Top 5 HR Trends 2025 - Episode 1

Speaker A: Welcome to Aon's HRBytes. I'm your host, David Kirk. And in part one of this podcast we'll be discussing the five megatrends which, uh, are designing total rewards for an evolving workforce. Transparency and equity in total rewards. Maintaining a productive workforce by moving from well being to sustainability. Elevating total rewards ROI with improved governance and operations. Managing the impact of AI on the workforce.

Speaker B: Hi, everybody. Um, thank you for your time today. I'm Jeanette Cook. Um, I've been in AON for a few years now and for the Last sort of 25 years I've been working across people, processes and tools, specifically in the pharma space, looking at how to really help our people thrive, not just survive in the workplace. So it's great to have these topics today.

Speaker C: Hi, David. Hi, everyone. Uh, Anthony Paul. I am leading aon's pay transparency proposition across the EMEA region. So, supporting clients, preparing for regulatory change, but also the broader social agenda that's changing along with it.

Speaker D: Hi, David. Hi, everyone. My name is Celine Ningtong. Um, I am in the global benefits team. So what that means is I've been working with multinationals, um, across the world for the past 20 years in terms of helping them with their global benefit strategy. And that's benefit in the very broad sense of the world, so of the ward. So pension, insurance, leave, um, you know, food allowances, etc. So you name it, um, we've been working with clients in that space.

Speaker E: Hi, everyone. I'm Steve Lee. I work in the retirement practice at aon. So I've been working in, um, predominantly pensions for the last 25 years. And my role is to advise pension schemes and employers essentially to make sure they're getting the most from their pension arrangements, so they're getting good value for their spend, but also making sure their people are getting good value from their pension savings as well.

Speaker A: Thank you, everyone. And my name is David Kirk. I'm your host today and I lead our strategic use of technology to bring maximum impact to our, uh, clients here at AON M. We're really excited to have this conversation with you today. And one thing you're going to notice as we go over these five trends is they're all incredibly connected in linked, so you certainly can't be discussing one without considering the other friend 1. We're going to dive in. And this is all around designing total rewards for an evolving workforce. The current diverse workforce brings huge advantages to organizations. But as we found at AON in our recent employee sentiment survey, there's a real disconnect between what employees want and what. One of the critical takeaways from the survey was that uh, over half ranked above average pay and m meaningful benefits first when considering a new employer. And there's a huge amount of employees out there right now today who are looking for new employment due to a dissatisfaction or a mismatch with their existing employer. The real challenge is that creating social rewards packages that are moving from a one size fits all to a holistic total reward framework is incredibly challenging for organizations. But really the first step in that process is understanding what your different and the first step in the process is understanding what the different demographics within the organization require. Celine, when we were preparing for this, you had some other insights around this that we thought would be worth drawing out.

Speaker D: Yeah, I mean I think my perspective is very much the multinational view. Um, and one of the stats that I thought was quite interesting is that um, over 65% of UK based multinationals were saying to us in 2024, so just a few months ago, um, that actually really considering the diverse need of their employees when designing their holistic benefit strategy was one of, you know, one of the key priorities for them. Um, and how they executing on this and how they were considering executing on this um, over the next few years was really thinking increasingly about how to customize programs. So how do we allow our employees to kind of pick and choose the programs that best fit their needs. And our employee sentiment survey for example really kind of highlighted that different generations, different genders, what um, those workforce profiles prioritize and really valued was really important. Um, so we're really seeing an increasing um, use of thinking about both inclusive benefits programs, a program that really support the needs of potentially marginalized um, population, but also um, playing around with um, customization of benefits. And I think this topic is going to be particularly interesting as we see how the US for example is evolving. So we're seeing a little bit of a different conversation around diversity, equity and inclusion in the US but it will be interesting to see how the UK uh reacts to that. But what we're seeing, what we're hearing, hearing from our clients, what we're hearing from employees is that please, you know, consider our diverse needs when you're you know, designing benefit strategies. And we're also hearing from employees that they do very much value that ability to customize. So I think this will be an

Speaker A: interesting space and I think that the stat that came out of it was across all of these countries that, that are surveyed, um, within the employee sentiment survey, 72% of employees would like personalized benefits. However, only 41% have access. So again, it's just highlighting, um, the gap that exists between the two. Stephen. Um, retirement savings, obviously, um, something that's very close to your heart. You'll be delighted to hear that, um, across all the different demographics, um, generations within the workforce, that was a, um, key, um, benefit, um, an area for consideration, um, across all five generations. Is that something that you're seeing within your work?

