Investment Nutrition: The Fuel For Retirement

Life expectancies have risen sharply in recent decades, from an average age of under 53 years in 1960 to 72 years in 2017. And in high-income countries, the average life expectancy is closer to 80 years of age.1 Given longer lives and longer work lives across the globe, fewer people today are adhering to a career model defined by three key phases of professional working life: school, work and retirement. Instead, a multistage life is increasingly common — one in which individuals may go in and out of the workforce, work part time or join the gig economy, and get new training or credentials in midlife or later. As workforces live longer and delay retirement, employers are struggling to evolve models, practices and policies that align with this new reality. To permit people to extend working life and remain productive into older age, employers must become "age ready" — or risk losing out on the benefits this growing segment has to offer. Another important factor is ensuring these employees are not victims of age discrimination — a common prejudice that often goes overlooked even in organizations committed to employment equity and that embrace the most comprehensive Diversity & Inclusion strategies. A Global Workforce of Experienced Employees   Mercer's "Next Stage: Are You Age-Ready" report reveals that, though populations across the world are living and working longer, the Asia Pacific region is feeling the greatest impact from a rapidly emerging generation of experienced employees. In fact, the report states that there will more than 200 million people age 65 and older between 2015 and 2030. Japan is becoming the world's first "ultra-aged" population, where those over 65 years of age will comprise more than 28% of the population. Hong Kong, South Korea and Taiwan — designated as "super-aged" populations — are not far behind, with more than 21% of their citizens soon becoming 65 and older. Increasing life expectancies have forced mature employees to face some difficult decisions. While many continue working out of a desire to learn new skills, connect with others or satisfy a desire to contribute to society, some aging workers don't have that choice. Instead, these employees continue working simply to finance the costs of their extended lives. Getting older is expensive, and weakening pension systems, poor savings habits in a context of inequalities in income growth, and low interest rates have all conspired to undermine the security once taken for granted by those nearing retirement age. Aging workers who opt not to retire present their employers, as well as incoming generations of younger workers, with unprecedented challenges and opportunities. Dispelling Preconceived Notions and Biases   Though workplaces around the world have greatly improved their efforts to curtail discrimination related to an employee's race, sexual orientation and gender, efforts to address age discrimination are often overlooked. Here are some of the most entrenched and damaging myths concerning seasoned employees, according to Mercer's Next Stage report: 1.  Myth: "Experienced workers are less productive." Truth: Extensive research dispels the myth that job performance declines with age. 2.  Myth: "Experienced workers have difficulties learning new skills and technologies." Truth: The hurdle here is not that these workers have difficulties learning new skills, but rather they often haven't previously received the training necessary to advance certain skills or knowledge. However, research shows that 85% of workers, including experienced employees, actively seek opportunities for skills development and technical training to enhance their career development possibilities. 3.  Myth: "Experienced workers are more costly." Truth: Pay can be higher for increased age (and responsibility) but older workers can significantly reduce costs for employers in other ways, like through reduced turnover rates. In Mercer's data, some drop off in pay for the same level of job is experienced as workers age. Mercer's penetrating research and analysis on the productivity levels, learning intent and capacities, and employer expenses related to experienced workers reveals a much more nuanced and complex relationship between older employees and their younger colleagues. Even in study cases where older workers did show lower individual productivity levels, the assessments did not account for key nuances, such as the time dedicated to mentoring, training and guiding others instead of focusing on their individual performances. Expanding the Value of Experienced Employees   Businesses must learn to capitalize on the talents, skills and potential of mature employees who are postponing retirement. Mercer's Global Talent Trends 2019 report states that the integration of modern technologies into corporate HR systems presents older employees with powerful tools that can teach them new, valuable skills. In addition, these technologies provide them with curated career development paths using specialized learning functionalities and predictive software algorithms. Corporate learning platforms can be used to shape content relevant to a particular ambition, close a skills gap or build connections among peers who can share expertise. Curated learning programs also allow employees to develop at their own pace and earn credentials based on benchmarks determined by personal career objectives. Professional development opportunities for experienced employees are also limited by many employers' inability to accurately assess the value and scope of their contributions. Mercer's Next Stage report argues that experienced workers can contribute significantly to organizational performance through their deep institutional knowledge, social capital specific to the business and technical or content expertise honed from years of on-the-job practice. Also, critical soft skills, such as listening, communicating, collaborating and team building, are commonly undervalued. Businesses that rely on common proxies for performance, such as performance ratings, promotion probability and pay, are likely to under-appreciate the contributions of their experienced workers and miss opportunities to better leverage their work. By maximizing the value and potential of experienced workers, employers can create new professional development opportunities that leverage these workers' experience, expertise and life-knowledge. With age comes wisdom. When empowered, experienced employees can lead their companies into the future — guided by their invaluable experience with the past. Sources: 1. "Life expectancy at birth, total (years)." The World Bank, 2017, https://data.worldbank.org/indicator/sp.dyn.le00.in

