Long gone are the days when companies could use salary and salary alone to attract the best talent. Today, especially as we continue to emerge from the COVID-19 pandemic, employees are looking for a Total Rewards compensation – a set of tangible and intrinsic benefits that include pay as well as training and development, work-life balance, recognition, and so much more. Employees are attracted to the entire employee experience.
Defining a Total Rewards Compensation Strategy
A company's compensation philosophy reflects how it believes employees should be rewarded for their contributions to the organization. A human resources (HR) strategy is how a company will attract, hire, retain, and motivate talent. A total rewards strategy needs to integrate both of these.
Creating a total rewards compensation strategy can shake up traditional ways of compensating employees. Most importantly, you need support from top management that aligns with the company’s mission, vision, and objectives. Something like a total rewards compensation cannot be implemented in a vacuum; it needs buy-in from the top down to be successful. HR needs to draw from various resources and key leaders throughout the company to make sure their total rewards compensation strategy is reflective of a leader’s perspective on how people should be paid and rewarded.
When a total rewards strategy is well communicated, it can lead to a positive culture. When people feel good about what they are doing and how they are rewarded, they are more likely to remain motivated and, in turn, more productive.
The Evolution of Total Rewards in the Marketplace
A total rewards approach to compensating employees is not a new concept, nor is it the latest HR trend. For the most part, when employees come to work, they are looking for more than just a paycheck. They want to be part of something larger than themselves – to thrive in a positive workplace environment and know that their contributions matter.
What has changed, however, is what employees want and need. Throughout the workforce, you have individuals from several generations ranging from Baby Boomers to Gen AA and everyone in between. Each generation has different expectations that they want their employer to meet. For example, salary, health insurance, job security, and retirement plans are priorities for Baby Boomers and Gen Xers. On the other hand, Gen Y, Gen Z, and Gen AA value flexibility to work from anywhere and have more control over their schedules.
The challenge of developing a Total Rewards compensation strategy is designing one that makes everyone across the board happy. It can be a challenging and daunting task. If you don't institute one, however, you run the risk of no longer being relevant or staying competitive as a top employer. In today's world of social networking, word gets out quickly as to what type of experience you create for your employees, which has the potential to be detrimental to your reputation.
How COVID-19 Has and Will Continue to Shape Total Rewards Compensation
The worldwide pandemic shaped where we work, how we work, and what we expect from work.
Without a doubt, COVID-19 has shaped employees' expectations of the workplace. It underscored a need for mental health initiatives, more robust healthcare coverage, childcare options, and overall flexibility (i.e., hybrid work environments) that will most likely remain top priorities for job seekers as we continue to operate in a post-COVID world.
It used to be that the government took care of the workforce. However, the tables have turned, and both the trend and expectation are that employers now hold that responsibility, and HR professionals don't anticipate that changing anytime soon. There is a war for talent out there. Those companies that don't take this into account will lose.
There Is No Cookie-Cutter Approach to Total Rewards Compensation Strategy
Companies must embrace a total rewards mindset to stay competitive. The first step is to understand the current employee population and what makes them tick. From there, it's essential to take stock of the financial and social environments and their impact on work. After gleaning this intel, you can confidently map out your Total Rewards programs to meet the specific needs of your company and employees. There is no cookie-cutter approach – every company has unique needs and requires customized solutions that will not only make your business an attractive place to apply but an attractive place to stay.
Continue the Conversation with Tam Nguyen
Tam Nguyen is international business management & human resources leader possessing expertise and technical knowledge in the areas of strategic human capital management and execution, including business strategy, global compensation & benefits, human capital and measurement, employment law, global mobility, and HR information systems integration and deployment to stabilization. Connect with Tam on LinkedIn.