Look at Employees as Consumers while framing your Rewards Strategy
The evolution of employees and talent challenges has been parallel with the evolution of consumers and market challenges. There was a time when salary growth was measured in terms of the number of years spent with the organization and benefits like car loan and home loan were also linked with the same. The employees back then had a few options to choose from and the roadmap of career, salary and rewards were linked with the work experience in terms of years. Back then quantity mattered more than quality of experience. And speaking of consumers, before liberalization, privatization, and globalization a very few variety of goods and services were available in the market. Therefore, we can say that just as the employee choices and the employee compensation were in a very limited domain so were the consumer choices. This dearth of choices was subsequently linked with brand loyalty. Earlier creating brand loyalty was not an exhausting task because of the limited competition and similarly, employee loyalty was also not hard to build. Employees realized that their career and compensation growth is dependent on the number of years he spent in one organization. But considering the current scenario where an upsurge in competition is observed almost every day, building both consumer value proposition and employee value proposition is crucial to organization’s success, today. And just as consumers don’t compare various products based on the only price anymore, employee satisfaction can’t also be attained only through salary and monetary benefits. The marketer has to attract the customers with a lot more propositions than just his product and to do that he has to go through many stages of identifying the needs and ways in which these needs can be satisfied. A similar approach is required while framing the total reward strategy of employees.
The existence of a variety of generations is another aspect disrupting the customer and the employee mindset. Organizations have to address six segments of customers. If we further narrow it down and eliminate the two generations, who will not be coming into the workforce in the near future, we essentially have four generation starting from baby boomers to Gen Z. Their needs, drivers, and aspirations are different. The total rewards models have to be designed with an aim to cater to these varied needs. For this, the concept of consumer segmentation can be utilized to segment the employees and give them a more personalized experience. Taking the example of airlines as they segregate their consumers as silver, gold, and platinum to define the different levels of services provided to each category, organizations can do something similar to focus on the critical employees.
While personalized reward experience is one critical area gaining popularity, transparency is another aspect of demand. Today the employees demand some level of transparency, just as the customer demands it from the brands.
The other thing which is going to be very different from the past is that there will be more women coming into the workforce and they will not only be restricted to the lower level of the organization. Therefore, the organizations would have to prepare themselves for an increased number of women coming in and design a very different level of the value proposition.
Lastly, the change which needs to be addressed is the movement of relationships from transaction to trust. And this trust needs to be manifested in the reward scheme organizations will design.
Elements of the consumer market and the talent market might be different but at the core, they are almost the same. HR leaders must remember that customers of tomorrow are also going to be employees of tomorrow. Demands and expectations for products and services are familiar with the expectations from the employers. Therefore while defining the employee value proposition and designing total reward strategy, read up some stuff from marketing and get a good idea about your customers who are your employees.
(This article is based on the keynote by Siraj Chaudhry, Chairman, Cargill India, given at the Total Rewards and Wellness Conclave 2018.)