Supplementary retirement savings plans can provide security and stability for older people who no longer have a steady paycheck — and India's National Pension System (NPS) aims to do just that. NPS is a supplementary Defined Contribution pension plan, and subscription to the scheme is purely voluntary in nature. Like most of the world, India's population is aging, and lifespans are increasing. As a result of improved health and sanitation conditions, the global life expectancy is forecast to increase from an average of 65 years in 1990 to 77 years by 2050.1 For most people, living longer means more non-working years to enjoy. But for growing numbers of people around the world, maintaining enough income to live comfortably during those non-working years is expected to be a challenge. Not only are most older people no longer earning income, but as the years advance, the cost of living and inflation continue to increase. As government leaders around the world consider ways to help citizens prepare for retirement, they can look to India's NPS as a model for boosting retirement savings and helping aging workers avoid poverty during old age. The Basics of India's National Pension System   In 2004, the Indian government launched its National Pension System with the goal of providing retirement income to its citizens.2 The system aims to institute pension reform and foster the habit of saving for retirement. Initially, the program was made available for government employees only, but in 2009, NPS became available on a supplementary basis for all Indian citizens between the ages of 18 and 60. A Tier I NPS account (a mandatory account offering tax benefits) is designed in such a way that it discourages early withdrawal until the account owner reaches retirement age. If the account owner intends to withdraw before retirement age, they are allowed to withdraw only 20%, and the balance has to be used to purchase annuity. The NPS offers a decent tax benefit for its participants — contributions are made before taxes — but a portion of withdrawals are subject to taxes. On reaching the retirement age, one can withdraw 60% of accumulations, which are tax free, and the balance of 40% has to be utilized to purchase annuity from approved annuity providers. One can defer the withdrawal and stay invested until the age of 70 or continue to make fresh contributions, if desired. Tier II NPS accounts provide voluntary savings options without stiff exit penalties or lock-ins. There is a proposal to provide some tax benefits under Tier II NPS, which would require a lock-in period of three years; however, this proposal is yet to be confirmed. Since the launch of the system, the Indian government has created additional social security programs to encourage retirement saving, especially among the working poor. In 2010, the government's Swavalamban Scheme committed to depositing 1,000 rupees into the accounts of each saver who contributed 1,000 to 12,000 rupees into their own account annually and was not covered by a government or employer pension. But in 2015, that plan was scrapped in favor of the Atal Pension Yojana (APY), which guarantees defined pension distributions during retirement for savers who meet certain qualifications based on their contributions. APY also offered a government contribution of 50% of the saver's total contribution or 1,000 rupees per year, whichever is lower, for a period of five years (from 2015 to 2020). India's NPS has gone through a few iterations and continues to evolve, but the plan is helping to boost retirement savings among Indian citizens. It's also shifting citizens' expectations: Instead of relying on younger family members to support them in their old age, many are now adjusting their savings and preparing to support themselves in their retirement years. On top of that, NPS is one of the cheapest investment products. Overall costs of the NPS are far lower than those of other products, and it is perhaps the cheapest pension product available. 3 Lessons You Can Learn From India's Model   For organizational leaders around the world, India's experiment in providing a national pension program for all its citizens offers a number of valuable lessons. 1. Unsustainable National Debt Requires New Solutions   Long before the NPS was launched, India's federal and state government employees were covered by a tax-funded defined benefit pension program that provided a 50% replacement wage at retirement with an inflation-linked adjustment. In the mid-1980s, this program cost the country less than $0.5 billion annually, but by 2006, with people living longer, the price tag jumped to more than $600 billion per year.3 Maintaining the program was unsustainable, and leaders realized they needed to develop a replacement program to ensure successful retirements for future workers and protect the nation's finances. Since the launch of NPS, all new government employees have been enrolled in it, fostering a responsibility among workers to prepare for their own retirement and protecting the government from continuing to run up unsustainable pension debt. 2. Tax Advantages Are Key for Supplementary Retirement Savings Plans   Most participants choose to invest in the NPS due to the tax benefits. However, some Indian citizens report that they did not opt for participating in the NPS as they perceived that some mutual fund instruments and private retirement savings vehicles have greater potential to beat the market and also provide better tax benefits. In order to encourage citizens and promote NPS, the government developed three categories of tax-saving options. The third of these options is exclusively for salaried employees whose contributions are made through the corporate model of NPS. All three categories can be availed together and exclusive of each other. Moreover, there was a recent relaxation in the tax-free withdrawal limit of corpus allowed at the time of retirement (from an earlier limit of 40% of corpus to 60% of corpus). Originally, though 60% was allowed to be withdrawn, the balance of 20% was taxed at normal rates, and making it entirely tax free has made it even more attractive. While a few senior executives may have access to other retirement savings plans, including employer-sponsored Defined Contribution superannuation plans, most of the population (particularly among the working class) do not have access to other retirement savings plans, and hence, the tax advantages inherent in NPS are crucial encouragement for them to save for retirement. 