The COVID-19 pandemic demanded that companies broaden their approaches to Human Capital Management (HCM). Diverse industries have needed to address issues including safe work environments, distanced working, and consequent mental well-being concerns. Most companies used now-commonly adopted technology and, where necessary, work-process and regulatory flexibility to ensure survival and serve their clients. From the perspective of employees, and especially for the younger generation, are these steps enough to attract and retain them?

WORKFORCE ENGAGEMENT

The movement behind “ESG” (Environmental, Social and Governance) includes an emphasis on an engaged workforce. While definitions might vary, employee engagement concerns the connection between an employee’s personal values, motivation, and work environment. Achieving this engagement requires an organization to think broadly.  Engagement takes different forms and results from workforce drive and well-being fueled by an agreed purposeful (not personality-driven) strategy. The pandemic has impacted the cultivation of this engagement especially among the younger part of the workforce. These younger generations have had two formative years of their early careers disrupted. A company’s focus on developing engagement in this group will be especially crucial in attracting and retaining younger talent. This engagement must also address millennials’ views about work – life integration and their priorities on deriving meaning from work.

EMPLOYEES AS THE CORNERSTONE STAKEHOLDER

An engaged workforce is a leading indicator of sustainable corporate performance. Employee engagement results in lower attrition and the consequential preservation of institutional knowledge, as well as in higher levels of productivity and customer satisfaction. Employees are generally responsible for the products, services and innovation that sustain customers and reward investors through operating profits. In an environment where management must manage a multitude of stakeholders, management’s focus on the centrality of employees will increase institutional sustainability.

According to the Edelman Trust Barometer, as job expectations relating to career advancement, personal empowerment, or social impact increase, employees are now the most important stakeholder group for the achievement of long-term corporate success. According to the Edelman Report, the COVID-19 pandemic has raised the level of commitment that employees can demand from their employer; companies will need to invest in employee upskilling so that both can “thrive in the age of automation and AI” – a virtuous circle of competitive advantage and employee trust reinforcing each other.

Though most employees are now well aware that technology provides other means of career development (such as through professional online networks like Handshake and LinkedIn), their approach to learning and comfort with technology-driven solutions will shape their employment expectations.

ESG DRIVING THE EVOLUTION OF HUMAN CAPITAL MANAGEMENT

Boards of Directors sit atop corporate performance. So how do boards oversee HCM strategy and ensure optimal management of talent as a unique corporate asset?

Boards have been increasingly holding management to account on strategy through the establishment, measurement and tracking of meaningful metrics. These metrics must include information about the development of HCM. Key areas of HCM performance can include the creation of a distinctive corporate culture, financial and non-financial benefits for employees, workforce training, a consistent two-way feedback system, and succession planning for senior management.

Successful companies will base their profitability and long-term value creation on their attractiveness as an employer. An important first step may be that HCM is focused to increase employee engagement. In these uncertain times, a resilient workforce could make all the difference.

Natalia Nicolaidis is a Fellow of the Denny Center at Georgetown University Law Center. Natalia is also an Independent Board Member at SMCP SA (Euronext Paris), Aegean Airlines SA (Athens Stock Exchange) and Mytilineos SA (Athens Stock Exchange). She is also President, Dynamic Counsel Ltd. and the former General Counsel at Credit Suisse Investment Banking & Capital Markets.