Organisations are increasingly taking a more inclusive approach to compensation and we are seeing a Total Rewards philosophy applied more frequently at global Top Employers. Total Rewards implies a much broader focus, not purely on the money element of compensation and benefits, but also including more holistic aspects like health and wellbeing, work/life balance, work environment and development opportunities.
The rationale for this philosophy is that employee satisfaction and engagement isn’t purely driven by monetary compensation. Factors such as development opportunities, flexible working, recognition, and culture are often the elements that encourage someone to leave their employer and look for fresh challenges. In an increasingly fluent talent market, where some skills are in short supply, organisations need to look at all ways to keep their most valuable talent. A purely financial inducement may help in the short term but is unlikely to compensate for the other areas of work and career fulfilment that employees seek for long. By including some of the broader elements in an overall rewards philosophy, companies can offer much more choice to employees, usually keeping within budgetary constraints. This in turn helps boost efforts in both the attraction and retention of talent.
The linking of recognition to Total Rewards is a fast growing area and offers more scope for companies looking to create a culture of appreciation and mutual respect. Popular non-tangible incentives amongst our participants are: performance awards (85%), showcasing individual successes (77%), innovation awards (66%) and values awards (58%) - however the most popular remains recognition for length of service, something that 90% action.
Total Rewards Statement
There is added value in communicating explicitly the total compensation package including the non-monetary awards. The Total Rewards Statement is an example of this in practice. Total Rewards Statements increase awareness among employees about the real value of the total package. We see that this is an emerging practice, however, only currently in place at just over half of participating companies, with 25% not doing it at all. A minority also include non-financial benefits like training investment, in the form of monetary value.
Monetary value
These Statements can make the monetary value of rewards more transparent, but is often limited to rewards with quantifiable costs. Many of the rewards we are seeing (such as recognition, work-life balance, flexible working) have no definitive cost attributable. Training may have a monetary value placed upon the investment, but no measure of the benefit gained by the employee.
Best practices
Best practice examples from Top Employers showed a range of incentives in their Total Reward models, all now being included as part of an overall compensation package clearly stating the value to the employee. A global hospitality firm includes work-life balance, personal development and a range of internal conferences and conventions in their offering to employees, whilst a large healthcare business rolled out Total Rewards over a 4 year period, adding components each year, with specific offerings catering for different generations and employees at varied life stages.
With Compensation & Benefits evolving to more inclusive and globally aligned practices we see this reflected in the way Compensation & Benefits is being organised. One participant has harmonised Compensation & Benefits globally and implemented an organisational structure completely aligned with their definition of Total Rewards: local professionals overseeing compensation & rewards, wellness, health and welfare, development and talent deployment all reporting in to the Global Compensation & Benefits Director, ensuring Total Rewards is not just a concept on paper but can be globally governed in an effective way.
A more global approach towards job grading is already quite common; we see a lot of organisations that already have truly global job grading structures in place. It is crucial however, to find the right balance between global alignment and local needs, to ensure a sense of fairness across the different regions.
Four key trends
‘Adoption of a total rewards philosophy’ is one of the four key trends we have identified in the Compensation & Benefits report. These four trends are shaping the way Compensation & Benefits can be used strategically to deal with talent attraction and retention issues.
Each one recognises the variety of ways in which employees now find job satisfaction, be it how performance is rewarded or acknowledging the need for healthier work patterns.
Download the full Compensation & Benefits report to learn all about the current trends in Compensation & Benefits and how organisations deal with these trends in their business processes.
