The concept of welfare is much more flexible and dynamic than in the past: new measures are gradually being added to existing ones to adapt to changing economic, social and cultural conditions. In general, a trend has emerged in recent years that takes the whole person into consideration (and thus not only the practical aspects related to work) and conceives of workers as subjects who inhabit and transform an increasingly complex reality.
While companies are realizing how engagement directly affects productivity, to be able to respond to the growing demands for greater social responsibility, they find themselves in the position of having to implement policies, procedures, programs, and resources that are increasingly based on internationally established ESG criteria.
We’ll explore this dual aspect, starting by defining welfare in order to be able to capture the changes in our current post-pandemic world that is still evolving.
What is employee welfare?
According to the ILO (International Labor Organization), employee welfare is defined as “the services, facilities, and equipment that can be established in or near enterprises to enable the people employed by them to perform their work in a healthy and peaceful environment and to enjoy facilities that improve their health and support their morale.”
Thus, a corporate welfare plan has the benefits and services that an employer implements for its employees. It may include agreements with institutions that offer different types of insurance (health, life, disability, and so on) or services such as on-site daycare, fitness centers, and meal vouchers.
The concept of welfare today increasingly tends to be all-encompassing and expands to contain all those initiatives in the corporate environment that are organized with the goal of ensuring the welfare of employees. It has two basic dimensions:
- the ability to engage people in corporate culture and life (with an emphasis on the extent to which workforce engagement translates into higher or lower levels of performance);
- a broader scope that can be framed within the ESG (Environmental, Social, and Governance) criteria that socially conscious organizations are adapting to (ESG criteria are used to reassure markets and stakeholders and to screen potential investments).
Welfare: increasing well-being to increase engagement and productivity
Stress among workers around the world has again reached an all-time high. This is what the data in Gallup’s State of the Global Workplace 2022 reveals, according to which worry, anger, and sadness remain above pre-pandemic levels. Although emotional health is not easily recorded by objective metrics, the organizational risks are there and they are absolutely real. Whether they are stressed because of the job or their stress transfers into the job 44% of employees seem to experience constant daily anxiety.
If companies do not pay attention to the well-being of their employees, the report says, they run the risk of being unprepared to handle burnout episodes and high dropout rates.
Even before the pandemic, the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) recognized the workplace as a means of creating well-being. In Happiness at Work, Jessica Pryce-Jones shows how the culture and environment in which people do their work—whether it’s a factory, an office, or remotely—is a powerful lever for promoting and sustaining “happiness,” which is understood as the physical and mental health of employees.
The link between “happiness” and productivity comes through the creation of engagement
We have known for more than a decade that a “happier” workforce is a more productive workforce.
Important studies such as the one in The Correlation of a Corporate Culture of Health Assessment Score and Health Care Cost Trend published in the Journal of Occupational and Environmental Medicine have shown that for every dollar saved in direct health care costs, employers receive $2.30 in benefits and productivity.
If, as Gallup states, low workforce engagement costs the global economy $7.8 trillion, the relationship between welfare and engagement is crucial in building an effective welfare system that is capable of producing concrete benefits for both employees and companies.
Companies that still focus exclusively on monetary benefits underestimate the importance that employees, especially the most qualified, attach to an engagement: a focused work environment, and above all, a stimulating and innovative workplace. To exercise effective employee retention actions (and maintain a stable and lasting relationship with their talent, avoiding excessive turnover and ensuring business continuity), companies should extend their welfare concept and make the employee experience (employee experience) an integral part of the organizational culture.
Digital transformation provides the tools to achieve this: thanks to new technologies today, companies can listen with real attention to their employees, acquire the data needed to know their physical and emotional state, preferences, and needs, and use this knowledge to improve the employee experience.
How ESG criteria are changing: more focus on employees’ social rights
Corporate stakeholders (managers, directors, investors, analysts, brokers) are increasingly aware of the urgency of including environmental, social, and governance criteria in business models and long-term action plans. Employee health and welfare, however, are by far the most neglected of the social principles within the ESG framework. Indeed, until recently, welfare-related metrics within ESG reporting frameworks still tended to focus almost exclusively on incidents related to injury, sickness, and disease.
