Aligning Total Rewards with Talent Management Top Global HR Priority

News Updates

The top challenge of the next three years for HR leadership across the globe centers on talent—finding it, motivating it and keeping it.

The 2014 Global Top Five Total Rewards Priorities Survey report conducted by Deloitte, the International Society of Certified Employee Benefit Specialists, and the International Foundation of Employee Benefit Plans found talent shortages, combined with managing a multigenerational workforce, pointing to the need for more effective and adaptable talent strategies and rewards programs.

Conducted during December 2013, the survey represents employers in 22 countries around the world. Two hundred and twenty global HR professionals ranked the following as the top five priorities for 2014:

  • Aligning total rewards with business strategy by attracting, motivating and retaining employees.
  • Reducing the costs of providing health care and other noncash benefits to employees.
  • Motivating staff when pay increases are flat or nonexistent.
  • Demonstrating appropriate return on investment for reward expenditures.
  • Creating a rewards program that reflects the culture and goals of the organization.

Keeping with last year’s results, the finding and retaining of qualified talent outpaced all other choices as the top challenge, according to 35 percent of respondents. When breaking the responses down by region, most respondents listed it as their most significant challenge—38 percent of respondents in the Americas, and 30 percent in the other regions surveyed (Europe, Middle East and Asia-Pacific).

The rising cost of total rewards was the second largest concern overall (16 percent) and in the Americas (19 percent). Respondents from Europe, the Middle East and Asia-Pacific continue to find difficulty with providing meaningful pay increases in a cost-reduction environment and ranked this as their second most significant concern (20 percent).

“These findings clearly point to the need for effective talent strategies as employers struggle to fill technical and skilled jobs during a period of stubbornly high unemployment. While the alignment of rewards with overall talent management was the top challenge across all geographies, the approaches to achieve this goal truly reflected the economic, cultural and political nuances of the local regions,” said Jason Flynn, principal, Deloitte Consulting LLP, in the report.

For example, the Americas region placed more emphasis on the cost of providing benefits to employees. “In the United States, this comes as no surprise, as the Affordable Care Act has most, if not all, employers focused on health care benefits and costs. There is a great deal of uncertainty around health care benefits and the role it could play on the incentive structure for talent in the United States,” said Flynn.

Employers in the other surveyed regions ranked compensation concerns as a high priority, reflecting the economic turmoil across Europe in recent years, as well as the general difficulty of replacing low performers in organizations, according to the report. In addition, the regulatory environments in these regions generally decrease differentiation of benefits across companies, making compensation a more critical differentiator in competing for talent.

Preventive Health Programs Top Strategic Action

A large percentage of respondents in all regions (43 percent) said they are or would increase health and well-being initiatives; respondents in the Americas are more likely to focus on health initiatives, as 50 percent said they were modifying these programs. “This is a new focus as organizations attempt to reap the longer-term cost savings and benefits from a healthier working population,” said Flynn. “Employers hope that improved health will lower health care costs, improve productivity and enhance job satisfaction. However, the success of these programs is difficult to measure in the short-term.”

In line with prior years, defining and mixing rewards components and redesigning overall rewards strategy was the top action for Europe, the Middle East and Asia-Pacific. “With the focus on attracting and retaining qualified talent, employers should regularly assess their programs to determine whether they are hitting the value target of employees,” said Flynn. “This value must then be balanced against the rewards costs, all within the context of the population’s changing needs and broader organizational strategy.”

Increasing employee communications and education was rated the top planned change to total rewards programs globally, with the Americas (52 percent) and the other surveyed regions (45 percent) responding with nearly equal emphasis. In Europe, this may relate to cultural or statutory requirements to communicate with employees through works councils or other employment bodies. In the Americas, employees may have higher expectations of employers to be transparent and openly share key organizational information.

When asked to identify which programs would receive more emphasis in the coming year, respondents indicated that wellness/disease management and compensation programs will be the focus. This is consistent with responses elsewhere in the survey indicating the growing emphasis on wellness programs.

Varied Rewards for Intergenerational Workforces 
Organizations across the globe face significantly different generational workforce challenges. While the workforce populations in the U.S. and most of Europe are aging, India and Brazil are experiencing an influx of young workers. The survey indicated that 60 percent of employers overall somewhat agree or strongly agree that their organization’s leadership team understands the total rewards perspectives and values of the different generations in their workforce, but only 37 percent of employers globally would consider a menu-driven reward mix that allows employees from different generations to build a total rewards package to fit their particular needs.

“Organizations have come to face the reality that their workforces are intergenerational and what may work for one generation in the total rewards program doesn’t necessarily work for the others,” said Yon-Loon Chen, senior manager, Deloitte Consulting and co-author of the report. “It will be imperative for organizations to have a flexible total rewards program that will support all its employees as they progress through their careers.”

Roy Maurer is an online editor/manager for SHRM.

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