5 Urgent Signs It's Time to Review Rewards and Incentives for Employees
Do your people feel adequately rewarded for their contribution? It's a question that keeps many HR managers awake at night. Often, you may not realize that there is a problem with your Total Rewards strategy until it's too late, and disaster strikes.
An inadequate Total Rewards program can lead to some critical problems, such as:
- High staff turnover
- Reduced productivity
- Falling engagement
- Damage to your reputation as an employer of choice
That’s why it’s vital to watch for early warning signs that something might be wrong with your approach to rewards and incentives for employees. If you can catch the problem early enough, you can take action before it starts to become a major HR issue.
Rewards and incentives for employees – The warning signs
As with most problems in HR, the best strategy is to gather employee data and watch out for worrying trends. But what should you be looking out for?
Here are five warning signs that something's not right with your Total Rewards strategy:
1. Employees say that they’re not happy with rewards and incentives
The easiest way to assess employee satisfaction is to ask the employees. Regular pulse surveys can help assess the team's mood and tell you if people feel that they're fairly compensated. Watch out for trends that show a change in overall employee sentiment.
A recent Gallup poll found that a staggering 43% of workers consider themselves underpaid. But it's important to note that feeling underpaid doesn’t necessarily refer to salary. People also consider professional development, paid time off allocations, and employee recognition plans that offer a monetary incentive. Ultimately, the goal is to make employees feel that their contribution is recognized and valued.
The warning sign: Pulse survey data on employee compensation, incentives and rewards shows that employees are unsatisifed, or that satisfaction levels are dropping.
2. You’re not 100% certain that you offer a competitive salary
When is the last time that you completed a salary benchmarking exercise? Or researched the perks and benefits available from other employers? If the answer is anything other than, “very recently”, then you may have a problem.
According to Forbes magazine, salaries are currently increasing at the fastest rate in 35 years. Desperate employers with key vacancies are trying to lure talented workers away from their current roles by offering them a wide range of attractive perks and benefits. It’s a candidates market out there, which means that you have to stay competitive.
The warning sign: It’s been more than a year since your last benchmarking or benefit comparison exercise.
3. Team members complain about working patterns
During the pandemic, many employees switched to new working patterns, like remote work or flexible hours. These patterns have turned out to be immensely popular, to the point where 39% of workers would rather quit than return to the office.
Some companies have plowed ahead and insisted that their teams return to the traditional 9-to-5. The assumption seems to be that employees will eventually fall back into their old routine. But this is a risky strategy, especially if you're not involved in an open dialog with your team. Employees may end up looking for a company that supports a healthy work-life balance through flexible working.
The warning sign: Employees constantly request increased access to remote working or flexible work hours.
4. Benefits uptake data shows changes
Open enrolment season is now over for many companies, which means that you have data on benefit uptake. If you analyze this data, you may see new trends emerging. For example, you might see radical changes to 401(k) and HSA contributions. Or certain groups might have changed their benefits – for instance, remote workers may have waived gym membership.
If you’re seeing these trends, it could mean that your benefits offering no longer matches employee requirements. It might also mean that you have yet to adapt to fundamental changes, such as having a remote workforce. If you don't act on this, then your people might not choose to stick around for the long term.
The warning sign: Benefit uptake is not as you expected, plus some subgroups (such as remote workers) are ignoring key benefits.
5. Employees don’t understand their Total Rewards
Compensation is about more than just salary. There is also the substantial value of great rewards and incentives for employees such as professional development, a formal recognition program, and useful benefits. Plus, there are some invaluable things an employer might do to promote a healthy work-life balance.
Collectively, all of these enhancements are your employee’s Total Rewards. When employees have a clear understanding of Total Rewards, they can see exactly what their job is worth. This can help to retain team members even when you’re not providing the highest salary.
The warning sign: Employees don’t receive a Total Rewards statement or don’t understand all employee rewards and incentives.
How to build a Total Rewards strategy that engages your team
The key to a successful Total Rewards strategy? Build a package of rewards and incentives that offer meaningful value to your team. Think about how you can make a difference in people's lives, and how you can motivate employees to deliver great work.
This isn’t always easy. You may have to do so deep analysis, including online surveys and focus groups. You’ll also need to research the market and find out what competitors are offering.
That’s why it’s often a good idea to call in an expert. Why not book a no-obligation consultation call today with a Helios HR expert? Find out how to design a system of total rewards and employee incentives that help you attract, engage and retain great talent.