3. Citizens Need Education About the Model's Benefits   While the NPS offers a number of benefits to savers, participation rates remain relatively low.4 Some respondents to a recent survey revealed that not understanding the importance of saving and the advantages of compounding interest could have influenced their choice to stay out. NPS leaders have used a variety of methods for communicating and educating the population about the system. For instance, pilot programs staged in two different geographic areas hosted workshops, meetings and camps targeting unorganized sector workers and key stakeholders. Information was also distributed through cable television networks, radio, mobile publicity vans, seminars and road shows. India continues to measure the success of its pension program and may make more changes in the future. Many countries are struggling to solve the potential challenge of poverty in old age, but the NPS in India is an encouraging step toward protecting the future for many of its citizens, and it's worth taking a look at the model for inspiration. Sources: 1. United Nations: Department of Economic and Social Affairs,"World Population Prospects — 2017 Revision: Global life expectancy," United Nations: Department of Public Information, June 21, 2017, https://www.un.org/development/desa/publications/graphic/wpp2017-global-life-expectancy./ 2. "National Pension System — Retirement Plan for All," National Portal of India, October 22, 2018, https://www.india.gov.in/spotlight/national-pension-system-retirement-plan-all. 3. Kim, Cheolsu; MacKellar, Landis; Galer, Russel G.; Bhardwaj, Guatam, "Implementing an Inclusive and Equitable Pension Reform," Asian Development Bank and Routledge, 2012, https://www.adb.org/sites/default/files/publication/29796/implementing-pension-reform-india.pdf. 4.Zaidi, Babar, "5 Reasons Why Investors Stay Away From NPS. But Should You?" The Economic Times, December 27, 2018, https://economictimes.indiatimes.com/wealth/invest/5-reasons-why-investors-stay-away-from-nps-but-should-you/articleshow/61890679.cms.

Asian pension systems are facing major challenges. The region is experiencing seismic demographic changes, with rapidly aging populations and declining birthrates. But investment returns are relatively low due to geopolitical uncertainty and minimal interest rates. With the region having relatively few robust retirement systems, many Asian countries will struggle to provide adequate pensions. Governments need to take positive action now to reduce financial pressures and avoid intergenerational conflicts between the young and old. Life expectancy at birth in the region has increased by seven to 14 years in most countries during the last 40 years, according to the 2018 Melbourne Mercer Global Pension Index (MMGPI), which ranks pension systems round the world on adequacy, sustainability and integrity. This is an average of one additional year every four years. The increased life expectancy of a 65-year-old over the last 40 years has ranged from 1.7 years in Indonesia to 8.1 years in Singapore. Much of the rest of the world is facing similar challenges relating to aging populations, and nations are pursuing similar policy reforms. These include raising pension ages, encouraging people to work longer, increasing the funding levels set aside for retirement and reducing the amount of money people can take out of their pension accounts before they reach retirement age. The 2018 MMGPI findings pose the fundamental question: What reforms can Asian governments implement to improve the long-term outcomes of their retirement income systems? The natural starting place to create a world-class pension system is ensuring the right balance between adequacy and sustainability. A system providing generous benefits in the short-term is unlikely to be sustainable, while a system that's sustainable over many years usually provides modest benefits. Without changes to retirement ages and eligibility ages to access social security and private pensions, the pressure on retirement systems will increase, which could threaten the financial security provided to the elderly. Increased workforce participation by women and older workers can improve adequacy and sustainability. Japan, China and South Korea rank near the bottom of the Mercer index. Their pension systems do not represent a sustainable model to support the retirement of current and future generations. If left unchanged, these countries will suffer social conflicts, since pension benefits will not be distributed equally between generations. Japan, for instance, is taking baby steps to reform its pension system by gradually raising the mandatory retirement age of some 3.4 million civil servants to 65 from the current 60 years of age. Japanese retirees can now choose to start receiving their pensions at any point between the ages of 60 and 70, with greater monthly payments offered to those who start at age 65 or older. Having the world's highest life expectancy and lowest birthrate, Japan's population is expected to shrink. This challenging situation is already contributing to skill shortages, which will further impact Japan's shrinking tax revenue base. The Japanese government could improve its pension system by encouraging higher levels of household savings and continuing to increase the level of state pension coverage, since 49 percent of the working age population is not covered by private pension plans. Introducing a requirement that part of the retirement benefit must be taken as an income stream and not a lump sum will improve the overall sustainability of the social security system — as would reducing government debt as a percentage of gross domestic product, as this improves the likelihood that the current level of pension payments can be maintained. China faces different issues. China's unique pension system comprises various plans for urban and rural populations, as well as for rural migrants and public sector workers. The urban and rural systems have a pay-as-you-go basic pension consisting of a pooled account (from employer contributions or government expenditure) and funded individual accounts (from employee contributions). Supplementary plans are also provided by some employers, particularly in urban areas. The Chinese pension system could be improved by increasing the use of workers' contributions to pensions to enhance the overall retirement protection of workers and increasing minimum support for the poorest retirees. A requirement that part of the supplementary retirement benefit