Today’s talent landscape is powered by Digitization, Artificial Intelligence and Machine Learning are the biggest disruptors; accompanied by a plethora of challenges with predictability being the biggest talent challenge. Unlike previous eras talent, today comes with multiple definitions and varying expectations and employers globally are in a continuous effort to “get it right” for a pipeline ready to meet the next business challenge right around the corner. Meanwhile, from a societal perspective, we find that income inequality has widened and political ideologies have shifted radically due to increasing unemployment.
This has resulted in a marketplace that is in a heightened sense of flux with a vast generational divide ranging from the Gen Z and Millennial workforce at one end to Gen X and Baby Boomers in their 50s and 60s who for various reasons would like to continue being relevant at the workplace. With very different sensibilities all of this presents a workforce that is heterogeneous, comfortable with alternative work arrangements, has vastly different expectations of work – clear indications that a “One Size fits for All” the approach is no longer relevant and human resources need to reinvent the talent proposition.
“There is a need to reinvent people solutions balancing organizational priorities and talent imperatives. Here is where the Total Rewards approach is a very effective way to plan the roadmap ahead. Total Rewards as a concept addresses both the legal employment contract and the psychological contract that employers need to build and maintain with employees.”
Total Rewards as a concept was introduced by WorldatWork and includes all the elements offered by an organization to attract, motivate, engage and retain talent.
- Compensation – Base / Fixed Pay, Variable Pay, and Incentives
- Benefits – Typically Healthcare, Retirement Plans, Annual Vacation Leave.
- Work-Life Effectiveness – Flexi-time options and other benefits to managing life changes
- Recognition – Awards and Appreciations
- Performance Management – Goal Setting and Career Enhancement
- Talent Development –Learning Interventions
Once we have laid out a clear approach, in theory, while it should be fairly easy to execute, real-world situations have most organizations grappling with the nuances of implementation – spanning a contextual reference of the Total Rewards blueprint and the extent of consistency as well as transparency from the employee perspective. While it is true that we have a holistic preview of all reward considerations, rewards still need to be translated in a manner that engages and stimulates the target audience. A dispersed demographic also comes with a very different expectation of what matters to them and what is important to one becomes a hygiene factor to another. To quote the Roman poet and philosopher, Titus Lucretius Carus: “what is food for one man may be bitter poison to others”.
Given that people costs can be significant and even trend at upwards of 60% it is critical that every unit spend matter.
As a case study let us look at an illustrative view of the preferences of different generations.
“It is not our differences that divide us. It is our inability to recognize, accept and celebrate those differences” – so said celebrated American poet, writer, feminist, womanist, librarian, and civil rights activist Audre Lorde. This is especially apt for a successful rewards program. Our employees are a reflection of our society and our customers. We need to, therefore, understand their differences and translate that into rewards that keep them attracted, motivated and engaged. A progressive outlook mapping business impact with societal sensibilities that will propel organizations into the next trajectory.
Having understood the rationale of why total rewards can fail if not defined aptly, we then need to consider what will work especially in the context of our organization. A sample illustration of a rewards map is provided below but this will fail if all impacting factors are not considered. The rewards map needs to be crafted within the contours of our organization’s reality – its life cycle, financial model, market realities and true demographics, will all make the difference between success and failure.
A start-up, for instance, will focus on performance-based long term incentives to preserve cash. Mature organizations may prefer to focus on ownership and investment in the organization’s future through stock options.
While generational differences matter, we also need to avoid generalities and stereotypes to delve into the true preferences of our employees and the best way to do that is to reach out directly through all available means.
Our experiences shape each of us and our reward preferences; employee demographics can vary not just by age but also by all the other complex social and economic characteristics that define each individual.
Employees looking to start a family would be more interested in benefits that help them manage the realities of a new family such as Parental Leave and Infertility/Maternity Insurance. Those passionate about their hobbies would look for employers providing support such as Communities of Experience, Sponsorship for training events.
We would need to peel the employee demographic layer by layer, analyzing each aspect similar to what was done for generational preferences and arrive at a framework. This needs to then be juxtaposed with a feasibility analysis to derive the right reward strategy. Here is where the creativity of reward professionals would come into play to consider options that also ensure employee involvement and participation such as salary sacrifices, benefit purchases and other voluntary options in addition to employer-funded options.
Finally, the right strategy will only be effective if it is paired with the communication strategy that can cut through the clutter and reach our employees – current and potential – translating to a sustainable talent pipeline that remains motivated and engaged. Employees understand the impact of choices and are more likely to be supportive and committed when the context to benefit propositions are transparently shared.
Customization is the order of the day and the manner of customization is less about individualized options and more about individual choices. The sooner that we understand the impact and shape our plans, the more prepared are we to catch the next wave!!
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