Understanding employees in context

PUTTING THE LENS ON EMPLOYEES

You are an individual with desires, interests and values that every product manufacturer, service provider and employer is trying to understand and anticipate to provide, and sometimes sell, something of value – or at least what they perceive to be of value – to you.

Given that South Africa has a working population of 9 644 000 in the formal nonagricultural sector as at the first quarter of 2017¹, can we expect employers to get this right for each one of us? And if so, how? How should they know what we want when we ourselves don’t always know, and when what we want changes from day to month to year?

The individual employee at the heart of the benefits framework

For employers, policymakers and service providers to engage effectively in co-creating a comprehensive social security package of meaningful benefits, they need to apply everything they know to the needs of the individual on the receiving end of these benefits – and this includes everything they know about the individuals themselves.

We’ve said before that employees still have a basic need for savings, income and medical protection regardless of how the world of work changes. A comprehensive benefits framework will take into account lifestyle needs such as housing and transport (which we discuss in more detail further on), financial protection against those ‘what-if’ scenarios, and savings that enable the accumulation of assets over time.

Because we all have obligations beyond our individual aspirations, employers can also consider providing personal improvement and protection benefits for both the individual employee and their family. This includes implementing policies which allow for the fact that ‘life happens’, acknowledging there will be times when people need more than just the legislated time off to attend to personal matters.

So, what should we be thinking about when developing this individualised, customised ‘package’ of benefits? In this chapter, we provide some direction by exploring employees in the context of their extended responsibilities. We then address the importance of considering different ‘money mindsets’ – attitudes and behaviours towards money that may influence the way individuals engage with these benefits.

By taking both these perspectives into account, we believe employers will be in a stronger position to offer the right benefits, at the right time, to employees who need them.

Individuals in the context of their responsibilities

Indeed no one is an island, especially in South Africa where the average household is made up of four people. This figure does not include grandparents or in-laws who live on the same property, extended family members whose numbers climb well into the fifties, and other individuals or groups who may not be related to but are dependent on you, either financially or for some other reason.

Adding to our ‘piece of the continent’ is a network of friends, colleagues, community circles and social organisations to whom we believe we owe some duty of care – whether formally or informally.

The responsibility lens

We see this network of significant others through our ‘responsibility lens’. The responsibility lens framework is a visual representation of an individual’s ecosystem of relationships and interdependencies between role players (industry, employer), partners (family, friends) and influences (social, community structures), as shown in Figure 4.

Naturally, we do not expect any two individuals to have the same responsibility lens. While the magnitude and focus of each lens will vary from person to person, no decision or activity – moving home, for example – by the individual at the centre is made or performed in isolation.

There are various forces at play that affect our individual interactions, decisions and outlooks within this lens. Personal circumstances (financial or otherwise), changing lifestage needs, cultural nuances, and upbringing, for example, play a role in determining how we connect the dots and allow the different lenses to co-exist in a balanced way.

Figure 4: Employee's responsibility lens

Using the responsibility lens to structure a meaningful benefits package

Many South African households have a non-nuclear construct, with varying responsibilities to influencers, participants, benefactors and decision-makers. Increasing pressure on and expectations for younger generations to financially support their parents before and after retirement further impacts on their own spending and saving patterns. At the same time, there is a growing trend to reduce contributions to long-term or retirement savings in order to fund monthly expenses.

Consider this reality for a large portion of South Africans: according to the survey of employees in Old Mutual’s Savings and Investment Monitor (July 2016), 45% of children expect they will have to support their retired parents – a significant increase from 2010 (26%).

By using these archetypes as a platform for discussion, employers and advisers can engage with employees about the benefits that would best suit their individual lifestyles, responsibilities and personalities.

Figure 5: South Africa's expectations of having to support  family in the future

Moreover, the 2017 edition of the survey reports that 58% of respondees expect to financially support both parents and other family members into the future, a trend that’s given rise to the term ‘sandwich generation’.

Members of the sandwich generation are among the first group of consumers who will make savings and investment sacrifices to ‘boost’ their monthly income so they can cover their expenses. And with unemployment now affecting 30.1% of young people (aged 15 to 24 years) and 27.7% of the total population, the chances are high that unemployment touches most South African families in one way or another.

With this in mind, it’s clear that the way an employer structures its employment policies and benefits can have a significant impact on our ability to meet our responsibilities and obligations. Using this lens, here’s what an employee might want to consider:

• How flexible are my employer’s policies towards letting me address family emergencies or health crises?
• How flexible are they in allowing me to address those day-to-day administrative hassles that plague family life?
• What are my options and how much flexibility do I have about retirement funding, medical aid cover, spousal and life cover?