It was the pandemic that highlighted the inextricable link between health and business performance. Most employers mobilized resources to respond promptly to an extraordinary situation by implementing safety protocols to reduce risk. Such processes that were already in place but proceeding slowly have accelerated dramatically: the impact of social distancing measures on workers has been so profound that it has become impossible for the world of work to ignore concerns around the health and general welfare of employees.
According to Deloitte, there is growing evidence that ESG pillars (environmental, social, and governance) exert a direct influence on employee welfare. The problem is that the measures in the ESG framework are often insufficient to capture the value of an organization’s welfare programs. In order to have a real, long-term impact, ESG model guidelines should include social requirements that can extend beyond traditional ones: updated standards for designing policies to protect diversity, increase equity and inclusion, and for developing useful practices for managing discriminatory behavior. Finally, a decisive factor in the success of actions based on ESG parameters is their communication: the ability to get clear and shared messages across both externally (social and institutional channels) and within the company (apps and collaboration platforms).
So far, we have investigated the main aspects on which a welfare plan that is able to capture the scope of the changes taking place should be structured. Now, we will look at the three best initiatives to implement in order to improve employee welfare.
1. Choose your welfare goals carefully (starting with an understanding of your employees’ needs)
Choosing the most appropriate welfare goals can be a complex and challenging process, particularly in larger organizations with a diverse workforce.
Possible goals that a welfare plan could pursue include:
- Increased employee satisfaction and engagement (strengthen adherence to company values);
- Reduced turnover (increase employee retention and improve talent management activities);
- Increased efficiency in benefit plan management (save time and money);
- Support for compliance procedures (avoid fines or penalties by ensuring compliance with employee protection regulations);
- Increased transparency (ensuring employees have access to accurate and timely information about their benefit plans).
Technology can play a key role in helping to manage and automate many of these processes, through the collection of information—structured (e.g., employee biographical records) and unstructured (interviews or comments posted on the company’s digital bulletin boards).
2. Measure your welfare actions
You cannot correct or improve what you do not know. That’s why it’s essential to conduct regular employee surveys to understand if new critical issues have arisen or whether latent problems have become chronic.
Collecting responses alone, however, isn’t enough: it’s essential to focus on information that offers insights that are actually useful, so that you can identify the root causes of problems but also encouraging signs. Valid insights can be extracted from a well-designed survey, both to identify causes and effects of trends and patterns of behavior and to suggest sound and realistic strategies.
Initiatives that measure the effectiveness of corporate welfare are essential for assessing people’s satisfaction with specific benefits, such as health care or retirement plans, in order to determine whether employees know all the benefits of the services offered, and to identify areas for improvement.
This includes regular risk assessments, through which companies can determine how safe and ergonomic facilities, services and equipment are.
Digital tools, such as data management platforms, play a strategic role in capturing and interpreting data related to the success of individual campaigns and actions: by integrating performance results within an overview that is accessible by different teams (management and human resources first and foremost), organizations can more easily identify potential trouble spots in policies and strategies, uncover the most innovative practices, and validate those that have already proven to work.
3. Communicate and promote your welfare actions
Welfare services that employees don’t use or are unaware of are ultimately useless. Investing in how employee welfare actions are promoted and communicated is then essential: to improve the employee experience, increase employee awareness and engagement. However, traditional communication tools may not be enough: long emails may be lost in the daily mail stream or simply ignored, or the pace of work may be such that employees don’t have time to use the company intranet.
This is where digital communication channels offer excellent alternatives:
- Mobile communications (e.g., apps that allow staff to be reached directly on their smartphones) are proving particularly effective for Generation Z and younger workers.
- Personalized videos transform employee data into engaging and interactive narratives that offer exactly the information each employee needs.
- Online surveys help capture the information needed to design and promote the benefits included in the welfare plan. Surveys also make employees feel part of the business decisions that affect them.
- Continuing education (including e-learning). Continuing education courses steadily rank among the most popular employee benefits. An online RSVP notice reminding of the start of classes can prove extremely useful in maximizing participation involvement.
Although most large companies provide welfare programs, the mental and relational health of employees is not always given due consideration, and the broader dimension of employee well-being (social, financial, professional) continues to be underestimated. All three of the corporate welfare initiatives we have reported succeed in filling this gap because they have one thing in common: they use digital technologies to implement personalized actions, from setting goals to measuring the success of services to developing clear, comprehensive, and timely communications.