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The State of Social in ESG

Data & Insights:

Human Capital Management

Introduction

The pandemic and cultural reckonings stimulated dialogues about the importance of human capital management. The Human Capital Management Coalition defines human capital as “the collective knowledge, motivation, skills and experiences of the workforce” and positions human capital as “the engine that drives our economy and allows companies to compete in an environment where ingenuity and the ability to adapt to novel technologies are the keys to lasting success.” Human capital management is thus a very broad concept and includes practices related to DEI and employee health and safety, which are covered in other sections of this report. In this section, we focus on working models, training & development opportunities, and measuring and promoting employee engagement, which play an important role in attracting and retaining talent.

Figure 7: Post-Pandemic Working Models

Which of the following models is your organization adopting post-pandemic?

Although Covid-19 is still circulating, estimated case counts have dropped from their peak in early 2022 and most public health restrictions have been lifted. As a result, many organizations are starting to bring their employees back to the office, although the frequency and approach varies widely across different organizations. We wanted to understand what the return to the office looks like, so we asked survey participants to let us know what type of model they are adopting post-pandemic.  

As shown in Figure 7, the data indicate that flexible and hybrid working models are the new normal. Among our 73 survey participants, only two organizations (3%) are bringing their staff back to the office full time while a staggering 92% have adopted some form of flexible model where staff work from home at least some of the time.  

About half (49%) of survey participants are adopting a hybrid model in which their staff choose which days they are at the office, providing a high degree of flexibility to their employees. Roughly a quarter (26%) of participants are adopting a hybrid model in which the employer chooses which days their staff are onsite, while 14% are offering a fully flexible model in which employees choose their work location. A mere 3% are fully remote, with no staff at the office, while the same proportion of participants (3%) are bringing staff back to the office full time.  

The data suggest that organizations bringing their staff back to the office full time may face challenges in the competition for talent that wants flexibility. A global survey of 28,025 full-time employees conducted by Cisco in 2022 found that 78% of employees believe that hybrid and remote work have improved their wellbeing. It is thus no surprise that a 2022 McKinsey survey of 25,000 American employees found that 87% of workers prefer to work from home when given the opportunity. 

It is worth noting that the preference for remote or hybrid work models tends to skew younger. A 2022 Mercer survey of 1,000 Canadian employees found that employees aged 25-44 tend to prefer working from home full-time, while employees over the age of 55 tend to have a stronger preference for working at the office. The same survey found that, among younger employees aged 25-34, flexibility was a key factor in deciding to potentially leave a role. About one-third of these younger employees cited a lack of flexibility as a reason for exiting their current workplace. This suggests that the drive for flexibility and remote work will strengthen as younger workers enter the labour force in greater numbers and move into senior positions over time.  

Figure 8: Training & Development Opportunities

Does your organization have a formal program to provide employees with training & development opportunities?

A 2022 Conference Board survey of 1,200 individuals found that 58% said they would likely leave their company without professional development opportunities or related training to develop new skills and advance their careers. This likelihood was highest among women, people of color, and millennials.  

Our research validated this trend. The vast majority (86%) of Canadian and US employees ranked training and development opportunities as ‘important’, with close to half (42% and 48% respectively) ranking it as ‘very important’.   

With professional development playing such a crucial role in employee expectations and retention, we wanted to understand what proportion of organizations are offering training and development opportunities. As shown in Figure 8, approximately three-quarters of respondents (73%) currently have a formal program to provide their employees with training & development opportunities, while 18% are considering or working on such a program. Only 10% of respondents do not have a formal training & development program and are not considering it. 

These data suggest that most employers are aware of the importance of providing their employees with training and development opportunities.

To gain a sense of what form these training and development opportunities are taking, we asked the 53 out of 73 participants who currently have a formal training and development program to provide more details, which are shown in Figure 9 below. Approximately three-quarters (77%) offer bespoke training courses and/or workshops in key elements of their business, while 70% provide formal leadership and management training and 68% provide credits or allotments to employees for professional development. A minority provide formal mentorship programs (40%) and scholarship/bursary programs (36%), while 19% reported using other formal programs to provide training and development opportunities to their staff.  