must be taken as an income stream should be introduced, as well. More investment options should be offered to pension holders to permit a greater exposure to growth assets, while pension plans should improve their communications with members. Hong Kong should consider introducing tax incentives to encourage voluntary member contributions, thus increasing retirement savings. Hong Kong should also require that part of the retirement benefit be taken as an income stream. Older workers should be retained in the labor market as life expectancies rise. South Korea suffers from one of the weakest pension systems for the poor when expressed as a percentage of the average wage at just six percent. Its system would benefit by improving the level of support provided to the poorest pensioners, introducing a requirement that part of the retirement benefit from private pension arrangements be taken as an income stream and increasing the overall level of contributions. Singapore's well-structured pension system is ranked top in the region and has seen improvements in sustainability. Its retirement system, the Central Provident Fund, provides flexibility to its members, who include all employed Singaporean residents and permanent residents. But more can be done. Barriers to establishing tax-approved group corporate retirement plans should be reduced, and the CPF should also be opened to temporary nonresident workers who comprise more than a third of the labor force. The age that CPF members can access their savings should be raised, as well. Since pension systems are an intergenerational issue, they require a long-term perspective. Pension systems, which are one of the largest institutional investors in any market, should increasingly recognize the importance of acting as good stewards of the capital entrusted to them, including managing risks, such as climate change. With Asia's aging populations staying productive well into their 70s and even 80s, it is critical to improve the provision of adequate and sustainable retirement income. Raising the retirement age, expanding the coverage of private pensions for workers and encouraging financial planning and early savings should be the focus of employers and policy makers. Article originally published in Nikkei Asian Review.

The Fourth Industrial Revolution is transforming employee satisfaction and career management through customized digital experiences and modern employer branding strategies. As technological advances continue to reshape workforces, and the need for digitally savvy workers grows, individual employees are taking a more proactive role in their own professional development. This is especially true in Brazil, where people view jobs as opportunities to grow both personally and professionally. In fact, according to Mercer's Global Talent Trends 2019 report, Brazilians seek greater control over their careers and rank being recognized for their contributions, having access to learn new skills and technologies, and being empowered to make their own decisions as their top three workplace concerns. Employers in Brazil must internalize the evolving needs of their Brazilian workers and implement processes and strategies that encourage professional development and harness the power of individualized career paths. The Power of Employer Branding   To attract top talent in their respective industries, Brazilian businesses must focus on building strong internal brands. Employer brands are built on a system of values that should permeate every aspect of workplace culture — from onboarding practices and everyday meetings to telecommuting policies and, especially, career development opportunities and digital experiences. Employers that cultivate a reputation for investing resources into an employee's career journey entice the best job candidates and will have employees who are more productive, successful and engaged with their responsibilities. According to Mercer's HR 2025: Talent, Technology and Transformation Magazine, "Thriving employees are three times more likely to work for a company that understands their unique skills and interests. And 80% of thriving employees say their company has a strong sense of purpose." Creating a clear and powerful mission statement that defines a company's purpose and how employee growth is a key element of that purpose will result in a more aligned and dynamic workforce. Employer brands must communicate and deliver career advancement opportunities to employees in ways that suit their personalities and individual sensibilities. Bespoke Career Management   In Brazil, employees are not only playing a key role in their own professional development, they are also pressing employers to offer more streamlined digital experiences and customized learning opportunities utilizing a variety of resources. Mercer's Global Talent Trends 2019 report explains, "In an environment where knowledge is widely and freely accessible, the corporate learning function must shift its focus to continue adding value. Curated learning is not new; what's changing is how it is being used to shape content relevant to a particular ambition, close a known skills gap, or build connections among peers who can share expertise." Employers can leverage digital experiences to address the uniqueness of each employee's goals, talents and learning styles. Online web portals, smartphone apps and other digital training materials can be customized according to the user's preferences, skill sets, learning ability and career goals. These digital experiences offer employees the chance to learn at their desired pace and develop skills that will lead to greater responsibilities and opportunities to advance their careers and income. The same Mercer reports explains that, "When curated learning works well, people stay and progress through the organization because their learning helps them accelerate their career." The Digital Transformation of Human Resources   Robust benefits portals, personalized training and educational digital experiences are only a few hallmarks of how digital transformation is revolutionizing human resources in Brazil. By creating digital tools that map and guide an employee's developmental journey, businesses can also better understand the overall health and value of their workforces. Cloud-based systems that use Software as a Service (SaaS) models are creating unprecedented transparency within the employer-employee relationship. However, for large multinational companies in Brazil, implementing these resources can be exceedingly difficult. Legacy systems, aging applications, technical