Employee Compensation And the New Paradigm
During a time when employee needs and expectations are broadening and a different kind of labor force is quickly manifesting, does your organization offer suitable rewards and incentives? We’re asking because, in case you haven’t noticed, we have entered a time of disruption, driven largely by the pandemic, in which lining up purpose with pay and performance is vital if you’re going to remain competitive and expect to be able to recruit and retain talent. That calls for improving the employee experience and building agility so that you aren’t caught flat footed when you need to pivot again. Keep reading for what you need to know about employee compensation and the new paradigm.
What is Meant by Total Rewards?
These are all the tools an organize may utilize to lure, motivate, and retain employees. Such packages usually include both monetary and non-monetary benefits. We’re talking pay plus healthcare benefits, insurance, vacation time, retirement plans, career advancement training, work-life flexibility, and any wellness programs. Typically, organizations add up every employee’s total rewards plan and presents it to them in the form of a total rewards statement during the yearly performance review, say, or when offering the job. This way, employees learn about the programs the company has established to assist them both professionally and personally. They also gain a better understanding of what comes with working for the organization.
Aren’t Great Pay and Benefits Enough?
No, it’s no longer that simple. While pay and benefits are crucial, of course, employees these days are asking more from their places of employment. And they increasingly have the leverage to do so. The idea of employee compensation must be tied in with opportunities to grow and develop and be a part of something bigger than themselves. Note the consulting firm Mercer’s 2021 Global Talent Trends Study in which half of employees said they preferred to work for a company that offered “responsible” rewards, and nearly as many favored organizations that protect both their health and financial wellbeing. What’s more, the study showed that 37% of employees are motivated by robust corporate values, purpose, and mission. And check out this figure: 36% of employees like organizations that prioritize environmental protection and social equity. That’s quite an uptick. So, your task is not only to develop a reworked rewards strategy, but one that is purpose driven and expanded to include a focus on issues that once weren’t a big part of most organization’s focus. It’s all part of the employee experience, which must be updated if you expect to compete for talent in this increasingly global world.
What Kind of Approach Do We Need?
What you want is a total rewards strategy that factors in costs, yes, but also the market and the perspectives of both the employer and employees. You also want to be able to use data to gauge employee sentiment and behavior, and the ability to ID workforce segments that have distinct needs and values. What’s more, you want to foster engagement through rewards programs that drive behavioral change. Now that you know more about employee compensation and the new paradigm, you can go about putting in place a strategy that not only aligns pay and performance with purpose, but that gives you the flexibility you need to adjust, when the situation calls for it, during a turbulent time. The good news is that you can use this time to reimagine total rewards and make the switch to a new system of talent management. To help you get there, we suggest enlisting the help of a consulting firm such as Mercer, which offers the breadth of experience and expertise you need.