But that’s not all that impacts on my relationship with the employer. Other considerations that come into play include:

• What will I have to give up in pay to just get to work each day?
• How convenient will it be if I also have to take care of young children?
• How easily can I get food at the workplace?
• Will there be other resources to fall back on?
• Will there be discounted services I can tap into?

Where we are moving to is a model of benefits that is light years away from the tradition of paternalism. Instead of a model where the employer says, “This is what you need and this is what I will give you,” the pendulum has now swung 180 degrees to, “How can I help you get what you need to make your work life here work for you and your family?” The more holistically employers can understand an employee’s life, the more likely they will be able to structure policies and benefits that make sense for their employees.

Individuals in the context of their relationship to money

Throughout recorded history, most people in Europe – as elsewhere in the world – had possessed just four kinds of things: those they inherited from their parents; those they made themselves; those they bartered or exchanged with others; and those few items they had been obliged to purchase for cash, almost always made by someone they knew. – Tony Judt, historian

The influence of our past experiences on present attitudes

The way we relate to employee benefits, compensation and money exchanges of any kind has to be understood through the lens of past experience and memories about money. The biases these influences introduce to our decision-making belie the notion of rational economic decisions. This is why, for benefits to be engaging, they need to speak to what matters to us, help us address our greatest fears, and provide clarity when notions of money simply leave us confused.

For most of us, our relationship to money is based on our experiences of and exposure to money during childhood. If you grew up in a home where money was readily available and there was always enough at the end of the year for a family holiday, you are more likely to be free-spirited when it comes to spending on creating new memories, paying little attention to the cost.

If your childhood was spent watching your parents borrow money from neighbours, banks and community mashonisas (credit providers) almost every week to survive, you are more likely to be focused on attaining as much money as possible – at the fear of losing it all – while at the same time being price- and savings-sensitive.

In the middle of the spectrum are those whose childhood experience with money was balanced: always enough to get by from month to month, but not quite enough to enjoy spontaneous ‘luxuries’ or family outings.

The influence of money mindsets

The fact is, regardless of where our money problems stem from, the way we respond to these pressures – for better or worse – is a function of these money mindsets.

As part of a recent study in partnership with Accenture’s Value Proposition Team to better understand our relationship with and attitudes towards money, we explored four possible mindsets that represent different beliefs, behaviours and goals.

These ‘money mindsets’ are plotted on two axes: one representing the degree to which each mindset is structured (rules-based or instinctual), the other showing the extent of scope (focusing on today or tomorrow). From this exercise, four archetypes are identified: achievers, balancers, experiencers and explorers.

Figure 6: Characteristics of each money mindset

Using money mindsets to guide a conversation about benefits

As we see above, these archetypes, and the characteristics that define them, can provide useful insights into how employees perceive the value of money in relation to their needs and the obligations of their respective responsibility lenses. By using these archetypes as a platform for discussion, employers and advisers can engage with employees about the benefits that would best suit their individual lifestyles, responsibilities and personalities.

Achievers: “Life’s a game and winning is the only option.”

Beliefs, behaviours, needs and goals:

• I’m goal-oriented; I’m willing to do what it takes to achieve set goals.
• Planning for all scenarios gives me comfort that nothing will stand in the way of achieving my goals.
• I’m constantly planning and budgeting with long-term goals in mind.
• I seek knowledge and insight into new and better ways to manage my finances. 􀅶 I’m prepared to make lifestyle sacrifices to achieve my goals.
• Show me the value you add to me and my goal.

Money mindset:

• I define success by being able to track the achievement of my goals.
• I want to be in control and prepared for the future.
• I’m long-term focused – I understand that achieving long-term plans is a consequence of meeting regular and frequent shorter-term goals.
• I stay on track; I’m always within budget.
• Educate and enable me.

Optimisers: “I ensure I beat the system every time.”

Beliefs, behaviours, needs and goals:

• Money is valuable – I aim to maximise that value on a day-to-day basis.
• Exploitation of the rules is necessary to progress in life. 
• I focus on optimising short-term transactions and value exchanges.
• The long term is defined as a series of short-term moments.
• I hustle on multiple transactions to capitalise on value that may be hidden in the detail.
• I don’t have any brand affinity towards providers.
• The system is out to get you.

Money mindset:

• Rules define the parameters in which a series of games are played – I make sure I understand the rules to find value in opportunities.
• I see money as a store of value and I’m always looking for opportunities to engage in arbitrage for more enhanced stores of value.
• I prefer minimal engagement with financial services. I don’t really pause to think about the long-term impact of my decisions or the associated cost. It’s about the here and now.
• My money is valuable to me and I want to make the most of it.

