Workplace flexibility is key to employee retention: research

Less than a month after Amazon announced that employees would have to ditch flexible work arrangements and return to the office full-time, new research has reinforced the value of a flexible work culture.

Consultancy firm Mercer’s Employee Benefits 2024 Assessment found 89% of Australian organizations still offer the option to work from home, with the average number of mandatory stable office days at around three per week, the same as last year .

In this era of limited wage growth, companies are increasingly taking advantage of flexible work arrangements to attract and retain top talent, increase employee engagement, and foster a positive workplace culture.

The research shows that some Australian workers are even prepared to take a pay cut for the sake of a more flexible working life. That and other findings conflict with a renewed push by some big companies to bring employees back to the office.

Three weeks ago, Amazon CEO Andy Jassy issued a memo calling all employees back to the office five days a week.

Up to this point, the back-to-office (RTO) conversation has been largely silent for most of this year. Hybrid work arrangements have generally been accepted as the norm for office workers.

Amazon’s move reignited the topic. Shortly after Amazon’s announcement, Tabcorp CEO Gillon McLachlan ordered workers back to the office to improve performance and create “a winning culture.”

However, not everyone is on board with the idea, here or abroad. Senior executives at Google and Microsoft quickly moved away. They assured workers that hybrid arrangements would remain as long as productivity levels did not decline.

The Mercer report, released on October 2, is based on data from 502 Australian organizations across all major industry groups and sectors. It has been found that flexible working – when managed well – can contribute to a positive workplace culture. It can also improve diversity and inclusion while broadening the potential talent pool.

As well as allowing people to work from home, the report found that 77% of participating firms allow staff to adjust their start and end times. And 5% let their employees work four days instead of five for the same pay. This is commonly referred to as the 100:80:100 model of a four-day work week.

Four percent of companies offered a “compressed working year” – the ability to work the equivalent of 48 weeks in just 40 weeks. Another business experimented with allowing staff to work four years at 80% pay and take the fifth year off.

Don Barrera, client engagement manager at Mercer, said employers need to balance the needs of their employees with overall business goals to create a benefits strategy that delivers value to everyone.

With flexible working now firmly embedded in many Australian companies, work culture is also changing.

Just under 60% now define their culture around “work-life balance”. This puts more emphasis on people, but not at the expense of performance.

This fits with 2021 research that identifies positive links between flexibility, employee engagement, productivity and overall performance.

Research from the Agency for Gender Equality at Work, published earlier this year, describes flexible working as “the key to gender equality in the workplace”.

Other studies have found that flexible working has increased potential employment opportunities for people with disabilities.

Flexibility also extends beyond the simple way of working. According to Mercer research, this can include career development, training opportunities, parental leave, part-time work, annual leave and financial wellbeing support.

In recognition of cost-of-living pressures, 65% of organizations now offer health and wellness courses, and 29% offer financial wellness programs. By expanding the scope of flexibility, companies can better respond to the evolving needs of the workforce.

Both employers and employees can benefit from flexibility. For employees, it’s about improving their work-life balance, with one-third now willing to forgo a 10% pay rise in favor of a flexible, reduced or compressed work schedule.

For employers, the benefits are attracting and retaining top talent, fostering a positive workplace culture and being able to adapt to changing market conditions with a skilled and engaged workforce.

By understanding the interconnectedness of these needs, firms can create a work culture that recognizes employees who have commitments and interests outside of work. This can help employees achieve a better work-life balance.

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