Focus on total rewards rather than compensation will contribute greatly to retention and loyalty of employees
Extending medical insurance for immediate family members can emerge as a great value reward strategy
As the tension between reward strategy and company strategy intersect at the ever-changing economic condition of the market, functioning as the link between business goal and employee expectation, maintaining a balance between the two becomes highly difficult for HR persons. In such a condition, it becomes necessary to differentiate between what needs recognition, when is it necessary to incentivize performance and when does the concept of total reward come in.
At the People Matters Total Rewards Conclave (TRC 2015) held in Gurgaon recently rewards leaders remarked that employee roles cut through different functions, definition of roles have become murky; roles today are fluid. In such a scenario, even employee expectation is tinted with the ‘I want it all’ attitude. There is therefore, a growing need to establish concrete employee roles. The old school concept of designing roles as per the company structure has become redundant. The emerging trend in defining roles is identifying diverse talents and then designing roles based on their skills; Google is a successful example that has followed this approach when it comes to concretizing roles.
Another growing challenge is creating different kinds of rewards for a diverse workforce. Diversity at work place is not confined to gender and age; ethnicities, nationalities and hierarchy all need to be considered while rewarding employees based on their different needs. As per a study, the average working age in a few years’ time will be 29; strategizing rewards beforehand accordingly is likely to be impactful. With the fluctuating rate of attrition for companies, focus on total rewards rather than compensation will contribute greatly to retention and loyalty of employees. This should include monetary as well as non-monetary rewards. In a study conducted by Google, it was revealed that employees prefer experience over cash rewards. A group of employees was sent to Hawaii, while others were awarded with $1000. When satisfaction was measured, those who went to Hawaii were much happier and for a longer time with their experience than those with the monetary award. However, in this strategy providing employees the option to choose is likely to be beneficial.
Extended benefit is another attractive reward strategy that hasn’t been explored in its depth. For instance, extending medical insurance for immediate family members can emerge as a great value reward strategy. Building a brand work culture has also emerged as an integral part of the Total Reward strategy as established by companies like Facebook and Google.
At TRC 2015, Harshe Ghate, Co-founder of ESOP Direct, talked about the growing importance of giving employees an ownership interest in the company. Given the changing business and regulatory environment, ESOPs is therefore, likely to emerge as a significant player in the long-term retention strategy for high performance.
HCL Technologies’ Anand R, Global Head of People Practices talked about training and building skills of employees as an impactful Total Rewards policy of the company. Creating personalised rewards after identification of skills is another reward strategy applied by HCL technologies. Further, identifying employee skills that contribute to business goal and polishing those skill has served as a strategy that has contributed to both business goal and employee expectation. Bank of America, on the other hand, has created personalised rewards based on age; regular health check-ups for employee being a part of that reward strategy.
Apart from these, other best practices in R&R are distribution of points that adds to employee value (points could be used for taking vacations and paid leaves), customization of appraisals, creating culture that contributes to maintaining work-life balance. Freedom to change roles and move within the company assures retention of talents that like to explore new opportunities and move constantly. Creating career forums where present and future career prospects can be discussed and providing feed-forward to develop skills are both attractive retention strategies.
Amid all of these, it is imperative to understand that compensations need to be given at the right time to boost performances, while total reward policy needs to be changed from time to time based on the changing trends of retention strategy.