incompatibilities and unintuitive interfaces pose serious challenges to effective implementation. Finding ways to navigate these technical obstacles is critical to future success. Digital transformation is redefining the roles and capabilities of HR departments and revolutionizing workplace cultures. Skilled, upwardly mobile workforces are not only more productive and add value to the bottom line, but also provide businesses with effective ways of differentiating their brand, services or products from competitors — a key advantage in competitive marketplaces. Employees who feel engaged, listened to and valued make their employers more competitive. Mercer's HR 2025: Talent, Technology, and Transformation Magazine elaborates, "Organizations typically pore over compensation and benefits numbers. Yet it is often the actions beyond salary — such as promotions, transfers and healthcare spend — that have a greater impact on business outcomes. Understanding which elements make a company competitive, and which are differentiators, can go a long way in delivering an employee value proposition that resonates." By investing in the futures of employees and their careers, employers in Brazil are also investing in their own long-term success.

As with all unforeseen threats, COVID-19 is prompting individuals, small- and medium-sized enterprises, and large corporations to reevaluate habits that have long gone unchallenged. The outbreak is stress-testing our resolve and our resilience. Those that will emerge fighting fit will balance tough economic decisions with empathy. For, while the pandemic remains foremost a human tragedy that requires constant vigilance and swift action, thoughts about the way we work are also coming to the fore. Who can work remotely? Do we really need that conference? How can we make virtual meetings more engaging, inclusive and productive? How ready are we to embrace digital working? Even before the crisis, one in three employees said they were anxious about job security, data from Mercer’s forthcoming 2020 Global Talent Trends Study reveal. The novel coronavirus will do little to calm those fears. And so, while organizations prepare to ensure business continuity in response to different scenarios, we find ourselves needing to experiment with new work patterns. Companies ahead of the curve will be those that place empathy at the heart of their mandate. It is the balance of empathy and economics that will win in an evolving and unpredictable world — in other words, companies that care enough to put people and productivity metrics side by side, both while confronting COVID-19 and its economic fallout, and further ahead as they build better, brighter futures. This year’s forthcoming Talent Trends Study points to how companies can respond to the pandemic and focus on what matters by applying the new decade’s empathetic imperative. Commit to stakeholders   With the vast majority of business leaders (85%) agreeing that an organization’s purpose goes beyond shareholder primacy, now is the time to match actions with words and make decisions with empathy and equity for all stakeholders. This includes supporting supply chains and the economies that rely on the company. For example, Microsoft has committed to paying normal hourly wages to non-employees (such as bus drivers and cafeteria workers) whose pay might be interrupted by the many Microsoft employees working from home. Another imperative is to provide a sense of security and trust. Indeed, trust is a significant factor in employees’ sense of thriving. The 2020 study found that thriving employees are seven times more likely to work for a company they trust to prepare them for the future of work and twice as likely to work for an organization that is transparent about which jobs will change. Building a strong community around a common purpose and sharing the vision is vital to communicating that the company cares and has a plan for different scenarios. How employers respond to well-being issues like stress, burnout, and uncertainty will be a hallmark of their attitude towards responsibility and sustainability And as people worry about their health, this is the time to confirm the organization’s commitment to well-being. Calm messaging, employee assistance, and mental health apps all have their place day-to-day. It also may be prudent to reexamine the relevance of company benefits: virtual yoga sessions or discounts for online shopping might become highly valued. The good news is that 68% of employers are likely to invest in digital health in the next five years. And if the pandemic lasts for a long time, fundamental issues of well-being will be at stake. Epidemics are historically associated with a rise in depression and anxiety. And this year a clear majority of employees said they feel at risk of burnout before 2020 even got started. Are employees’ partners covered by income protection? Do benefits extend to family members? What financial advice is on offer? For instance, outdoor retailer REI has modified its paid leave policy to guarantee the income and benefits of employees who miss work or have to care for family members. All these need to be communicated clearly. How employers respond to well-being issues like stress, burnout, and uncertainty will be a hallmark of their attitude towards responsibility and sustainability — a critical attitude given that 61% of employees trust their employer to look after their health and well-being. Kick start skills   Executives are swiftly adopting future of work strategies to compete in response to a possible economic downturn. If macroeconomic conditions continue to be unfavorable, companies see this as an opportunity to double down on new ways of working such as strategic partnerships (40%), using more variable talent pools (39%) and investing in automation (34%). Front of mind is modelling supply and demand under various scenarios and interventions, such as how to manage variable and fixed costs.  