Article: It is time to modernize your rewards program

#Compensation Benefits

It is time to modernize your rewards program

Rewards and recognition have emerged as a prime reason to ensure a confident and motivated work culture. How do you ensure you offer the right rewards and benefits to all the employees and keep them motivated?
It is time to modernize your rewards program

As businesses continue to get disrupted and the demands of the workforce continue to evolve, employers are re-inventing the work across the global, virtual workforce.  To remain relevant in such changing environment, employers need to move beyond the default models, expectations and practices to attract retain and engage high-value talent. In this war of talent, organizations are very particular about what they offer to their employees- compensation, learning opportunities, flexibility, career enhancement options, and rewards. Over the years, we have witnessed rewards and recognition emerging as a prime reason to ensure a confident and motivated work culture.

However, according to various studies, we found that:

  • 87% of company recognition program (a $46 billion market) are focused on tenure (year of service), according to Bersin by Deloitte. Still, they have little or no impact on organizational performance.
  • 83% of organizations suffer from deficit n employee recognition, and only 17% of employees believe their managers know how to recognize them well.

  • According to an employee engagement report, 79% of all employees are feeling undervalued due to lack of recognition and appreciation.

  • According to Willis Towers Watson, while most employees think they get compensation at or above market expectations, 39% employees value Total Rewards over Bonuses and Base Pay.

The increase in knowledge-based specialized workforce, high technology penetration, changing workforce demographics have modified business methods, corporate ecosystems, and approaches to innovation. With this dynamism in place, the complexities related to motivating employees have also amplified. The influence of reward and recognition has thus become vital for making a difference to talent in every organization. According to People Matters study, Trends in Employee Recognition 2018, 79% respondents said that the primary objective of their R&R program is aimed at improving the morale and motivation of employees. Hence, there lies an impeccable need to modernize rewards & recognition. 

Among the multitude ways of modernizing rewards and recognition program, few simple steps can be looked at:

Understand your employees:

Knowing your employees and what they value is vital for business. Understand your workforce segmentation and demographics and what they value. E.g., devise your rewards strategy according to the different set of people working at your organization. Understand what recognition means for different people, which would be monetary as well as non-monetary. For someone it could be receiving more good quality work as an appreciation of his/her excellent work in the past; for someone, it could be the provision of a flexible working environment.

Introduce wellness: 

Today’s workplace is filled with benefits designed to fit the needs of a contemporary workforce. These benefits should make employees feel happy, and in turn more productive and loyal. Hence, it becomes imperative to include workplace wellness as a part of a more extensive benefits and rewards program.

Your workplace wellness program should include three major types of wellness:

Financial Wellness: Today’s workplace is filled with benefits designed to fit the needs of a contemporary workforce. Make sure the benefits you offer are customized according to the needs of the employees. Make sure you cover every employee- a person who has joined the company, person who is retiring, person who works as a contractual worker or person who plans to have a long-term career with you.

Physical Wellness: Being in good physical and mental shape set employees up to be great at their job. Companies should understand this and offer their employees a series of benefits and activities that promote health and well-being.

Spiritual Wellness: The nature and meaning of work are experiencing an intense evolution. The emergence of spirituality at workplace points to the desire that the work is associated with a higher purpose. Employees yearn for work to be a place in which they both experience and express their sincere soul and spirit.

Separability: 

Differentiate rewards from merit pay and the performance appraisal. Financial rewards, especially those given on a regular basis such as bonuses, profit sharing, etc., should be tied to an employee's or a group's accomplishments. By doing so, a manager can avoid a sense of entitlement on the part of the employee. It also assures that the reward highlights achievement rather than a basic skill. Additionally, there is a need to separate cash rewards from non-cash rewards. Cash incentives tend to be linked to overall compensation, non-cash awards stand out as rewards for performance. Create a culture of recognition by connecting rewards and recognition to the organization’s cultural values that are agile, innovative, brave, and imaginative. Aim to create an element of motivation and engagement that helps us creates an environment of high performance by recognizing employees who exemplify such behaviors.

Avoid predictability:

As mentioned in the report, 87% of company recognition program (a $46 billion market) is centered on tenure (year of service) which makes rewards and recognition predictable and hence doesn’t add value to employees’ motivation.Also, recognition should be constant and spontaneous. Delaying rewards and recognition make employees anxious, suspicious, and less productive. 

The changing workforce demographics have compelled leaders to rethink and realign their strategies around employee recognition, retention and rewards. Strong recognition and rewards are the core pillars of a healthy and progressive talent management strategy. It can have a considerable impact on the perception of fairness and transparency in the company. 

Topics: Compensation & Benefits

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