Article: Design rewards that truly matter to CEO and employees

Compensation & Benefits

Design rewards that truly matter to CEO and employees

An effective total rewards strategy requires deep understanding of what the CEO and employees really value
Design rewards that truly matter to CEO and employees

Indian organisations are still in the evolutionary stages of HR maturity, and definitions of what constitutes total rewards are varied


Companies that create customised financial structures & differentiated employment experiences achieve greater ROI from their total rewards strategy


While featuring in the HR lexicon for over 10 years, there are widely divergent opinions in the community as to what constitutes total rewards. Organisations have differing compensation and benefits structures, operate under diverse management principles, and have different approaches to employment value positioning. Irrespective of the number of surveys and statistics available on what the workforce values, the horizon of attraction and retention factors in India is rather broad. The diversity of the workforce is one of the key reasons behind the broad spectrum of attraction and retention factors in India.

Indian organisations are still in the evolutionary stages of HR maturity, and definitions of what constitutes total rewards are varied. Sridhar Ganesan, Head of Rewards Practice at Hay Group says, “Rewards management in India is evolving, companies are still in the process of building architecture of managing salary and benefits aligned to market reality and business affordability.”AON Hewitt’s 2012 Global Total Rewards survey among 750 organisations, defines total rewards as “everything an employee receives from the employer that they find rewarding”. Others define it as the tools available to the employer that may be used to attract, motivate, and retain employees. It includes compensation, benefits, learning, development and encompasses everything that the employee receives from an employer to enrich the employment relationship–financial or experiential.

Companies aspire to provide rewards that allow the creation of a strong emotional bond between employees and the organisation. There are essentially four key areas where companies provide rewards–compensation, personal development, organisational attributes, and benefits. The prevalent trend of total rewards in India, centers around offering standard financial incentives (incentives, stock options) and undifferentiated companywide benefits (wellness, retirements). The AON Hewitt survey, however, reveals that companies that are able to create customized financial structures and differentiated employment experiences achieve greater ROI from their total rewards strategy.

Very interestingly, Towers Watson conducted a study in 2011 that mapped attraction and retention drivers against how organisations spend on total rewards. The study highlights that there is a large mismatch between how organisations and employees rank attraction and retention drivers. For example, organisations ranked base pay as the greatest driver for both attraction and turnover. Employees, however, ranked job security as the most important attraction driver and work-related stress as the biggest cause of leaving.

Organisations also tend to operate under certain assumptions while designing a total rewards strategy. These assumptions include an over-reliance on employee surveys, dependence on managers for team insights, and assumptions that all employees in a demographic group have the same expectations. There also seems to be a large mismatch between the expectations of a CEO from a total rewards strategy and the output that compensation professionals deliver. For a CEO, the metrics that matter are strategy, customers, investors, and culture with a standard set of profit center expectations. Compensation professionals, however, view the function as a cost center. It is important that compensation professionals start viewing total rewards with the lens of organisational strategy and understand the value measures that a rewards strategy implies for customers, stakeholders, and the organisational strategy.

Most companies do now know where to start while building a total rewards strategy. As Ganesan says, “Indian companies today, look at rewards in a reactive manner, making a choice factoring business context and market dynamics is still work in progress.” By targeting factors that employees value, an organisation can build a deep emotional connection with its employees.

The second step of a total reward programme is to identify reward programmes that complement business strategy. Lastly, an organisation has to find the right balance between short-term and long-term rewards. Different objectives require different incentives and the reward programme has to reflect the short-term and long-term objectives of the strategy.

Read full story

Topics: Compensation & Benefits, Performance Management, #TotalRewards

Did you find this story helpful?



What are the top work tech investment focus areas for your company currently?

2 months free subscription

Subscribe to all new People Matters HR Magazine


And Save 59% plus Two months free

Subscribe now

What is your strategy to augment employee well-being?

READ the November 2021 issue to know from global leaders how to integrate well-being at work