ORLANDO, FLA.—“Now is the most exciting time to be in HR. So many challenges!” observed Jennifer Barton, SPHR, as she addressed issues relating to “Designing the Right Total Rewards Strategy” during her June 23 concurrent session at the 2014 Society for Human Resource Management Annual Conference & Exposition.
The total rewards mix is the driver for attracting, retaining and engaging talent, but it’s too often approached in piecemeal fashion by management, and misunderstood and undervalued by employees, explained Barton, national practice leader for HR consulting at Willis. She urged HR professionals to put in place an overarching total rewards strategy that evaluates the effectiveness of each reward element, reviewing how it aligns, or doesn’t, with business strategy and employee needs.
An optimal mix of reward elements includes not just compensation and benefits but also work/life balance, career development and social recognition, among other offerings.
“The right mix is going to help bring in talent that is engaged and tied to business performance and profitability,” she noted.
Initial questions HR should ask include:
- Is our total rewards strategy designed to influence the right behaviors to drive business results?
- Is voluntary turnover among high-performing/high-potential employees higher than desired?
- Do our employees understand the real value of their total rewards package?
Rate Reward Elements
“It’s important to have the right stakeholders in the room as you discuss what the total rewards strategy is trying to achieve and look at the effectiveness of each element,” Barton advised. Conduct a gap analysis by rating each reward element in terms of its effect on attraction and retention. Do the same for engagement.
“Look specifically at how rewards are perceived based on workers’ age, gender and tenure,” Barton recommended. Ask how aligned the element is to your business strategy.
Also consider the marketplace:
- Have you identified your desired competitive position for each employee group (executives, managers, associates, etc.)?
- Do you lead, meet or lag the market with your rewards?
- Are you losing candidates and employees to competitors because those businesses deliver this element better than you do?
“It’s OK to lag with one or two reward elements if that fits with your business strategy,” Barton said. “But it isn’t OK not to talk about it.”
Another vital part of the analysis is employee feedback. This can be gauged with “pulse surveys” throughout the year that ask just three to five questions at a time, making it quick and easy for employees to respond. For instance, ask “What do you value, or not value, in the rewards package?” and “What keeps you working here?”
Encourage managers to discuss how rewards are perceived by their workers and to share those responses.
After performing this analysis, prioritize your rewards, identifying three to five core elements that your organization can use to drive talent recruitment, retention and engagement.
“Look at low-scoring items,” Barton advised. Are they aligned to the business strategy? Are they market-competitive?
Discuss whether you should terminate elements with little actual or perceived value.
“But consider that the problem could be ineffective communications and education—employees don’t value what they don’t understand,” Barton said.
“Package and communicate the total mix,” she urged. “Connect employees to the right information, at the right time, using the right communication channels.”
She recommended distributing annual one-page total rewards statements that relay the value of different offerings, creating a “big picture.”
“This also helps HR to consider the value of rewards they don’t talk about every day,” Barton noted.
To read the original article on shrm.org, please click here.