Countless HR departments across the country are in a precarious situation as it becomes harder to find, attract, and retain qualified employees that want to do the jobs they need them to fill. Sound familiar?
The rapidly shrinking talent pool combined with a forecast by Deloitte that 2 out of 3 millennials will quit their jobs in 2020 cripples an ever-growing number of businesses. To add insult to injury, partially and fully disengaged employees make up 2/3 of the average workforce according to Gallup Institute and come to work unmotivated, negatively impacting product or service quality and customer satisfaction. These problems aren’t new, but they’re getting worse because most companies only focus on the symptoms rather than the underlying causes.
In its best form, the employer-employee relationship should be symbiotic and provide both sides with the value and benefits (value currencies) they seek in the exchange. This is where theory and reality quickly depart from each other. While employees have been hailed in boardrooms across the country for decades as a company's most important asset, reality presents a very different picture.
Many employees feel as if they get the short end of the stick and don’t feel that they get what they deserve. This invites the question: What is it that employees want in return for their time, effort, skill and experience? The answer is not as obvious as many of us might think.
Just ask yourself – do you know which value currencies matter most deeply to your employees? What about which key factors keep them most engaged at work? If attracting and retaining key performers and building a strong employee experience is on your list of priorities – and it should be – you will be hard-pressed to ignore the benefits of a total rewards strategy. This isn’t just some passing HR fad or a supposed silver bullet to solve all your problems. Instead, a total rewards strategy presents a common-sense, grassroots approach for addressing the recruiting and retention issues plaguing today’s businesses. Let’s dig a bit deeper to see how.
Which is changing – employees or their expectations?
The word on the street is that employee expectations are changing. I disagree with that, which we’ll get into shortly, but the fact remains that entire HR conferences have focused on this as part of their discussions on the future of work. While these discussions are necessary, the amount of focus has made the topic seem complex enough to easily intimidate and overwhelm the people it’s meant for, especially for HR professionals in small and mid-size companies who are already stretched thin.
As a result, many companies that start addressing the problem only deal with one aspect of the issue thinking they’re meeting an expectation, like employee wellness or employee engagement, neglecting the many different aspects that define relationships between companies and their employees. Others recognize the complexity and back away from it, figuring that doing something is better than doing nothing. But I think what makes this feel overwhelming is thinking there’s all these new expectations we have to catch up with when the reality is actually somewhat different.
Employee expectations haven't changed – they're just becoming more visible.
I don’t believe employee expectations are changing so much as employees today have a different perception of what’s possible in their relationship with their employers. Because of that, they’re more prone to be vocal and voice their expectations – expectations and desires that have been suppressed for many decades. In addition, the current economic circumstances and the shortage of skilled labor in many industries allow employees to take a more demanding stance.
So I don’t think it’s a question of understanding new expectations, but instead of uncovering expectations that have been there for a while – and this is something a total rewards strategy is well-positioned to address.
What's the solution? Expand your focus
Research has shown over and over that employees focus on a wide range of value currencies they expect to receive in return for their contributions at work. While monetary compensation will not go away any time soon, it has become more of a “hygiene factor” rather than a deal maker. As a rule, compensation must be fair; and for Gen Z, money has a slightly higher value, as the Workforce Institute at Kronos recently uncovered. Beyond that, employees are looking for a wide range of health benefits, including an expansion of paid leave for maternity and paternity and support for mental health issues. But don’t stop there. What employees are looking for goes well beyond expanded benefits and fair pay.
It's about targeting the right value currencies for your organization.
After an extensive review of research studies and reports about what makes today’s employees come back to work day after day, I've identified 29 value factors which I grouped into 6 value categories, which I refer to as the Total Rewards Value Cocktail. I call it that because if you pick the right mix for your organization, your HR team will be able to stand out from the crowd when it comes to recruiting, hiring, and retaining the right employees for your organization.
Find the right mix for your total rewards strategy
Here are the 6 ingredients or value categories that companies should consider when designing their Total Rewards Value Cocktail to attract and retain employees:
- Traditional Value Currencies
- Work-Life Integration
- Transparency/External Validation
Each of the six categories contains several factors that can directly influence how employees perceive the employee-employer relationship, and thus influence the employees’ commitment to the organization and reduce flight risk.
Rather than just reading through the list, it’s a good idea to complete a SWOT analysis around the different total rewards value factors to determine—you guessed it—the strengths, weaknesses, opportunities and threats currently in place (or not) within your organization. Based on that, you can build a set of short-term and long-term actions to close any gaps and create a Total Rewards Value Cocktail that provides what today’s workforce wants to see from a top employer. This approach is a documented way to reduce attrition by as much as 40 percent and has propelled companies onto the various “Great Places to Work” lists – making them desirable targets for job seekers.
Let's make this very practical. If you look at the graphic above, you will see that the first factor under “Self-Actualization” is “Influence.” Today's workforce is looking for opportunities to influence their work environment, the focus of their work, their work schedule, and the ways they apply their skills for the business’s benefit. We’ll take a look at influence to walk through how building your Total Rewards Value Cocktail should work.
Start with two key questions
There are two questions you should ask yourself for each of the total rewards value factors. First, what opportunities do you provide your employees to exercise each of these value areas? In this example, you’d ask how you allow them to exercise influence. For instance, you might have technology that enables employees to request short-term shift changes or pick up additional work. Another example might include opportunities to engage with senior leaders directly or indirectly to provide feedback on needed changes or ideas for improvement – options that help your employees feel they have a say in the direction of your organization and their work within it.
Secondly, for each factor you should ask how effectively you’ve communicated to employees that these options exist. I have seen many companies that have cool benefits, perks, procedures, and opportunities for their employees, but completely miss the mark in terms of getting the word out. The result is poor adoption and little to no impact on employees’ overall perception of the value currencies the company provides.
To keep the influence example going, you could set up a suggestion line where employees can share ideas, or roll out a self-service scheduling tool they can use to automatically swap shifts with qualified peers or take open shifts they’d like to fill. If you publicize options like these correctly, your employees will feel their influence is something that matters in your company culture.
A note on external validation
While it goes well beyond the scope of this article to walk you through all the total rewards value categories in detail, I'd like to highlight the 6th value category, "External Validation." It might have been okay until a few years ago for your business to operate without explaining decisions to your employees, but that’s not the case anymore. With the rise of companies like Glassdoor and LinkedIn, and the countless “Great Place to Work” surveys employees receive today, the work environment has become very transparent.
While you can’t control what employees are writing about your business at public review sites like Glassdoor, you can and should review the content to identify reoccurring themes around what you’re doing well or what you can improve. Use that data as a lagging indicator of whether or not you’re pushing your total rewards strategy in the right direction.
Conclusion: The time for a total rewards strategy is now
While crafting (and implementing) a comprehensive Total Rewards Value Cocktail can be quite an undertaking, especially if you start with very few of the factors already in place, it will be a gamechanger over time. Just remember the benefits far outweigh the time you’ll spend building the right mix for your company, so make sure you get started as soon as possible. With each of the total rewards value factors you operationalize, improve, or publicize more effectively, you will increase the number of employees motivated to come to work every day and reduce the number of employees that will passively or actively seek job alternatives.
If creating a Total Rewards Value Cocktail is something that you would like to further explore, be on the lookout for additional blog posts from me that will explore in more detail each of the 6 value categories, including checklists, examples, and practical recommendations. In the meantime, check out our HCM Buyer’s Guide to see how the right technology can help your organization achieve its goals around total rewards and other key areas.