Employees are redefining what work means and how it is structured. Some may call this “the future of work” but we call it the present reality of business. Advancements in technology are driving a need for new skills, and changing the way we think about our work and what it means to be a worker (versus an employee). The conversation around being skilled at tasks, rather than jobs, is also evolving. And economic uncertainties have long held corporate leaders to a high “return on investment” for any programs they invest in, including Total Rewards.
With this confluence of conditions comes the need to reevaluate how to attract and retain talent, be it employed or contingent, in a competitive environment. As a result, organizations are facing increased pressure to invest strategically in the right Total Rewards programs to optimize their performance. And to optimize effectively, they can’t respond to each pressure in a vacuum; they need to consider how it aligns to the complete strategy and unique “talent value proposition.”
Here are 10 reasons why it’s important to modernize your Total Rewards programs in light of the current environment.
1. The workforce of tomorrow will look very different than today’s. It’s essential for companies to be more future-focused and that means attracting a variety of skillsets and learning to become more agile. The current ways of working won’t stand up in the emerging environment, as things have to change both on the people side as well as organizationally. Just as we are preparing for the full impact of the future of work, we must modernize Total Rewards by looking at all aspects of it differently.
2. Technology is not only changing how we live, but how we interact with work and work-related programs. The nature of Total Rewards will have to reflect a new reality for how people access information that relies on hand-held devices, mobile apps and personalized messaging. It’s clear that technology will have an impact on how we personalize rewards and make them more accessible to a workforce that is used to doing everything from scheduling appointments to filing their taxes online.
3. The use of data and analytics helps tailor Total Rewards programs to reflect changing employee needs and increase engagement, while optimizing cost and risk. Insights can be used to inform such questions as: What should our total reward spend be? What is the best allocation of reward spend to maximize employee satisfaction? More specifically, if a company is spending $2.5 billion on benefits, what could they get if they spend $2.8 billion? Or reduce the budget to $2.3 billion? Asking these questions is essential in terms of both cost and risk and it requires being flexible and nimble to find the right answers.
4. A one-size-fits-all approach toward rewards no longer applies. As the workforce changes to include more contingent workers and with five generations currently in the workforce, considering Total Rewards in the context of a value proposition for each talent segment will help to create tailored rewards and benefit packages. Customization is key to cut through the complexity. While it’s important to treat people as individuals, not generations, certain life stages could be considered when it comes to Total Rewards strategies.
5. Consumerism is taking hold in the workplace. Employees tend to report higher satisfaction levels with their benefits when they have greater flexibility and choice. Technology, such as a portal solution with decision support, enables you to segment your workforce effectively and treat employees as consumers by enabling them to make their own reward choices.
6. Employees expect more transparency from their management in the workplace. This also extends to Total Rewards, including base pay and bonus. The expectation is created by both regulation as well as technology. For example, recent tax legislation supports restrictions on executive compensation and there has been increasing global attention to pay equity legislation.
Forums such as Glassdoor have also enabled workers to openly share their employment experiences with a global community. Employers have a real opportunity to use the desire and need for transparency to their advantage and communicate their value proposition in all possible forums.
7. Wellbeing is a priority for workers and employers alike. Employers have a real opportunity to actively encourage their talent to live healthy lifestyles. Employee wellbeing goes beyond physical health to include financial, emotional and social dimensions. These holistic connections to wellbeing are important, but so is the way they’re framed within the employee experience. Employers should ask themselves: How can we design a holistic wellbeing strategy that is an integrated part of our talent value proposition?
8. Data show that financial concerns are a significant risk to engagement and performance. Employers are looking to do more to encourage employees to actively manage their personal finances to achieve security now and in the future. Companies can make strategic decisions about financial support depending on the country, as different social infrastructures will likely impact the types and amount of financial support employees value.
9. There is a direct correlation between Total Rewards programs and the drivers of sustainable engagement. The talent experience has never been more important as workers have higher expectations for their rewards performance and are willing to look elsewhere if a firm is not meeting them. Part of the modernization agenda involves understanding the wants and needs, and engagement drivers, of different segments of the workforce.
10. Moving to a more global approach to Total Rewards governance is becoming essential. This means direct involvement from top management and a global approach to devise an efficient way of managing Total Rewards that may vary considerably from country to country. As these themes evolve, we see benefits governance as a supplement the Total Rewards personalization, customization and choice agenda.
And if these 10 reasons aren’t enough, consider this: The talent you need may be attracted to industries that have already modernized their Total Rewards programs; for example, people that work in financial services or consumer goods today are gravitating to tech firms. And life sciences firms. And startups. This changes the dynamic in job markets considerably, especially for talents with critical skills, such as cyber skills. And we’ll continue to see a ripple effect across industries and across the world as these trends continue.
With the correlation between worker engagement and productivity clear, the need to offer talent and rewards programs that workers are looking for might become more important than any other asset investment your company makes in the current environment. The future economic success and competitive advantage for your company could depend on it.
Previously in this series: The Future of Work: Do you have a legacy mindset?
Next in this series: 4 Ways the HR role is pivotal to M&A success
John Bremen, Managing Director, Human Capital and Benefits, North America
Chantal Free, Managing Director, Human Capital and Benefits, Western Europe