Total Rewards: The industry landscape

As per World at Work - The Total Rewards Association, “The six elements of Total Rewards that collectively define an organization’s strategy to attract, motivate, retain and engage employees are Compensation, Benefits, Work-Life Effectiveness, Recognition, Performance Management and Talent Development.” A survey carried out by the same organization revealed that of these 6 levers, 88 percent organizations have recognition programs in place. In many organizations, after Compensation and Benefits, Recognition would be the 3rd of the 6 levers used by employers to achieve the objectives stated above. 

So just how big is the market for rewards and recognition services and solutions? As per Incentive Federation’s 2016 “Incentive Marketplace Estimate Research Study”, American companies are estimated to spend USD 90 Billion a year on non-cash incentives. Of this, about USD 23 Billion is spent on Sales Reward and about similar amount on Employee Rewards. In this space, companies are increasingly using the Gift Card options followed by Merchandize, Award Points, and Trips and Travel. If one actually looks at all the 6 aspects of the Total Rewards strategy as per definition above, the overall market size would be huge when compared to the estimated size of Compensation & Benefits market that was between INR 900 to 1000 Crores in 2011.

With the VUCA world and the forces of SMAC changing every aspect of our lives and business, in face of consumerization of business processes, many organizations are taking structured approaches while designing their rewards strategies. In designing the Total Rewards program, the following models and best practices can help in determining an organization’s specific Total Rewards program.  

• The WorldatWork Total Rewards Model is one of the frameworks that companies can use to assess and design their Total Rewards program. The model details the six elements of Total Rewards that collectively define an organization's strategy to attract, motivate, retain and engage employees. These are compensation, benefits, work-life effectiveness, recognition, performance management, and talent development.¹ 
  
  
• The EY Rewards Survey 2016 gives clear indications of what is really missing in most companies reward strategies and specifies the perception gap between Employers and Employees on the Total Rewards program.² 
  
  
• How a company’s board and HR committee views the company’s rewards programs is also crucial. From a Board’s point of view, trends, market, volatility, growth, testing hypothesis, risks, leverage, budgets, and time are the nine components that are looked at when it comes to a rewards strategy.³ 
  
  
• One of the leading service providers in this industry, O.C .Tanner reveals the 3 recognition truths in the Evolution of Recognition that can aid in designing a successful rewards strategy – making recognition personal, presentation to convey recognition and appreciation.⁴ 
  
  

When one looks at Total Rewards through the lens of the 6 components, a variety of solutions emerge. Considering the scope of this article, we have outlined few of the critical solutions (a representative sample) that most organizations are likely to evaluate and use.

Some of the global consulting companies that cut across all these 6 areas of Total Reward and help organizations define, deploy and sustain such total reward strategies are:

AON - Also referred as AON Hewitt, the organization was formed by the merger of AON and Hewitt Associates Inc. in 2010. At the time of the merger Hewitt Associates was a global Human Capital consulting firm with revenues of roughly $3.2 Billion. Since 2010, AON has been further consolidating its position in the highly competitive HR consulting space by acquiring relevant organizations much like its peers. One of its recent acquisition is of Gurgaon based Co-Cubes, a talent assessment firm specializing in entry-level talent.

Deloitte - A global consulting firm, Deloitte, under its Human Capital consulting practice, helps organizations in designing and implementing unique HR strategies that help in addressing the key talent challenges. Deloitte’s practices cut across various areas of HR and Total Rewards is one of them. Over the last 18 months, Deloitte has acquired 6 technology related start-ups in a bid to expand its offerings while responding to the growing demands in the market. With such acquisitions, it aims to provide a complete service offering to its clients, locally and globally. 

Mercer - A well-known and recognized player, Mercer is particularly known for its Compensation & Benefits benchmarking practice. Mercer recently announced its acquisition of Thomsons Online Benefits, provider of one of the leading online benefits platform DarwinTM. This acquisition outlines the move by most global consulting organizations to provide a global yet local solution powered by technology especially in the areas of compensation & benefits. 

Willis Towers Watson - Another entity that has recently come into existence via the merger of Willis Group Holding PLC and Towers Watson & Co., Willis Towers Watson is one of the global consulting firms and has its own software product and platform to deploy along with consulting services. It offers a rather broad range of solutions targeted to solve specific business challenges for global organizations. 

One of the most used services in the Total Rewards space is around compensation & benefits aka payroll solutions. Here, companies essentially take one or a combination of the following approaches: 

One of the often overlooked aspects in the overall compensation and benefits aspect is the statutory compliance that needs to be embedded within the compensation and benefits program of any organization. This is typically a challenge with small and mid-sized companies. Most solution providers however do address this aspect but with Saas-based technology solutions, many small & mid-sized companies are increasingly adopting the payroll technology solutions to resolve this. One may argue that such decisions are more tactical in nature than taken from a Total Rewards perspective. In most cases, companies may have different solution providers especially from a technology perspective to address each of the areas within the overall total rewards strategy. 

While all of the 6 aspects of Total Rewards defined above have also been impacted to varying degree by forces of the VUCA world and SMAC, the most visible of them is Recognition. As with increased consumerization, employees have started to demand the same level of flexibility and autonomy with respect to reward & recognition options. This is evident in the Incentive Marketplace Estimate Research Study 2016 which revealed that the use of gift cards & award points increased in 2015 over 2013.

In our journey to look for the right reward & recognition solution provider, we looked at some of the global and Indian companies. 

