How the Total Rewards Model Can Improve the Employee Experience
Does your company offer an amazing employee experience? Before 2021, most HR leaders would have answered yes. But then The Great Resignation happened, which caused many employers to question the fundamentals of their HR strategy.
An unprecedented number of people left their jobs during The Great Resignation, and as many as 40% of all workers gave serious thought to a change. Salary was a significant motivator, but it wasn’t the only one. Many people quit without another job lined up, and they took a risk in the hope of finding better benefits, a healthier work-life balance, or opportunities to develop their careers.
After the great resignation, most people focused on the question of why so many people quit. But maybe the better question is: why did so many people stay? What is the secret to employee retention?
Often, it’s all about a great implementation of the Total Rewards model.
What is the Total Rewards model?
The Total Rewards model is a framework for evaluating everything an employee earns from their job. This includes their salary and benefits, as well as rewards with an intangible or long-term value.
The five pillars of the Total Rewards model are:
- Compensation: Cash-based rewards, including salary
- Benefits: Company-subsidized perks and benefits, including vital insurance
- Work-life balance: Accommodations that the company make for employee well-being, such as remote working, flexible hours, or access to wellness resources
- Recognition: Official programs to recognize and reward excellence, including bonus and award schemes
- Professional development: Opportunities to learn new skills and gain valuable experience through training, education, and mentorship
As we see, the Total Rewards model is about more than what you see on your payslip each month. And the right rewards package can have a big impact on your ability to engage and retain people.
How does the Total Rewards model impact employee experience?
The IBM Smarter Workforce Institute identifies five main aspects of the employee experience:
- Belonging: Feeling that you’re part of a team
- Purpose: Knowing that your work is an important part of the larger mission.
- Achievement: Seeing that your career path is heading in the right direction
- Happiness: Enjoying the average working day.
- Vigor: Approaching your work with energy and excitement.
If you compare this to the Total Rewards model, you see an obvious overlap. Professional development can lead to a sense of achievement, for example, while a healthy work-life balance can make you feel happiness and vigor.
There’s an opportunity here for smart HR managers. If you build your Total Rewards offering around the employee experience, you’ll build a happy, engaged, loyal team.
5 ways your Total Rewards model can improve the employee experience
Here are some ideas on how to leverage your Total Rewards package to improve engagement and retention.
1. Inspire happiness with flexible working patterns
The pandemic gave people a chance to experiment with remote working and flexible schedules – and they loved it. Employees found that they could renegotiate their work-life balance, which helped lower stress levels across the board.
This correlates with pre-pandemic research. Of employees who reported high levels of happiness, 63% said that they had access to remote work, flexible schedules, or both. If you can provide employees with flexible working patterns, you’ll improve employee engagement and retention.
2. Give purpose by tying recognition to meaningful goals
Monetary rewards are important, but employees also value the feeling that their work has meaning. One survey found that 9 in 10 employees would take a job where they did meaningful work each day, even if that meant taking a pay cut of up to 23%.
Your recognition program works best when it’s tied to your main strategic goals. For instance, if your goal is to provide the best customer service on the planet, then you should think about basing your bonuses on customer feedback. This helps employees to feel part of the big picture and gives their day-to-day a greater sense of meaning.
3. Grow careers with professional development
We all like to think that we’re moving up the ladder and heading towards our dream job. That’s why people place such value on professional development, with 60% of candidates saying they’d choose a career path over regular salary increases.
Professional development is even more critical after the disruption of the pandemic. Many employees suffered setbacks, especially women, minorities, and recent graduates who missed mentoring opportunities. These people are keen to find an employer to help them get back on track to long-term success.
4. Connect the team with pay transparency
Most people feel underpaid, especially in relation to their colleagues. A pay transparency policy can help to alleviate these feelings and show everyone that their compensation package is in line with that of their colleagues.
Pay transparency needs to be handled with care, especially if there is a notable variation in salaries. But this policy could play a big part in building a great employee experience – 58% of employees say they would consider switching to an employer with greater pay transparency. That figure is even higher for Gen Z, with 70% of younger workers wanting an open dialog about salary.
5. Get people excited with great benefits
The right benefits package can be life-changing. Quite literally, in some cases – around 66% of employees say that their benefits have helped reduce their levels of financial stress. And people with lower stress tend to be more energized and engaged with their work.
The trick is to find the right blend of employee benefits that empower people to live their best life. If you listen to your team, they will tell you the major pain points in their life. Then, you can build a benefit structure that caters to those needs.
Recommended Reading: How to Attract and Retain With Your Total Rewards Program for Employees
How to implement the Total Rewards model
The great thing about the Total Rewards model is that employers already do most of these things. So, how come some companies can retain their people while others see high levels of staff turnover?
Two reasons: planning and implementation.
First, you need to think about what rewards your people actually need. Remember: a benefit only has value if it benefits the employee. Talk to your team and find out what rewards they need.
Second, you need to establish robust processes that support your team through all circumstances. It isn’t easy to do so during unprecedented times as these, but it’s easier if you have robust HR processes in place.
Need some expert advice in implementing the Total Rewards model or building an outstanding employee experience? Book a no-obligation consultation call with Helios HR. Let’s talk about how to make your office a great place to work.