Experiencers: “Help me avoid self-sabotage.”

Beliefs, behaviours, needs and goals:

• I’m aware of my regular, compulsive spending without a great deal of planning.
• I want to feel less guilty when enjoying life. I want the freedom and flexibility to spend on my lifestyle.
• I’m extremely reliant on having a secure income from my job.
• Managing finances is based on gut sense – I only check on my financial position when I think I may be exceeding my credit facilities.
• I fluctuate between extreme experience-driven behaviour and subsequent rebalancing through trade-offs.
• I need help to plan and to avoid self-sabotage.

Money mindset:

• Money is a means to an end – I focus on the short term.
• I value experiences over money.
• I occasionally feel guilty about my poor spending habits, but this is temporary.
• I want to feel less guilty when enjoying life.

Explorers: “Make me feel I truly matter”

Beliefs, behaviours, needs and goals:

• My goal is to live a full and purposeful life – money will enable this.
• Success is not determined by financial wealth only.
• I interact with brands and services that feel personalised and unique.
• Rules and too much structure inhibit my movement and gut sense.

Money mindset:

• I have a balanced, holistic view of longterm benefits.
• My spending is based on perceived value.
• I will make trade-offs to achieve my financial goals.
• I’m equally happy to spend without hesitation if the perceived value is greater than the monetary store of value.
• I have a tendency to make impulsive decisions, so need to know that all scenarios are catered for.
• I don’t read the details of products and services.

Figure 7: Behaviours related to money mindsets

It may be that we identify with more than one of these mindsets, which is not unusual, given the number and complexity of factors that influence our financial decisions and behaviours. The figure below shows how we can refine the way we identify with each mindset by considering the relative importance of certain behaviours related to each (for a detailed discussion on how we make financial decisions, see Benefits Barometer 2015: Financial Well-being).

Different generations, different approaches

Mark Zuckerberg addressed an audience at Harvard University with the following words: “Our generation will have to deal with tens of millions of jobs replaced by automation like self-driving cars and trucks. When our parents graduated, purpose reliably came from your job, your church, your community. But today, technology and automation are eliminating many jobs. Membership in communities is declining. Many people feel disconnected and depressed, and are trying to fill a void².”

Throughout this chapter we’ve emphasised the importance of, and value in, engaging with employees as individuals in our efforts to develop customised solutions within a framework of benefits. Yet much is made today of how generational differences shape attitudes towards money. Baby boomers (born 1946 to 1964) and millennials, or Gen Ys (born 1977 to 1995), are supposed to manifest distinctly different attitudes towards their jobs, their careers and everything in between. For some experts, these differences are a function of changing technologies. In South Africa, our distinctive historical experience, and the roles that our families and friends played in the context of those different periods, provides an added dimension to those generational differences. But the contrast also serves to show how far the country really has come for this family here.

We investigated this by asking two individuals from the same middle-class, South African family a series of questions related to their views on jobs, career paths, employers and benefits. This is by no means a research study at scale, but merely an exercise to showcase extremes and just how our impactful our environments can be.

Evelynn*, and Maxwell*

share their unique experiences.

*To maintain the anonymity of our respondents, we have changed their names.
 

Q: Describe your childhood, family, dreams and aspirations when growing up.

Q: What influenced your choice of work or career?

Q: What was the socio-economic landscape in South Africa when you looked for your first job?

Q: How did you find your first job?

What has undoubtedly changed through the generations is the dramatic shift in how we acquire knowledge and make decisions. Today’s millennials have none of that need for verification from a voice of authority. In their world, the collective wisdom of the masses provides a more reliable resource than the voice of the specialist. Can the same be said of their employers? Probably not. Employers are only now beginning to explore how they can more effectively drive HR decision-making on the basis of what the HR data suggests. This, and more, is discussed in our chapter on The Promise of Workforce Analytics.

Q: How many jobs have you had over the years? What made you change jobs?

Re-thinking the concept of goals and expectations

Q: How would you say technology changed the way you worked?

Q: What are your views on what talent the baby boomers can offer organisations versus that of millennials?

Summary

The stories tell it all. Our employees are becoming an increasingly diverse and complex population to engage with. Standard solutions simply won’t capture any one group’s needs or wants. Creating a viable employee benefits framework that can better cater to this changing population demands that we understand the history, the values, the psychology, and the relationship lens of our employees. If we can understand that then we will at least have the right starting point for a meaningful discussion. Designing the optimal answer is the question we will try to answer in our discussion of 'Benefits that Matter'.

References

1 Stats SA, 2017, Quarterly employment survey (Q1: 2017)