The phenomenon of employees contemplating quitting, just when economies around the world are poised to rebound strongly following the pandemic, is worrying businesses. A standard response to employees quitting jobs has been an increase in monetary compensation. But it hasn’t been proved to be enough.
The shifting priorities of talent, challenge the existing Total Reward strategies of companies across the globe.
To learn more about the emerging approaches to compensations, benefits and total rewards, we interviewed Roopank Chaudhary, Partner and Chief Commercial Officer, Human Capital Solutions, Aon.
Roopank shares the latest trends and discusses how rewards is changing as a function. He also talks about the changing role of rewards managers.
Here are some excerpts from the interview:
How far do you think an increase in monetary compensation would help organisations retain their best talent? Where is the current compensation and benefits strategy lacking?
A substantial increase in monetary compensation unless done strategically, will only serve as a knee-jerk reaction and not help in the long run. Undoubtedly companies have to resort to counter offers and mid-year increases to stem the flow of resignations that we are seeing in the market today.
But it is impossible to do this for everyone at risk – companies need to strategically focus on ring-fencing their key and critical talent who are an intrinsic part of their growth strategy over the next 3-5 years. And even for this select pool, there is a need to go beyond compensation as someone will always pay more than you in the market – it’s an endless battle.
The war needs to be won by also creating career and growth opportunities for these employees, and creating an environment for them to grow for the longer term.
The 'Great Resignation' has shown that it's not just compensation that drives engagement, but a holistic approach including work environment, growth, learning & culture is required and companies need to understand this.
Given the current state of work, how are rewards changing as a function? What implications do these changes have on the role of rewards managers?
Given the advent of the future of work, and newer ways of working, the function and role of rewards and reward managers are moving away from just annual increment cycle management and compensation benchmarking to becoming the custodian of all aspects of rewards strategy.
The role needs to focus on how to differentiate rewards for your top talent; how to weave in an overall relevant rewards strategy for the industry and demographics that the company is part of; baking in the right approach for both short term and long term incentives for different levels of management.
They also need to start thinking about how will agile working impact rewards – would location-based pay and remote working/hybrid working have an impact on how pay is structured going forward? At the same time, reflect, what are the newer benefits that need to be introduced to manage wellness and health aspects?
What elements need to be introduced for an impactful Total Rewards strategy for the new world of work? What are some emerging approaches to benefits and total rewards?
An employee-centric design is essential to create an impact rewards strategy. Getting employees' and managers' perspectives on their current challenges and trying to address them will go a long way and clearly, a well-designed Total Rewards programs will help organisations reach there. The new world of work or future of work is going to be agile, non-linear, flexible and skill-based.
At the same time, rewards need to focus on different models of work such as hybrid, and hence make sense for all kinds of employees. All these factors need to be considered for creating a total rewards strategy. Along with wellness strategies, regular recognition, feedback and manager connects are some other popular approaches that are seen today in benefits and total rewards.
How can employers create a differentiated value proposition for different talent segments while resolving the emerging tensions around equity and transparency?
Equity and transparency are clearly a given when it comes to total rewards strategies today – a larger part of the organisation needs to reflect these. Pay decisions and pay communication will play a large role in determining how these issues are tackled.
At the same time, having performance differentiation is critical in creating an EVP of meritocracy and ensuring your top talent feels recognized and engaged to perform at their best. In addition to segmenting the key talent, the other value propositions can be created around demographics (companies are seen as a talent magnet for young leaders), skills (value proposition focused around tech skills, for example), and diversity (creating flexible work models and structures for employees who need to balance work and personal life).
How can organisations align their newly emerged wellness efforts with the overall benefits and compensation strategy in order to create a sustainable balance for businesses and individuals?
Health and wellness have assumed significant prominence over the last two years, especially in the wake of the pandemic. With a strong focus on mental health, companies are trying to drive work-life balance for sustainable operations.
One big takeaway for companies is that these wellness efforts cannot be ad-hoc and transient. It is evident that the way we work is going to become very different and a long-term thought-through wellness strategy is core to employee engagement and business stability. Going forward, employee wellness needs to be an integral part of the total rewards strategy and needs to be aligned to the demographics, life stage and nature of work of the organisation.