With the quickened pace of automation, it’s no surprise that executives and employees are reflecting on how this will impact careers. The Mercer study reveals that business leaders rank reskilling as the top talent activity capable of delivering ROI this year, while employees say the #1 factor in thriving is the opportunity to learn new skills and technologies. Yet, for employees the biggest hindrance to learning is lack of time, according to our study. In this respect, the current crisis may offer the opportunity to kick start reskilling. Providers such as General Assembly and edX offer on-point courses and, with potentially more time to spare, employees can take advantage of online learning to explore new directions. But to realize learning’s full benefit, organizations will have to be transparent with employees about the new roles reskilling could lead to. Take the time to have clear career conversations with employees about the skills required to move along a pay range and/or qualify for other jobs within or across departments. People who feel well-informed about their future career path are more likely than others to take up reskilling opportunities (83% versus 76%) and are more likely to stay with the company (54% versus 46%). Share what you know   In the last five years, HR has moved data up the value chain and seen a significant jump in its use of predictive analytics. This is a major development in the growth and value of workforce analytics. Finally armed with insights, organizations are shifting their focus toward gaining measurable value from analytics and honing their market-sensing and analytics capabilities to enhance talent management practices. But as companies weigh the impact of the disease, are organizations measuring the right things? This year, the study shows 53% of companies are tracking the drivers of engagement, yet insights on training (down 6%) and burnout risk (down 25%) declined in prevalence. Digital ways of working bring more data sets we can mine, but also challenge our models of workplace success. Exploring what metrics are most relevant and sharing them with employees provides insight into productivity inputs in a new remote working and distracted climate. Many employees would be happy to receive meaningful findings and advice on how they are working or on their well-being indicators. Finally, as the workforce science discipline gathers force, it can supply vital forecasting insights to build future business resilience. Key to workforce forecasting is an enterprise-wide culture of experimentation. HR can work closely with executives, finance leaders and data scientists to explore how to mitigate the productivity and well-being fallout of such scenarios. Promote the remote   For many organizations, the novel coronavirus has been a wakeup call to the possibilities of remote working and its impact on the employee experience. JPMorgan Chase, Twitter and Sony’s European offices are just some of the many companies asking employees to work from home. The challenge has been that only 44% of companies assess every job for its ability to be done flexibly. So what helps? Thriving employees say the most important factors for successful flexible working are: colleagues that are supportive of people with flexible work arrangements, a company culture that encourages flexibility, and managing performance on results not hours worked. Design thinking with pilot teams working remotely are critical to seeing what needs to change to better suit these times. Still, if not done well, remote working can exacerbate challenges with inclusion, accessibility and emotional support. Some simple tips for staying connected in times of social distancing can help: Inclusive teaming when working remotely requires effort. To make sure every team member’s voice is heard, communicate expectations and agendas in advance, encourage people to be visible on the call, ask people to come with comments/questions, and set up discussions by hangouts and chats in between calls. Pre-brief senior people in your team to be vocal and embracing. Create an informal climate up front with small talk. Remote calls require a redesign of the meeting. As a rule of thumb, halve the time you would allocate for a face-to-face meeting for a call where people are dialing in. Leverage pre-reading to ensure those who are more introverted or reflective feel ready to contribute. Small group preparation and post group actions are vital to building team spirit. Establish new rituals.   Take time to address the emotional, not just the practical. Take a few minutes at the start and end of a call to find out how everyone is feeling. Pulse-checking questions people can type responses to in a chat function (e.g. “Use one word on how you feel about what we’ve just shared”) can be a great way to take a temperature check. Communicate that managers are still accessible by phone, even if not in person. Use old and new technology (phones as well as video conferencing services) to stay personal, especially with workers not used to working remotely. Don’t let email (and even chat) be the only way you communicate. The volume can become deafening if not managed. Leverage community sites and project boards to train people in how best to stay connected. In our study, 22% of employees believe that some necessary human interactions have been lost, so finding ways to inject warmth and a bit fun into exchanges is a good idea.   The social distancing required in response to COVID-19 has, rightly, got many companies reexamining their digital work experience. Forty-seven percent of executives are concerned about employees’ digital experience — or the energy-sapping nature of not having it. Nearly half of employees believe there is room to improve on digital transformation: 20% of employees today say HR processes are complex, and a further 29% say they have been simplified but still have a long way to go. In the longer term, it will be valuable to revisit the company’s EVP and interrogate how technology-enabled HR processes are today and how capable working tools are with coping with mass remote services. Intermediaries such as ServiceNow, Mercer’s Mobility Management Platform and digital outplacement solutions can help. How we care is how we win   Employees are understandably concerned about the health of their families and communities and organizations are quite rightly putting the health of their people first (their #1 workforce concern this year). But financial market volatility, and the impact on individuals’ jobs is a mounting concern that is weighing on people’s minds. Meanwhile, businesses are examining whether their practices are agile enough to withstand unpredictable events such as COVID-19, if they are resilient enough to sustain themselves through this period of hardship, and innovative enough to stimulate demand afterwards. We’re being challenged to do things differently — in companies big and small, on new platforms and with new technology, and we see emerging new ways of caring for one another. And in their wake we will not go back to how we operated before. Necessity breeds innovation. We are on the cusp of new ways of working and living that, if executed well, will build a bright future.