Speaker E: It is, yes. And yeah, I was pleased to see that it is featured so highly. So perhaps we would have expected to see that amongst sort of the baby boomers, or perhaps Generation X, where retirement's probably a bit more pressing in their kind of immediate future. But I was very pleased to see it was also ranked sort of the, um, the most appreciated benefit amongst Generation Z as well, which I think would probably come as a surprise to a lot of employers who think perhaps their younger workers are probably least interested in that sort of benefit. And thinking about retirement, what I'm seeing a lot is sort of following on this theme around being able to tailor and personalise benefits. That's quite challenging with a lot of retirement plans because essentially people are going to be offering the same level of retirement saving for different generations and different types of workers. But what we are seeing more is employers thinking about how they communicate with different groups. So, for example, in our dc, um, pension scheme survey last year, we found over half of employers are actually tailoring the way they communicate to different generations within the workforce. So although they may ultimately be benefiting from the same pension provision, there are probably different aspects and different, um, elements of that that might be relevant for people. Ah, ah, at different points in time. Uh, and in particular, I guess a good example of that is perhaps older workers who may be able to benefit from sort of flexible access to retirement savings. So thinking about how employers can support those workers who might want to stay in work but perhaps reduce hours, um, take on different roles and actually can they use the retirement plan to help manage and help support those workers. So, you know, that's just one example of been able to tailor the same benefit but perhaps use it in a different way for different groups

Speaker A: and as part of, uh, that full total reward package. Clearly, medical support is incredibly important. Jeanette, what are you seeing from your work in terms of, uh, this need or this desire from the workforce, um, in the wellbeing space?

Speaker B: Yeah, I mean, two things really. I mean, I guess we can't talk medical in the UK without using the words nhs um, and really if you think about nhs, that is for when you are ill. So that's far to the end of spectrum after someone's struggling and they have got a condition. What we're seeing now is wellbeing is really in that preventative space. We're looking at that shifting of the dial and being able to support employees before they are, uh, having any chronic conditions or having time off back. You know, in the COVID years, wellbeing was a relatively new buzzword. We've seen an uh, evolution in wellbeing, I would say, over the last five to seven years. So back then wellbeing was in its infancy. People meant well, it was very modest. We went shopping, we just bought whatever products were available. Um, that's what we kind of refer to as well being 1.0. So our cupboard was full of things. Then we moved into the well being 2.0 space where we were trying to link it. Okay, what is well being? We have the five pillars. Physical, mental, financial, which Stephen's mentioned, social and your career. And so we were looking at, okay, do we have, what do we have in the physical space? The medical insurers were really proactive in giving sort of incentives. If, uh, companies were giving discounted gym membership, for example, and we were all around when it was, um, fruit bowls in the canteen or the vending machine had a few extra options that were slightly more healthy. So they were great siloed interventions. But where was that bang for the buck? Where was that seismic change for all the investment? So we've moved into Wellbeing 3.0. Uh, now we're looking at that more holistic, integrated approach to wellbeing. Gone are the days when you gave someone a nap and said, here, good luck with your well being. It's no longer a HR problem, it's no longer an employee problem. Yes, we own our well being, but the company and the organisation, the employer has to make sure we can look after our well being. And that's the change we're seeing now. That shift to being a company. Responsibility, team, individual team organization. We're seeing that thread across and wellbeing has been most successful. There's been some really elegant studies, David, where have looked at, uh, okay, different interventions. Do they actually track? Do they make any difference? And the more integrated that approach. So moving away from when they're ill, reactive to that, more proactive education, screening, um, that type of area, we're seeing a huge change. Occupational health, no longer four weeks when you're sick. It's actually right when you're starting to have that backache. Then you get your. Oh, so it's, um, a mindset of companies that wellbeing sits strongly in preventative and is effective. That's what we're seeing now.

