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Increasingly, rewards that aren’t cash-related are more prevalent as companies aim to keep talent while remaining flexible. Here’s what you need to know about building an agile rewards infrastructure.
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Companies that aren’t paying attention will be shocked to learn that, when it comes to attracting, motivating, and retaining employees, it increasingly takes more than a nice pay and benefits package. Things were going this way anyway, but it took the pandemic to truly bring it to bear.
Rather than stay stuck in the mud, or in denial, employers should view this new paradigm as an opportunity to reshape their total rewards approach to reflect both financial and non-financial incentives. While you’re at it, you should make sure you’re able to pivot if the landscape changes again, which it likely will.
Having said that, here’s what you need to know about building an agile rewards infrastructure.
Increasingly, rewards that aren’t cash-related are more prevalent as companies aim to keep talent while remaining flexible. Even before COVID-19, there was plenteous buzz about pay parity, so these compensation issues needed attention anyway. Add to that the fact that employees are gaining a bit of the upper hand, in terms of choosing where they wish to work and what kind of work they want to do. It’s a new day, folks.
What Is Meant by Total Rewards?
Total rewards packages usually include salary or hourly wages, performance pay, yearly cash bonus and other incentives. In addition, the term includes benefits such as health and retirement, non-cash pay such as educational assistance or transportation. Non-financial rewards can include leaves of absence, flextime, training, and the like.
How Can We Best Craft a Total Rewards Philosophy?
1. Create a direct line between business strategy and performance. Get the brain trust together to figure out and agree on what results should be incentivized, because such outcomes will help with rewards elements prioritization.
2. Figure out how your rewards philosophy will contribute to your organization’s reputation in the talent marketplace. You’ll shoot yourself in the foot if you’re only focusing on areas that connect to company goals. However, offering company-wide top-tier pay and benefits is fraught, too, since such employees may lose motivation to give it their all.
3. Use transparency to foster equity and fairness. Make sure your rewards design is equitable for all populations. Utilize pay equity analyses regularly to make sure you’re still good and that subconscious bias is not in effect. This could mean surveys and focus groups.
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Building an Agile Infrastructure
If you want to produce an agile rewards infrastructure, you will need an executive compensation program that pulls financial; environmental, social, and corporate governance (ESG); and any ESG concerns into your compensation program. Why would you want to do this? It’s so you can lure, keep, and motivate talent who can flourish during disruptions.
You will likely need executive compensation consulting to make sure you’re doing it right. If you go through a consultant such as Mercer, you can use its comprehensive database. This will help you develop and put in place a program to enhance your ability to recruit and motivate, match pay with your company’s strategic needs, come out on top in ownership transactions, and remain in compliance with legislative, regulatory, and shareholder requisites and guidelines.
As you can see, building an agile rewards infrastructure takes focus, planning, and likely the help of a consultant who has deep roots and expertise in rewards, human resources, and data and analytics. Such consultants can help you have a marked effect on performance, risk management, and efficiency. In any case, don’t delay. The workplace is changing and likely will continue to do so. Agility is key.
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