The minority (10%) of participants that do not offer these opportunities and are not considering doing so may face challenges in their efforts to attract and retain talent that largely wants these opportunities. However, our research suggests that even those who are undertaking these efforts may not be meeting employee expectations.  

Figure 9: Types of Training & Development Programs

Which of the following formal programs Does your organization use to provide employees with training & development opportunities?
Bespoke training courses/workshops in key elements of your business
41%
Formal leadership and management training/courses
37%
Professional development credits/allotments
36%
Formal mentorship programs
21%
Scholarship/bursary programs
19%
Other
10%

N=53

woman laughing at work

The Employee Perspective:
Great Expectations - Still Unmet

While a clear majority of employees in our survey strongly or somewhat agree that their employers are performing well on every dimension of social performance, there is a persistent gap between those performance scores and the level of importance employees place on social issues.  

The creation of training and development programs and opportunities was the single most important issue for employees (very or somewhat important to 86% in both countries), albeit tied statistically with programs supporting employees’ mental and physical health and protecting human rights. 

However, much lower percentages – 65% in Canada, 71% in the U.S. – believe their organizations are doing very well or somewhat well. This is the second largest “importance-performance gap” in the survey. 

Only 22% and 35% of Canadian and US employees, respectively, ranked their organization as doing “very well” on this front. Again, scores were lower from Canadian employees: 27% report that their company is doing “not very well” or “not well” at all on this issue (compared to 20% of US employees). 

The creation of training and development opportunities was the single most important issue for employees, but only 22% and 35% of Canadian and US employees, respectively, rate their employers as doing “very well.”

Figure 10: The gap between employee expectations and evaluation of performance

Creating training and program development programs and opportunities for employees

Whether employers are not offering the scale, breadth or depth of training opportunities employees want, or employees are simply unaware of the opportunities available to them this finding points to a need for much stronger internal dialogue between employees and employers on this issue.  

Figure 11: Measuring Employee Engagement

Does your organization regularly conduct formal surveys or programs to measure and/or promote employee engagement?

Amid growing competition for talent in a world where flexibility is a new norm and expectations are running high, it is increasingly important for employers to engage and understand their employees. Achieving this engagement and understanding cannot happen without input from employees, so we asked participants whether they regularly conduct formal surveys or programs to measure and/or promote employee engagement. 

As shown in Figure 11, approximately three-quarters of participants (73%) regularly conduct formal surveys or programs to measure and/or promote employee engagement, while 10% are considering it or describe it as a work in progress. Only 18% of participants do not regularly measure employee engagement and are not considering it. This latter group not considering it is composed primarily of non-profits and small organizations with fewer than 99 employees.  

We asked the 53 participants that regularly measure and/or promote employee engagement to provide more details, which are presented in Figure 12 below. Ninety-one percent of this subgroup engage their employees with office social events, employee discussion forums, and internal communication channels. Eighty-nine percent leverage committees, working groups, or task forces to promote employee engagement.  

Sixty-eight percent use employee learning events, while 58% use staff offsites or retreats to promote employee engagement. Fifty-one percent of respondents have a volunteering program while 49% match donations to charitable causes to engage their employees. Forty-two percent use mentorship programs while 21% use employee exchange programs. Nineteen percent of respondents wrote in other programs to promote employee engagement such as coaching and mentorship, employee surveys, free snacks, webinars, and employee ownership opportunities. 

How will employee engagement strategies evolve in the era of flexible and hybrid work? An important question, considering the current emphasis on office social events.

It will be interesting to see how employee engagement strategies evolve over time in the era of flexible and hybrid work arrangements, particularly since office social events are at the top of the list in this survey.  

Figure 12: Promoting Employee Engagement

How does your organization promote employee engagement
Office social events
91%
Employee discussion forums
91%
Internal communication channels
91%
Committees/Working Groups/Task Forces
89%
Employee learning events
68%
Offsites/Retreats
58%
Volunteering program
51%
Match donations to charitable causes
49%
Membership program
42%
Employee exchange program
21%
Other
19%

N=53

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