Everyone’s job has, in some form or another, a job title. Be it a Brick-layer, Accountant or CEO. The common understanding is that the job title depicts the respective job and its roles and responsibilities. Our work with different clients of different sizes, with different structures, maturity levels, and in different economic and cultural environments, however, suggests that there is much more heterogeneity in job titles than one would suspect. In one organization, for example, an Accountant is called ‘Financial Advisor’ whereas in another organization, s/he is called ‘Finance Officer’. In Mercer’s 2019 Global Total Remuneration Survey, on a sample of 182 organizations based in the United Arab Emirates, as an example, the Mercer Job Library position ‘Accountant–Experienced Professional’ is tagged against more than 180 different job titles. This suggest that more than 99% of organizations included in the data set label this type of job in a unique, idiosyncratic manner. In a similar vein, Mercer’s 2019 data from Australia shows more than 360 different job titles across 313 organizations. A similar report for India from 2019 shows over 520 different job titles across 360 organizations for this type of job. In Brazil, Russia and the UK, the same analyses produced very similar results. This means, to be specific, that similar jobs even in the same organization are often labeled in a heterogeneous, unconcerted way. Problems associated with purposeless job titling   While the Accountant example provides some insight into the actual responsibilities of the role, we often see organizations labelling jobs in less meaningful, purposeless ways. For instance, we find job titles such as ‘Senior Supervisor Financial Accountant’, ‘Business Analyst’, ‘Finance Executive’ or, more recently, creative titles such as ‘Accounting Guru’, ‘Accounting Ninja’ or ‘Accounting Rockstar’ in this area of organizational life. In our view, this creates five key issues: 1.   In markets that are suffering from employee disengagement, the rise of passive job seekers and a growing appeal of self-employment and entrepreneurship[1], a job opening with an inaccurate job title faces two key problems. Firstly, the job applicants may be over or under qualified for the position at hand and, secondly, potentially suitable applicants may not apply as they believe the job is not a good match. 2.   Breaches of the psychological contract between employees and their employer may occur. To be precise, “the psychological contract encompasses the actions employees believe are 1.      expected of them and what response they expect in return from the employer”[1]. To this end, a purposeless job title may provide an inaccurate view on the actual roles and responsibilities to be performed by the new joiner. For instance, a ‘Financial Advisor’ may execute on the classical accounting tasks, such as processing accounts receivable and payable, but the job title, however, indicates that the job holder would spend some time interacting with stakeholders and provide advice on financial matters. The lack of defined possibilities to engage in such activities may constitute a psychological contract breach, leading to cynicism towards the organization, turnover, job dissatisfaction, reduced commitment and an overall decrease in performance. 3.   Another important issue to consider is an employees’ propensity to boost their current job title. This is linked to two mechanisms. Firstly, boosting one’s job title ultimately serves to enhance one’s status and self-identity[1]. Secondly, an enhanced job title is likely to attract attention on the external job market. 4.   Perceptions of fairness may decrease due to inconsistently labelled jobs. For instance, a job may be called ‘Finance Lead’ that is, in terms of roles and responsibilities as well as qualifications required, very similar to a ‘Head of Finance’. For most people, a ‘Head of Finance’ is classified as a higher ranked job despite both jobs being very similar in nature and potentially having the same job grade. This can create perceptions of injustice leading to employee turnover, lower levels of extra-role behavior and greater levels of withdrawal, deviant and retaliatory behaviors[2]. 5.   Purposeless job titles may also be detrimental for internal and external communications. Internally, there might be a certain degree of ambiguity to what the hierarchy level of a an incumbent is and consequently how messages should be phrased. Externally, purposeless job titles may further lead to misunderstandings in terms of authority levels and responsibilities an employee holds. Reasons for purposeless job titling   The reasons for these five issues are manifold. First and foremost, only few organizations seem to have adhered to a coherent, up-to-date and intuitive job titling framework. In fact, in many organizations job titling is either left to the line manager or, in some cases, left to the job incumbent. This, by definition, is likely to create a certain degree of