BI Worldwide is a global leader that helps organizations design various engagement and loyalty solutions for employees, channel partners and customers. The fact that they can play on both sides of the organization, both inside and outside, puts them in a unique position to determine which employee behaviors on the inside will impact the customer behaviors on the outside. The combination of technology platform and reward fulfillment capabilities makes them a very interesting player in this space. 

Edenred is another player similar to Sodexo, Zita and Udio, which offers digital meal vouchers. With their tie-ups with payment switches like Mastercard and Visa, they are able to offer an easy-to-use payment and settlement process via smart phones. The value proposition is simple, ease of administration and use across multiple point of sale. 

Niyo Solutions is another digital payment solution that companies can leverage to ensure there is a single method of payment and reimbursement for all employees. NiYO aims to revolutionize the payroll market with a new age banking-grade solution and it is evident here that banks will start to play an important role as they take a lead in providing such solutions to its corporate clients. 

O.C. Tanner is one of the world’s oldest and largest pure play service and technology company in the global rewards and recognition space. The great work platform solution is a technology platform that helps integrate social, performance, career, wellness, safety, and other programs together. This is one of the highly specialized players focusing on employee recognition specifically. 

Sodexo is a global organization and has been one of the early entrants in Indian market to offer benefit & recognition solutions. The idea of meal vouchers that provide tax benefits and can be used at company discounted canteens and grocery stores alike was an instant hit with Indian corporate. As per market estimates, Sodexo is estimated to have 80 percent of the market share of the corporate benefits space in India. 

Vantage Circle is a web-enabled corporate privilege program for employees. This platform acts as a conduit between various service providers and corporate employees, thus ensuring that employees get the best of services at “discounted” rates. With an array of benefits like shopping, recognition, meal voucher and health & wellness provisions, this platform helps its customers cut across few areas of the Total Reward strategy. 

Xoxoday (earlier GiftXoxo) offers unique experiences as benefits for corporate employees. It offers a rewards management platform so that you can ensure your entire employee reward and wellness program get integrated into a single platform.

YouEarneditTM is one of the latest entrants in this space. Founded in 2012, it has taken a position as an expert in this field. In this short span of time, the company has worked with other small companies and Fortune 500 businesses and caters to small & medium enterprises that are unable to afford large global solutions and services. They are more of a SaaS-based platform solution than a full service solution company.

Zeta Optima suite aims to provide maximum benefits to employees. This player is clearly focused on the benefits space and offers meal vouchers, medical reimbursement, and LTA option to Indian employers. Combining aspects like ease of use with wider acceptance through its SuperCard, the company is looking to fundamentally change the way we do benefit administration — especially the statutory ones.  

There are also solutions and solution providers who do not necessarily occupy a single category in the total reward categorization but spread across multiple categories or are useful in multiple categories. To leverage areas like benefits, work-life effectiveness & recognition, organizations are also turning to health & wellness programs. Service and solution providers like TruWorth Wellness, HOD Life, HealthifyMe, The Fuller Life are changing the wellness programs for companies as they offer unique value propositions to corporates with respect to their health and wellness program while combining the same with metrics and analytics. 

With so many options to offer to employees, companies find it difficult to manage multiple options. Employees also expect a choice out of all the possibilities of vouchers, coupons and other such options. This is where recognition platforms like Kwench and Peoplecart come into play. These companies have essentially taken out the burden of managing various reward programs from the HR and put that on the platform while freeing up the HR to design innovative reward programs and ensuring that the platform makes it gamified and social, thus driving better engagement and utilization of available options. 

There are pure play services companies like Engage4More, who have created unique delivery models of employee engagement and recognition. Having created their own corporate event like any other big reality show, this company has now established themselves as a leading company in this space. Their comprehensive offering from consulting to events around this space makes them a unique service provider in this space.

Companies like Qilo are taking a completely different approach in such a marketplace, considering building culture as the cornerstone they have created a model based on their internal research which helps companies build their unique culture via performance management & recognition done via their platform. While the platform has the model designed by Qilo at the background the company can customize the whole process to suit their internal processes. This is a unique solution for companies who are at some level of maturity with respect to performance management process

There are also specialized players in the space of Performance Management and talent development that help companies address these specific challenges. In most cases, these areas can largely be divided into consulting and technology solutions.⁵ 

Most analyst and top consulting organizations are recommending organizations to move to a Total Rewards strategy as it helps them take a systems view of various moving parts of the employee lifecycle and HR processes within the organization. As more and more organizations take this journey, the interplay of various HR processes, policies and technologies will be an important factor. With technology redefining organizational processes along with the impact of SMAC, consumerization will be increasingly seen in all aspects of the Total Rewards strategies and the manner in which companies respond to these forces. We will continue to see emergence of innovative players such as Qilo, YouEarnedit, TruWorth Wellness and Zeta along with the mid and large consulting companies that will continue to acquire innovative and category defining or redefining start-up players like we have seen with Deloitte acquiring 6 different technology companies over the last 18 months. 

As companies look to derive and design their Total Rewards policies, a strong focus on cost and ease of creating, administrating, and disseminating these programs across the organizations will be observed. We would continue to encounter themes of giving more control to employees, moving from top down to Peer-to-Peer systems, and building transparency in design and implementation of Total Rewards systems. Most companies will look to buy solutions across the various categories of Total Rewards with a view to stitch together a unified ‘employee experience’ which would prove to be the key differentiator in the future. 

One of the often overlooked aspects in the overall compensation and benefits aspect is the statutory compliance that needs to be embedded within the compensation and benefits program of any organization