- Employers must be able to offer a differentiated and competitive reward package in order to retain and attract staff.
- Through a comprehensive reward package, employers can offer a range of services to assist with various obstacles staff are facing.
- Building an element of choice into reward policies can be impactful and value-adding for both staff and employers.
The world seems to be increasingly volatile economically, socially and politically recently, creating more pressure on some organisations to evolve at a faster rate. As a result, employees’ needs have changed, prompting employers to be more versatile and support differing needs through their reward strategy.
According to the March 2022 Reimagining work and rewards survey by global advisory and broking firm Willis Towers Watson, more than two-thirds of organisations across Europe will prioritise offering more tailored reward for workers who have critical skills this year due to current recruitment struggles, acknowledging that offering a differentiated and competitive reward package can be key to retaining and attracting staff.
Responding to demands
The pressure employers are experiencing to offer a tailored provision is a result of the balance of power shifting from the employer to the employee, and increased needs for higher-than-usual pay rises to keep up with the escalating cost of living, says Stuart Hyland, associate partner at Aon Reward Solutions.
“This combines to create a need for change that organisations simply cannot ignore and this has to include looking at the overall reward strategy,” he explains. “For example, how do [employers] respond to demands for higher-than-usual pay levels to attract the right talent and simultaneously maintain internal pay equity at a time when profit margins are reducing and becoming tighter? That requires a well-balanced, flexible, agile and transparent reward strategy and many organisations have simply not thought that way previously, which is why so many are embarking on this type of review right now.”
Employers are reviewing what they offer against a backdrop of increased flexibility and competition for talent.
Eva Jesmiatka, rewards director at Willis Towers Watson, explains: “Post-pandemic, there has been a bigger focus on wellbeing and flexibility, as well as a struggle to attract and retain staff, so organisations are forced to rethink their total reward strategies to try and stand out in the market. They are asking their staff what they most value and what a career at the business means for them, and going from there to ensure they come across as a fair employer. It is worth thinking about what is the most cost-effective way to offer the most bang for your buck.”
A tailored approach
Understanding what staff want can ensure that employers are able to focus on meeting those needs, because failing to engage them could set a reward strategy up to under-deliver.
Recognising what would and would not add value to employees is a core part of developing a strategy that meets their needs, as well as deciding on the level of employee segmentation and flexibility that can be incorporated, says Hyland. “This does not have to mean that every employee is treated differently, as this can become impossible to manage and create lots of potential internal pay equity concerns, but it will enable [an employer] to consider more closely the demographics of employees in different parts of the organisation and look for ways that individual needs and preferences can be fulfilled,” he says.
By choosing reward packages that not only benefit the employee but take into consideration their wider personal circumstances, employers can look to increase the value of what they offer, says Jane Hulme, HR director at Unum UK.
Offering a choice
Building an element of choice into reward policies can be impactful and add value for both staff and employers.
Jesmiatka has seen a shift to a flexible approach to reward following the pandemic, and that from this employers can decide what needs to be segmented and can be different for individuals. “We have seen employers put a bigger focus on more flexibility and choice, allowing staff to opt in or out and decide what is relevant to them depending on their age and circumstances. For example, the level to which an organisation supports its employees’ wellbeing through specialised programmes, flexible working conditions, and variable or fixed pay can be personalised and adjusted based on what each employee needs or most values at the time. This type of benefits tailoring as part of a person-based, individualised and flexible approach can make organisations attractive employers.”
Employers may want employees to feel that the benefits on offer have been tailored to them and their specific needs, regardless of whether they have or not.
“The benefit of creating an environment where employees feel that the reward strategy is tailored to them, is the impact this will have on attracting and retaining employees,” says Hyland. “If an employee feels that the reward package is tailored to them, it will encourage them to join an employer and will help them to stay there once they are in.”
Inclusivity
What inclusive benefits mean from one organisation to another may differ slightly, but a key thing to ensure is that none of what is offered discriminates in any way.
Jesmiatka explains: “Under the diversity, equity and inclusion umbrella is what we call inclusive benefits. Some organisations are making sure they have a benefits offering for everyone, while also recognising that everyone is different. It is important to ensure that the reward package being offered is relevant for all of the different groups that make up a business.”
As Hulme concludes, employers should be guided by employees on what reward strategies will provide the most support across the workforce, while also noting that everyone will have different needs. “Those aged 50 and above will naturally have different needs from an employee benefits scheme than a new graduate in their early 20s. Employers, therefore, need a broad mix of benefits to cover a diverse range of employees.”