Speaker A: Great. Thank you, Jeanette. And as you were talking there, I was thinking about what would be the step for an organization to achieve a holistic total reward framework. And there's four areas and some of those of which that you just touched on there. The first one, very much being around making sure that you're collecting and analyzing this workforce data so in an integrated way from multiple data sources, using that data, uh, segment the workforce. So again, it's that ability to create this personalization that is clearly being asked for from all employees. Um, third one is very much around creating systems to monitor and evaluate the effectiveness of the program. So exactly as you were touching on there, in terms of actually, what is the roi, um, on these investments. And then the final one is really around communication. So point four is how do we communicate an offering in an effective way that's really going to have impact for an organization, um, as that final step. So, moving on to trend two, we saw about paid transparency. It's very much more than pay and, um, more than just transparency. Um, Anthony, it's brilliant to have you here, um, to talk more about this. You spend a lot of time with clients on this topic. Um, it's more than just pay and it's more than just transparency, isn't it?

Speaker C: I mean, yes, David, for sure. There's no question about that. And, um, I'll dig into a couple of those points. Um, but before I do, I think the first thing to acknowledge is this is potentially about significant change. And that sounds like a really obvious point to make. And David, you and I have spent a lot of time together in the past talking about this topic. It's about organizational DNA, right? When everyone within a given organization starts to understand more about pay and more about what's going on, then we are going to start to see some very different conversations happening, perhaps some different perspectives from different groups. And we're really going to have to make sure that we manage that change appropriately. So as we know, when we talk about pay transparency, the catalyst to why we've been talking about it so much recently has been the EU directive. And even within the EU directive, what we mean by pay is much, much broader than just perhaps what we might have historically thought of as pay. So we do include everything that an employer gives in cash or in kind to an employee that does include benefits, that does include pensions, that does go into potentially other items, um, that the employer has been awarding over time. So when you think about change, this isn't just about a reward team. This is a whole business initiative and something which is coming up quickly, at least from a regulatory perspective. But more broadly and certain for our clients in the uk, social change and social drivers are really pushing for more and more of this transparency. But I would say that, you know, to more specifically answer your question, um, it is about equality. Um, if we go back to our employee sentiment survey that I think all of us would recognize is the encyclopedia of what people want, um, at the Moment, you know, 22% of employees in the UK believe that pay is not fair and equitable in their organization. And whilst that is um, slightly higher than the US and a lot lower than it is in APAC, I think we'd all agree that 1 in 5 people thinking that way is suboptimal. Right? And so whether or not it is actually the case, the fact that one in five people believe it is a challenge there, that surely we want to solve. You, um, think about, um, when everyone has access to pay ranges in adverts, um, when you can request from your employer where you sit for your category of worker relative to males and females. And again these are requirements of the directive itself, but likely to breed over into different locations. We are going to get very different conversations. Line managers need to be skilled up differently, um, and we need to be talking and thinking in a consistent fashion because it's about, we often think about the numbers when it comes to this stuff. But actually a lot of the context is we need to be clear on how pay is set, progressed and managed within the organisation as well. I think the second one that I'd point to, um, as to why this is about more than transparency. I think this is about talent in its entirety.

Speaker E: Right.

Speaker C: This is about the employer value proposition and how we can potentially add to that. Um, because if you think about where this is taking us into an environment where there's much more clarity and structure in roles and the organization, we can see more apples to apples. We need to be able to make apples to apples comparisons to be able to determine whether we have equality or not, um, that enables people, I think, to see more clearly what's on offer across the organization, what are the opportunities for me. And that potentially adds, um, to the value proposition of this organisation. If I'm going to stay here, can I see a path to the future? It changes a lot how I think about my career.

Speaker A: Brilliant. Thanks Nancy. And Stephen, is there a retirement savings angle to this?

