Compensation and Benefits professionals are faced with an extremely challenging task in devising innovative reward strategies to lure and retain top talent within their organisations. In today’s increasingly competitive market, reward professionals continue to increase their focus on the broader definition of total rewards, giving as equal attention to flexible benefits, attractive pensions and a broader ‘employee experience’. These include factors such as work-life balance, career progression and an ever-increasing range of perks (Towers Watson report, 2014).
Tailoring reward to the local population
There has been a growing focus on how to effectively compensate different sections of the workforce. For the baby boomers, this means devising effective pension plans. For Gen Y, achieving a work-life balance is the theme. For millennials, one of the priorities is the ability pick and choose certain benefits that fit their lifestyle (e.g. gym breaks and health insurance). Being able to integrate their work duties into their broader lifestyle, and make their work life more ‘portable’ is also key (PwC, 2015).
Organisations also tailor their compensation and benefits packages to wider geographical trends and pressures. With house prices soaring in London for example, KPMG and other firms are taking steps to assist their employees to get onto the property ladder by matching contributions made by employees into a mortgage-specific savings account. Elsewhere, compensation and benefits strategies are localised according to national or regional workforce trends. For instance, EY found that staff within BRIC countries (Brazil, Russia, India and China) differ in terms of their orientation and value placed upon certain reward strategies. In Russia having security and a steady income in the ‘here and now’ tends to be valued, whereas in China equity-based pay (e.g. stock options) is highly desired, suggesting that Chinese workers are concerned with their long-term future at their organisation.
Reward offerings by segmented populations?
There have been tremendous strides in terms of how organisations are compensating and catering to a diverse workforce via reward. However, beyond tailoring compensation and benefits to employees at different stages of their life or those in different regions, what else are companies doing differently to push the boundaries, to really prioritize their total reward offering and offer something truly unique? Who would say no to free gourmet meals or being able to bring your pet to work? Not every company is a tech giant with huge funds to spend on indulgent benefits. A good example here would be Google. Their people and analytics team draw on big data to offer distinct rewards to different sections of their workforce (specialised functions and sought-after skill sets). Other tech and financial services companies are implementing solid sales incentives plans to attract top salespeople to win lucrative accounts where revenue is likely to come from new, rather than repeat business. These are all great methods for generously compensating niche skill sets and making employees really feel at home, at work. Beyond this, are there any other ideas?
An interesting proposition, as suggested by a Head of Compensation & Benefits at a global life sciences firm, focuses on having employees on a so-called ‘football contract’ for a fixed period of time (e.g. 5 years). Under this approach, employees would receive incentives and bonuses after having achieved critical milestones. This finite contract period, although it might suit the way that millennials have a more transient approach to employment, would arguably be controversial and necessitate a substantial shift in mentality.
What next for total reward thinking?
After speaking to senior compensation and benefits professionals located throughout Europe, many state that their organisations would love to invest in distinctive and progressive reward packages to attract top talent. However, a primary concern, especially as the economy is still recovering from the recession, is to smooth out internal dynamics. Whether by dealing with benefits harmonisation due to M&A activity or by breaking down silo’s within the business and centralising compensation and benefits, these fundamentals seem to be taking a lot of attention, therefore posing barriers to creating attractive pay strategies to attract the cream of crop.
So for now, aside from the heavy hitters from Silicon Valley and other tech firms, attracting top talent from a Reward strategy perspective continues to be a major challenge. Although the reward community seems to be embracing new technology, analytics and increasingly creative benefits, firms struggle to come up with really distinct reward packages and thus a compelling corporate brand. Having said that, noises from the international reward community seem to be cautiously positive. As the economy picks up and companies continue to place emphasise their reward offering, it will be interesting to observe how companies tailor reward to create a powerful employee value proposition and win the war on talent.