United Kingdom

Why employee needs should be at the heart of a total reward strategy

Jeff Fox

Twenty or so years ago, employee benefits and indeed, total reward, such as it was then, was lacking the employee piece: the acknowledgement that the employee should be at the heart of benefits strategy.

It was purely transactional: core benefits were provided to staff; staff received paper-based total reward statements every few months and there endeth the process. There was little or no engagement with the very staff who the benefits were actually for. There was certainly no employee listening.

Things have changed somewhat since then, and there’s been a seismic shift of employer awareness around engagement and employee experience. In fact, engagement, awareness and employee experience were the top three reasons given by employers for wanting to improve workforce understanding of total reward, according to Aon’s Benefits and Trends Survey 2021.

When it comes to total reward, the focus needs to be on the word ‘total’ to maximise ROI - but this approach should be driven by employee needs.

The survey also identified some interesting trends across the total reward space and the shift in employer recognition around improving employee understanding. There was a rise in the number of employers planning to implement more website, app and video solutions for total reward statements in place of paper-based solutions.

Responsive reward

At the same time, an increasing number of employers are now developing ‘employee listening’ using pulse surveys and focus groups, with 71% of employers carrying out specific employee listening initiatives in 2021 compared with 62% in 2020. Yet despite employee experience becoming an important focus for most forward-thinking firms, a significant number – 27% – are still not actively engaging with their workforce and not making use of available information or data.

This is key.

Employee needs must be what drives strategy, otherwise it’s tantamount to throwing money and resources at something without really knowing what that something is.

Do you, as an employer, have an aging workforce and are therefore experiencing issues with rising insurance premiums and claims costs? Are there eldercare issues or challenges around succession planning? Or is your EAP data telling you that high numbers of staff are experiencing financial worries? Do you have a large number of staff with childcare responsibilities?

A strategy that fails to make use of this type of knowledge and understand the specific needs of their workforce is a strategy that will ultimately fall short. It must, before anything else, be employee-driven.

People are at the heart of organisations. We talk about ‘employees’ but it can be easy to overlook that employees are people with different needs and expectations. Too often, organisations forget the human side of this, employees aren’t just cogs in a machine; many organisational issues are people-related, and it’s down to how employers themselves respond to this. The key question for employers then is ‘what can we do to address these issues?’

It’s about creating a benefits strategy which genuinely puts employees needs at its heart.

Authenticity, autonomy, empowerment, respect and sustainability. These are the modern principles of a total reward approach.

Authenticity: the approach should authentically reflect the workforce and its diversity of needs

Autonomy: individuals should have flexible working (where appropriate) in order to manage their work/life balance

Empowerment: employees should feel empowered to make reward decisions which are right for them

Respect: the total reward approach should respect individual needs and finally

Sustainability: the approach must be both financially and environmentally sustainable

The power of choice

What this all boils down to is about choice; it’s really important. In the past, total reward was much more paternalistic and fairly static, with very little dialogue between employer and employee. But that’s changing now, with a resurgence in flexible benefits. We’ve seen renewed interest from employers who want to either implement flexible benefit schemes in their own right or make their existing benefit provision more flexible.

It’s a strong approach; a solid total reward approach rooted in employee needs – and therefore choice and flexibility – is one that can be easily mapped back to ROI. With a forward-thinking total reward approach, employers will find it easier to recruit the talent they want because they’ll be seen as the employer of choice. They’ll be better at keeping talent from a retention point of view because engagement will be there. ROI in this sense can be a real game changer.



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