It all starts with the ice cream
The current business climate is characterized by a sense of optimism as we talk of re-setting, re-thinking, and re-building the new shape of work. As employers look beyond the pandemic, there’s no better time to reassess your company’s total rewards strategy.
Think of your total rewards strategy, a key element to your employee value proposition, as a sundae. All sundaes start with ice cream — just like how in exchange for work, every job has some level of pay and benefits.
Comprehensive total rewards strategies and a clearly defined employee value proposition are instrumental for promoting employee engagement and driving performance.
The ultimate goal, or should we say, “the cherry on top”? Employees that take pride in working for your organizations.
The right foundation
Building your sundae with a delicious raspberry sorbet or a rich vanilla custard will determine the overall flavor, no matter what else you add. The same is true with compensation and benefits — if those aren’t right, it doesn’t matter what other rewards and experiences you throw on top of them.
As the foundation of your total rewards “sundae” in today’s tight labor market, competitive pay and benefits are the door opener for interviewing candidates. With the increasing call for transparency, you’ll need to confidently provide pay and benefits information before even scheduling an interview with a candidate.
Gathering insights from reputable data sources will set you up for success in market pricing jobs, evaluating benefits offerings, and managing your pay structure. Salary surveys should cover all of your benchmark jobs and represent your labor market. Benefits data should reflect recent market trends in both your region and industry.
Recent trends, not just the flavor of the week
Compensation and benefits tend to be relatively stable reward structures, meaning they don’t often shift dramatically. However, they are always changing, moving along with markets particularly as different jobs and skills are in higher demand versus the supply of labor.
Recent labor shortages have contributed to significant, unexpected changes to pay and benefits for many jobs. Warehouse and supply chain roles, long-haul truck drivers, and all levels of retail workers have seen significant increases in hiring pay. Of course, many industries are seeing increases due to pressure on minimum wages as well, including healthcare, restaurant, hospitality, and retail.
Additionally, the purpose of base pay has shifted over time. Where individual performance was once rewarded through annual increases, we are seeing a shift to employers using short-term incentives or bonuses to reward the individual.
Skills based pay is a newly emerging trend. Where employers are traditionally promoted from job to job with some consideration for tenure and experience, adjusting pay accordingly, they’re beginning to look at how to reward employees based on the acquisition of skills. According to Mercer’s 2022 Global Talent Trends Study, 86% of companies link pay to skills at the point of hire, but only 31% are rewarding the development of skills.
Employers are also learning how to manage pay for a workforce that is distributed more broadly due to remote work and flex practices. According to Mercer’s US Flexible Policies and Practices survey, tech firms are much more likely to say they will pay based on the labor market for the role, while non-tech firms are more likely to pay based on a home office location.
Regarding benefits, while there seems to be signs of a slow down in both the cost of healthcare benefits and deductibles, there are some trends in how employers should be rethinking the traditional benefits offerings.
Some considerations:
- Ways to help employees’ paychecks go further. For example, an employer could modify the 401(k) match calculation to include the HSA contribution, therefore increasing the overall 401(k) contribution.
- Unique benefits to help reduce employee turnover now and in the future.
- Mental health and substance use disorder coverage to help connect employee well-being to performance.
- Affordable healthcare plans with immediate eligibility for all employee types.
Reach for the cherry
While pay and benefits will always be essential, employers are reaching beyond the contractual elements and enhancing their employees’ whole-life experience in order to remain competitive today. The ultimate goal, of course, is to have engaged employees that are proud to work for your organization — it’s the cherry on top!
Looking for more information on how to sweeten the deal for your current and prospective employees?
Contact us via email or by calling 855-286-5302.
Read part 3 of the series
The secret is in the (hot fudge) sauce. The third part of this Sundae Series discusses how companies can focus on their employees’ wellbeing to enhance their employee value proposition.