With millennials dominating the workforce and the next generation of workers gearing up to make their mark, employers are being forced to rethink their rewards and employee benefits strategy. They’ll need to consider a total rewards package.
When we think “rewards,” compensation and benefits typically first come to mind—and with good reason. Research shows that compensation is the leading driver of job satisfaction, followed by benefits. Demand for a more complete, or total, rewards system though – is on the rise. In 2015, the Society for Human Resource Management reported that the trend toward a total rewards package will continue for the next five years. Also, promotions, not base pay increases, will gradually become the driving factor behind pay raises.
According to a 2017 report by Deloitte, employers are moving in the direction of a fully-integrated total rewards program. Although only one in five surveyed organizations had a fully integrated total rewards program, three out of four said they were interested in fully integrating their compensation and benefits program in the future. What does that mean for your business – and how does it differ from a typical employee benefits package?
At the core of this shift is the premise that employees want to work for companies that foster growth both within and outside of the organization. They desire a workplace that offers a complete rewards program through six elements:
- Work–life benefits
- Performance management
- Talent management
These six components are increasingly crucial to attracting and retaining top talent in a competitive hiring market.
Legally, employees must be paid for the work they perform, which makes compensation a default component of total rewards. Compensation needs to be competitive, however, to attract and retain qualified workers. Compensation strategies might include fixed pay, which constitutes the employee’s base pay; and variable pay, such as bonuses and commissions, which is determined by employee performance.
Employee benefits are indirect, noncash payments that employees receive in addition to their cash compensation. Benefits vary by company and may take the form of health and life insurance; retirement plans; employee assistance programs; and legally required benefits, such as workers’ compensation, family leave, and unemployment benefits.
The work–life aspect of total rewards is about maintaining attitudes, practices, and policies that help employees achieve a balance between work and home. Strategies include offering flexible work hours, paid and unpaid time off, health and wellness programs, and diversity programs.
The purpose of recognition programs is to reward behavior, effort, and performance that lead to organizational success. Accomplishments, for example, can be recognized through service awards, employee-of-the-month awards, peer recognition awards, spot awards, and luncheons or formal events.
Employee performance management involves establishing performance expectations, assessing performance, providing feedback, monitoring performance, rating performance, and rewarding satisfactory or exemplary performance.
Through talent development, employees receive the tools they need to improve their skills and maximize their potential within the organization. Opportunities may include internships, promotions, tuition reimbursement, leadership training, online learning, and coaching and mentoring programs.
In the end, a total rewards package helps you attract and keep valuable employees on board. Call us today if you need assistance developing your rewards program, recruiting new hires, or retaining your top talent.