Total Rewards Trends in Digital Era


Managing Total Rewards is both an art and a science. Managing Total Rewards is a science in that there are specific approaches and tools that can be used to study, design, and improve the system. There are some ‘right answers’ that can be discovered through the use of correct methods and correct data. Mistakes can also happen by neglecting these methods and data.

However, managing Total Rewards is also an art. This is because data is rarely perfect and the reality of implementing a Total Rewards System forces managers to deal with numerous complexities that are difficult to foresee, understand, and manage.

In this sense, Total Rewards is an art form where the best data and methods are used as much as possible while overseen by judicious managers who must even take some risks in order to design and implement a coherent system

“According to mercer’s recent survey, nearly 700 organizations found that 59% of employers are planning to revisit their total rewards strategy in the next six to 18 months for the entire organization, and another 18% are planning to reconsider their strategy for specific job families”

In general, two inputs plays vital role to make rewards strategy decisions:

  • Employee Preferences gathered through an employee conjoint survey on which workers are asked to evaluate rewards programs on a relative basis, to get a comparable value or ranking of program elements.
  • The Costs of Each Rewards Program that the organization invests in, which commonly only includes those that are easily quantifiable like direct compensation and benefits.

There are many external factors influencing the Total rewards strategy in future, say an example

  • Multi-generations workforce.
  • Employees Health care
  • Competitors
  • Unions
  • Diversity
  • Globalization
  • Technology

To Attract, Motivate and retain the Top-talents in this digital era & Multi-generational workforce, organizations must focus on building relationships with employees and developing a differentiated suite of rewards, a strategic communications approach is critical in creating a workforce experience.

Here the communication plays a vital role and it must be holistic, branded, and timely.

Research has consistently shown the importance of human capital to company performance. Companies included in Fortune magazine’s “100 Best Companies to Work For” lists earned, over the long-term, excess risk-adjusted returns of 3.5%. Another report surveyed a multitude of studies on human capital and found that there is a positive correlation between human resource initiatives and investment outcomes such as total shareholder return, return on assets, return on earnings, return on investment and return on capital employed. A survey concluded that companies that had a workforce that was not engaged had an average one-year operating margin below 10%; however, those that consistently promoted workers’ well-being had an average one-year operating margin of 27%.

Willis Towers Watson research validates this supposition, showing that companies demonstrating best practices relative to the talent experience are:

  • Three times as likely to report employees are highly engaged.
  • 93% likelier to report significantly outperforming their industry peers financially.

The latest research by Bersin™ tells us that high-performing organizations are six times more likely to use data and analysis to understand the rewards preferences of their workers compared with their lower-performing counterparts.

Hence organizations should concentrate more on predictive Analysis to derive new total Rewards strategies and need to build a relationship with Employees to identify their preferences.

As per GPA- Global Payroll Association, Organization needs to think about following things to make effective pay & rewards.

  1. Attract Key Talent
  2. Replacing Performance – Pay
  3. No- Longer One Size Fits Approach.
  4. Personalized Rewards

Attract Key Talent

To optimize compensation budget, it is necessary to move away from the traditional bell curve approach, which simply allocating the majority of the organization’s pay budget to average performers. Instead concentrate your expenditure on key talent, which can make more sense. 

First of all, it is important to work with HR and business leaders to understand what ‘key talent’ actually means in your company terms. Identify business-critical roles, which high-value staff members could be at risk of leaving, and think about their skills in a wider market context.

Possibility to Replace Performance-Related Pay

Recently many organizations eradicate the annual reviews and performance rating and favour of evaluating performance on a more regular basis using continuous, real-time feedback. But this scenario raises inevitable questions about how to manage performance-related pay in a rating-less world.

Pioneerorganizations that went down this route first adopted a mainly discretionary approach, allowing managers to make their own assessments. Some used shadow ratings during compensation reviews based on broader criteria than simply past performance such as promotability and potential, but this information would typically not be shared with employees.

Other Organizations tried stack performance rating for employees, where employees are in essence ranked from one to x and pay is calibrated accordingly. Again, this information is not typically shared with the employees concerned. 

In both cases, lack of fairness and transparency. In other words, it is important to find new ways of compensating key talent that can be understood and communicated effectively.

Reward Segmentation

It is important to find ways of managing rewards effectively for different types of Employees

To make life even more complicated, some organizations are already discussing whether to add bots to their company headcount, which raises the question of how long it will be before they have to go on the payroll too? While this scenario may seem a bit fanciful today, many organizations already have multiple talents that co-exist as they increasingly understand that a one-size-fits-all approach to reward no longer works well. 

This means that 2019 should be a time to consider how to combine a range of different reward approaches that match the company’s reward policies.

Personalized Rewards

Many Organizations find themselves unable to offer big pay rises are looking for non-monetary approaches to help them engage their employees more effectively. While the focus to date has been on employee choice in the benefits arena, it has been less the case in terms of mainstream compensation, which still consists mainly of fixed and variable pay. 

As an Employee-centric Organization, it is likely that employees want to see more flexibility and more available options in their reward packages.

Employees want to make decisions based on what stage of life they are at and in line with their risk tolerance. So, the organization needs to undertake an audit of the reward options available, how they align with different talent groups and whether they are effective or not.

According to speakers at recent WorldatWork’s Total Rewards Conference, held recently near Dallas.”Analyzing data that most organizations already possess can reveal how rewards programs affect job-offer acceptances, turnover, engagement levels, and productivity,” said Juliette Meunier, a consultant with Ernst & Young.”

Here we can test the target areas and then track how these changes affect outcomes. She provided the following examples:

Issue: Turnover

  • Problem: Pay hasn’t kept up with the market, which drives people to competitors.
  • Data to Analyze: payroll, human resource information systems (HRIS), benefits enrollment and exit interviews.
  • Solution: Make targeted pay adjustments for high performers with a high flight risk.

Issue: Engagement

  • Problem: Employee engagement is lagging.
  • Data to analyze: engagement surveys, HRIS, and benefits enrollment.
  • Solution: Redesign internal web portals/communications to expand awareness of and enrollment in benefits that differentiate the organization from its competitors.

Based on this type of analysis, Google expanded its maternity leave policy from 12 to 18 weeks and saw a decrease in turnover among female employees, Meunier noted.

In 2019’s challenging employment environment, it is important to focus on the delicate balancing act of differentiating wages sufficiently to encourage high performance and staff retention.

Total Reward = Total Relationship In the world of Socio-digital, where workers are seeking deeper meaning in their work and the organizations are striving to create a greater human connection with their Employees, rewards can either be an incredible motivator or a topic of contentious debate. To help avoid the latter, organizations must expand their view of rewards, engage their Employees/workers, and enter a new world of work where perks and pay are just the beginning.


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