare. Two years into the pandemic, 2022 is the year when the theme becomes critical to a company’s success.

It’s really encouraging to see these social factors now discussed so broadly among mainstream investors and companies have been open to engagement on this theme for quite some time.

Companies with strong labour management frameworks in place are widely seen as better positioned to create long-term value.

The Securities and Exchange Commission chair, Gary Gensler, revealed last year that human capital disclosures should be added to the list of information that publicly traded companies are required to report: “Investors have said that they want to better understand one of the most critical assets of a company: its people”.

Duke University professor Dan Ariely conducted an interesting study on one large, American corporation that wanted to motivate workers in one of its factories. Ariely provided some advice, and an experiment was run across the factory.

See also: – Lessons from the pandemic for COP26

A quarter of the workers were paid $30, another quarter were given a $30 pizza voucher, a third quarter were sent an encouraging text message from their boss (“Well done!”) and the control group were given nothing.

The outcome was surprising. Cash worked well on the day, but then productivity plummeted. Pizza fared better than cash on day one, but productivity fell more gradually across the other three days.

The verbal reward also did better than cash on day one but get this – the motivation of these workers stayed highest across the week. Interestingly, verbal rewards were suggested for the bonus scheme for executive management too, but they were cool on the idea.

Employee motivation is key to an organisation’s success. In addition to being more engaged, motivated employees are more productive, handle uncertainty better, have lower levels of absenteeism, stronger customer service, the list goes on.

Ariely talks of “goodwill” which he defines as the gap between what people have to do to keep their jobs and the maximum people can do if they’re truly excited. To evoke the latter, it takes more than money, it takes a strong culture and engaged workforce too.

See also: – Companies with thriving culture see double rate of return

This is not to say that money does not motivate people, but rather that extrinsic motivators coupled with intrinsic motivators have the most lasting effect. When people are told they are appreciated, it sticks with them.

Investors recognise poor labour management as a significant risk, and are looking at numerous indicators to gain a detailed picture of the culture of the companies they invest in.

Three companies getting employee welfare right

We’ve seen some outstanding examples of human capital management throughout the Covid-19 pandemic.

Endava is a leading next-generation technology services provider and helps accelerate disruption by delivering rapid evolution to enterprises that have become laden with legacy IT infrastructure. Throughout the pandemic Endava has continued its stellar approach to employee engagement through the launch of wellbeing initiatives and volunteering opportunities to help others. The result of the company’s efforts is a dedicated and skilled workforce, and recognition as the employer of choice in Romania.

Workiva is a global SAAS company providing a cloud-based connected and reporting compliance platform. Workiva recognises that its employees are key to the company’s success, and it has implemented numerous engagement and wellbeing initiatives throughout the pandemic.

Flexible working policies, special projects to keep fellow co-workers connected with each other, guided yoga breaks and mental wellness initiatives. It has resulted in Workiva being named on Fortune’s Best Places to Work for the third consecutive year.

In the UK, we’ve seen Dunelm recognise the hard work of its employees throughout the pandemic – ensuring employees continued to receive at least 80% of pay whilst on furlough, one-off bonus, initiatives to support mental wellbeing, and an increased focus on diversity and inclusion.

So, remember to tell your staff how fantastic they are, and watch your productivity grow!

But a pizza and some cash can’t hurt either.

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