Total Rewards Can Make You the Employer of Choice

Millennial Voices Spoke.BlogIt has to be overwhelming for employers to consider not only how to articulate but deploy a strategy that will attract, motivate, and retain quality talent. Organizations must provide compelling reasons why they are an employer of choice while contending with a multitude of issues including:

  • Legislation, like the proposed changes to the Fair Labor Standards Act, which could significantly impact budgets, workplace flexibility, and culture;
  • Multi-generational workforces, from the traditionalists and Baby Boomers to Gen X, Millennials, and now Gen 2020;
  • Cultural differences that may be misunderstood and mismanaged;
  • Stagnant merit increase budgets averaging around 3 percent and unlikely to grow;
  • Growing disenchantment of workers;
  • Increasing income inequality and gender inequity; and
  • Expanding and competitive labor markets creating concern about slower growth.

A Total Rewards framework is a viable means of addressing external influences, incorporating the organization’s business and human resource strategies, and communicating value in order to drive employee interest and engagement. The key is to effectively implement it!

A Total Rewards framework includes compensation, benefits, work-life programs, performance management, talent or career development, and recognition. These are very broad categories and each organization may offer other intangible rewards based on its culture and leadership style. As employers design their mix of rewards, they should customize the offerings based on the needs of their specific workforces and present them as an integrated portfolio of choices. They also need to regularly monitor each program so that no one element operates to the detriment of another. An example is when an organization communicates that career development is encouraged but does not provide employees the mentoring or feedback in the performance management process necessary to develop in their current jobs. Or worse, employees aren’t made aware of any career opportunities or openings within the organization.

Consider the challenge of different generations in the workforce. While the variation between generations may not be as great as that between individuals, research has given us a few insights. We have read that many Baby Boomers value base pay, retirement plans, and interesting work, whereas Gen Xers want flexibility and career advancement. Millennials have expressed the need for feedback and clarity regarding performance expectations.

Therefore, the next step is to consider the effectiveness and interdependence of each Total Rewards element. Whether a Baby Boomer or Millennial, do employees understand and participate in the retirement plan? Or, is enrollment low due to low base pay levels and minimal communication? Are base pay levels impacting the ability to recruit as well as the ability to meet employees’ basic financial needs? Have employees expressed an interest in phased retirement? Would this option enhance a career development path for other employees? Are career paths clearly defined, and do managers know what skills and competencies are required to move forward and help the business? All of these questions demonstrate that it is a continual analysis and no one element stands alone in meeting the needs and interests of any of these generations.

Consider now the angle of focusing on just one element of the total rewards model: performance management. This has been a hot topic as Microsoft, Deloitte, GE, and many others have recently announced the demise of their annual performance review systems. As even more organizations move away from the annual performance review, they acknowledge that the current system doesn’t work. Or rather, what doesn’t work is the poor implementation of the system. These firms plan instead to hold more frequent conversations where managers give regular and specific feedback to employees. That can certainly help with career planning and skill development. If a manager focuses on looking forward with the employee, rather than looking back on past performance, that might encourage both productivity and employee engagement. It also encourages mentoring and recognition of accomplishments that employees of all generations desire. It does require, however, effective implementation. That means management training and accountability. Honest and open communication must occur, and if managers aren’t comfortable or skilled in this area, they will naturally try to avoid it. That avoidance dooms the goal of meeting the Millennial’s need for feedback, perpetuates poor management, and reduces employee engagement. Effective implementation also means streamlining the administration around performance reviews and ensuring that the process focuses on both goal achievement and employee skill development toward meeting business objectives. Certainly, this is easier said than done.

 Given these two views alone, it is clear that development and execution of a total rewards strategy is an iterative process and will evolve based on the needs and values of both the company and its employees. It requires understanding what employees value and listening to their input along with communication strategies that deliver and reflect the organizational culture. It is challenging but what a reward to have engaged and committed employees!