In the post-pandemic workplace, the terms of the employer-employee social contract are changing. Employees want to work for employers they trust and believe to promote well-being, a positive workplace culture, social and environmental responsibility, and a sense of belonging. - BY SHARON ROSS
The social contract between employee and employer is not a new concept. Like any contract, it is about reciprocity and expectations. The baby boomer generation's basic contract mostly stayed the same over the past decades, and three things happened. One was the entrance of millennials into the workforce, many burdened with college debt and a perspective shaped by events such as the 2008 financial collapse, which changed the job market and delayed their ability to do what prior generations had done, i.e., start a career, buy a house, and have a family. Another event leading to the transformation of the social contract is the pandemic, which changed the work model and other social factors, and reinforced the millennials’ push for work-life balance, family health benefits, more paid time off for personal reasons like caregiving, and mental health benefits. Now Gen Z is in the workforce, and they have even stronger expectations about diversity and inclusion as an embedded value, work flexibility, and the importance of belonging.
A third influence on the social contract is technology, which has impacted how and where work gets done and how people communicate and network. In the past, the social contract was mainly about job security, a steady salary, and some benefits. Today, employees are looking for more than just a paycheck. They want to work for companies that value flexibility, work-life balance, and opportunities for growth. They also want to work for employers who support a diverse workforce, understand the importance of inclusion and belonging, and are committed to social justice and environmental sustainability. Employers must adapt to the changed employee expectations, creating new challenges in attracting and retaining talent.
The factors just mentioned that are transforming employee expectations are just some of the most obvious. There are others driving organizational changes in the talent system. The Great Resignation (now ending but a wakeup call for employers), quiet quitting, and now loud quitting (complaining about an employer on social media) plus shifts in the labor market, employee demands for having a voice in decision-making, and the need for leaders to manage with empathy have influenced the social contract also. Employees are also more aware of inequities in pay structures, career opportunities, safety standards, and training opportunities.
The shift from the most recent old to the new social contract has occurred rapidly compared to changes in the past. Baby boomers were satisfied with rigid work schedules, standard benefits such as vacation and sick days, competitive wages, standard training programs that took them away from their job responsibilities, hierarchal career paths, and benefits packages composed mainly of health and dental insurance. Under the new social contract, employees want flexible benefits; non-hierarchical career paths based on competencies and skills; tech-driven, customized training programs that are accessible 24-7, access to resources and job assignments that enable career progression at a faster rate, higher level safety standards, and the ability to pursue financial security. Diversity and inclusion were discussed under the old social contract, but employers were not held accountable. Under the new contract, employers are expected to demonstrate a genuine commitment, produce measurable results, and add equity and belonging as values.
PROACTIVELY REDEFINING THE SOCIAL CONTRACT
Employers are increasingly focused on creating a positive company culture and investing in their employees' well-being. This means offering benefits like mental health resources, wellness programs, and flexible work arrangements. Employers should be proactive in meeting employee expectations about the relationship employees have with the company. One way to do this is by creating an open and transparent communication channel between management and employees. This helps to build trust and creates a culture of transparency, which is vital for a healthy working relationship.
Another area where employers can improve is in the way they measure performance. The annual and biannual performance reviews persist, and even when they are more frequent, they are often ineffective and subject to unconscious bias. The conversations fail to provide employees with direction on improving and advancing. Millennials and Generation Z want goals and objectives, feedback, discussions on career development and the employee experience, and where they stand with the organization. The reviews lack inspiration. Instead of solely focusing on quantitative metrics, which can be misleading, companies should also look at qualitative factors like employee satisfaction and engagement. By taking a more holistic approach to performance measurement, employers can create a more accurate picture of their employees' performance.
Developing a collaborative culture is another key to a productive and successful work environment that supports the transformed social contract. Employers should encourage cross-functional teams and create opportunities for employees to work together on projects. This fosters collaboration, and helps employees develop new skills and learn from their colleagues. Also important is that collaboration fosters a sense of belonging in employees. Effective collaboration encourages employees to share their unique perspectives and experiences, builds human connections, builds teams, and enables people to bring their authentic selves to work.
Career development is another “clause” in the social contract. An Amazon and Workplace Intelligence survey of 3,000 U.S. employees from different companies and industries found that 78% believed they lacked the skills to advance in their careers, and 70% felt unprepared for the future of work. Additionally, 83% reported that skills improvement was a top priority. The employees who hoped to move into leadership positions liked the idea of helping the next generation have a better work experience. Approximately 64% planned on quitting if not given opportunities for skills development, 66% planned on quitting because there were no career advancement opportunities, and 65% wanted to change jobs because they did not see a career path in their current organization. Successfully recruiting and retaining talent depends on employers offering skills development and career advancement.
DELIVERING MUTUAL BENEFIT
Overall, the social contract between employee and employer is becoming more collaborative and focused on mutual benefit. Employers prioritizing their employees' needs are likely to see higher retention rates, increased productivity, and a better reputation in the industry. The social contract is a work in progress, so it is essential to recognize that it continues transforming for employees and employers. Employees expect employers to be trustworthy and more transparent. They want more empowerment and opportunities to be creative. Employers striving to meet new employee expectations recognize they must let go of the old social contract's rigidities. For example, step ladder career progression is replaced with flexible career paths. Instead of being locked into a single career path, there are opportunities for different career paths. By meeting the workforce's needs, the organization positions itself for long-term success.