heterogeneity among job titles. In addition to that, even in leading organization, there is often no clear, well-defined organizational process in place to govern this element of organizational life. We advocate, and outline in greater detail below, that there should be a process in place including clear roles and responsibilities in terms of who sets and ultimately approves the titles of jobs. We also see that organizations often seek to develop job titles that adhere to the specific cultural contexts in which they operate. This, as a consequence, also adds to a certain degree of incoherence in job titling. Lastly, the high degree of change to which many organizations across the globe are exposed to, also contributes to incoherent job titles. To be specific, when organizations adopt new structures and amend roles and responsibilities of their jobs, job titling should also be considered. However, for many organizations this is an issue of limited importance of the time of restructuring so this tends to get neglected. As a consequence, especially with numerous rounds of re-structuring, a heterogeneous, incoherent landscape of job titles is likely to emerge. Conducting purposeful job titling   The above-mentioned observations raise the question of how organizations can move forward to actually create purposeful job titles. Meaningful or purposeful job titles usually consists of two key elements. Firstly, purposeful job titling should indicate the actual function and with this associated roles and responsibilities the job incumbent is tasked with. If an employee in Finance is responsible for maintaining the Finance IT systems, then the job title should indicate that this employee looks after IT for Finance, as opposed to more generic IT activities. Secondly, a purposeful job title also indicates the hierarchical level, or, to be more specific, should hold reference to the actual job grade the job has been mapped onto. In our work across the globe, we see a certain degree of inconsistency and incoherence in this respect. Frequently, strict hierarchical levels are used to create job titles, even though the job evaluation may not indicate such job titling. For instance, the responsible job incumbent for managing financials in a country managing set-up of a small to medium sized enterprise owned by a multinational corporation may be called ‘Chief Finance Officer’. This job title indicates a fairly senior position. In reality, however, such a job more closely resembles the activities of a ‘Financial Accountant’ or a ‘Finance Manager’. Such discrepancies between the actual roles and responsibilities of a job and its titling typically become clear when job evaluations are performed. As such, we advocate a certain adherence to job grades when it comes to job titling in order to derive purposeful job titles. In Figure 1, we outline how an approach to purposeful job titling could look like. It indicates the main components of a job title, i.e. (a) what the job’s hierarchical level in the organization is, (b) its function or area of expertise, (c) to what organizational unit the job belongs, and (d) what the actual scope of responsibility of the job is. For instance, a ‘Senior Vice President Finance EMEIA’ uses the elements A, B and D of the framework. Element C, the organizational unit, in this case is not required. For professional jobs, as another example, an ‘Advisor Finance Downstream Abu Dhabi’ would have all elements in her or his job title. This way, the same protocol and nomenclature for different job titles is applied universally across the organization, and thereby meets the requirements of purposeful job titling set out above.                           Figure 1: Mercer’s Purposeful Job Titling Framework In addition to adopting such a framework, organizations should consider who owns and governs job titling. The governing department should make sure that there are employees who have ownership of this process, and that no job requisition and its related activities as well as any internal re-structuring fails to comply with the framework. This way, purposeful job titling gets embedded and institutionalized in the organization. Sources: 1. 2017, ‘The talent delusion: why data, not intuition, is the key to unlocking human potential’, Tomas Chamorro-Premuzic, Piatkus. 2. 1994, ‘Human resource practices: administrative contract makers’, Denise M. Rousseau and Martin M. Greller, Human Resource Management, 33-3, page 386. 3. 2005, ‘Understanding psychological contracts at work: a critical evaluation of theory and research, Neil Conway and Rob B. Briner, Oxford University Press. 4. Ibid. 5. For an interesting review see: 2019, ‘The five pillars of self-enhancement and self-protection’, in the Oxford handbook of human motivation, Constantine Sedikides and Mark D. Alicke. 6. For a good overview please refer to: 2001, ‘The role of justice in organizations: a meta-analysis’, Yochi Cohen-Charash and Paul E. Spector, Organizational Behavior and Human Decision Processes, 86-2.