Speaker E: Well, good question David. And there actually is. You might not think so in terms of pay transparency but um, as Anthony mentioned, obviously pensions are part of the picture, um, as well as other benefits. But something that perhaps people might not be aware of is there's a big um, pensions gender gap in this country. So people might be aware of the gender pay gap. Um, indeed most large organizations need to publish um, sort of public data around that. But actually there's also a significant gap between pension savings between male and females in this country. Um, and this is something which I think is becoming more apparent, more well known over time, um, and more organizations are actually looking to do something about it. And interestingly when we've looked into this and when I've looked into this with particular companies, it's not always the gap in payment which has driven the gap in pensions provision. So pay differences in pay might be one factor, but actually sometimes bigger factors in terms of pension savings and differences can be around sort of working patterns, um, sort of periods of leave. Um, you know historically females um, have been more likely to sort of take leave for caring responsibilities, whether that children or sort of older um, family members, um, but also some of the behavioural side as well and the fact that the sort of decisions taken around um, for example additional contributions can be different as well between males and females and that can all feed back into this whole point around recognising the way that we communicate and are we communicating in an effective way to different people across organisations. Um, so I think it's a really interesting one and I say there's um, a lot more work and a lot more recognition um, coming to the fore around that gap in pension provision.

Speaker A: And Celine, from a global benefits perspective, how do you see this impacting your clients?

Speaker D: I mean I think exactly as ah, Steve was sharing, right, um, as Steve and Anthony were sharing the conversation around pay transparency is driving conversation around equity. One of the biggest piece or one of the biggest gap around benefits equity is really around pension and what Steve highlighted in the UK we actually see, you know, replicated across most markets. I would say, um, obviously the numbers might be different but I've seen numbers, you know, 30 to 40% quoted in Asia for example around pension pay gap. So the, what's been discussed so far really is a global issue and I think as Anthony was saying, pay transparency is a catalyst for a conversation around broader talent and as well broader um, equity. So I think again linking back to our Trend one. Right. David, you were saying how the trends are interconnected. Um, this is actually really supporting a conversation around. Is the way that our benefits design really driving equitable outcome? And as an organization, are we okay with this or do we want to do some tweaks? So pay transparency, I think is just the beginning of a much broader conversation on this topic, which kind of again links back to really trend number one around diverse workforce and the need to address their needs in a holistic way. And without taking that one size fits all approach.

Speaker A: And on that point, Anthony M. How does this play out in the long term? And linked to that. Are people ready? Because this is right around the corner now.

Speaker C: Um, that's a great question, David. It's the question of the day, the degree of readiness. And certainly we would observe a lot of, um, inertia, I would say, amongst clients. Um, whether it's for regulatory issues, um, the directive in the EU is still being, uh, transposed at local level. Whether that is obviously from a UK perspective. There is no direct requirement at this point, but there are kind of social, social pressures coming through, you know, for the future. I think that, um, there is fundamental challenge for organizations to say, if I take this point around, forget the numbers for a second, but we have to articulate how pay is set, progressed and managed within our organization. You know, I think for many firms, writing that down in a format that is consistent and is true across the whole organization is going to be something that's new. Right. So significant change in terms of having to actually articulate a consistent approach. Um, I think fundamentally this is a shift in people's mindset from pay is about the job primarily and less so about the individual.

Speaker E: Right.

Speaker C: Because I think a lot of organizations, particularly if I take financial services and there's other related sectors as well, uh, people do think about their pay as their own piece. And we're going to have an arrangement in place in the future whereby we have a clear structure to the organization. Every job has a range and within that range, um, you are going to see, um, where someone's performance impacts so much more weighting towards. It's about the job. And if I really want significant change, significant career growth and pay, I'm going to have to move into a different job. And that leads me to my third one which I think is, um, career and skills. Right. There's some more references. We're going to come to talk about AI later and the impact on people's jobs. And I know we've got lots of statistics around that. People are concerned about whether I'm prepared for the future. And inevitably you will be more mindful of it in an environment where you can see a structure in front of you, the skills required of the jobs that you want, and you can start to move towards those. So I think, you know, the future has definite challenges in terms of change, but a lot of upside in terms of the transparency it brings, not just from a pay perspective, but also from a career perspective.

Speaker A: Thank you for listening. Tune in for the second part soon.