Category : Workforce Planning & Development

By: Claudine Kapel and Alina Mitchell

Aligning rewards with business strategy, communicating programs help firms make most of total rewards.

Cost containment remains high on most organizations’ agendas, even with signs the economy is improving. Yet at the same time, many organizations still worry top talent could be lost as market conditions improve.

The resulting dynamics are prompting some organizations to revisit investments in total rewards – with an eye to finding the right balance between cost and value.

When assessing the effectiveness of an organization’s total rewards offering, consider the following five questions.

1. Does the total rewards offering contribute to the success of the business?

An effective total reward offering helps an organization attract and retain the right talent. It also fosters strong organizational performance through compensation plans and other programs that elicit desired behaviors and results.

Some vital signs to monitor include:

*Organizational expenditures related to total rewards. Monitor overall costs as a percentage of revenue, as well as year over-year increases in the cost of individual reward elements, such as base pay, benefit claims or disability insurance premiums.

*Employee turnover statistics. Note any jobs or areas with higher than acceptable levels or any trends or concerns emerging from exit interviews.

*Time and cost to fill vacant positions. Highlight any job types that are especially hard to fill, or skill sets that are particularly hard to find.

*The extent to which employee performance objectives are achieved and how this correlates with business performance and financial results. Identify any areas of concern with consideration to goal setting, performance management, employee development and talent gaps.

*The alignment between compensation payouts and the overall financial results of the organization. Note any disconnects between pay and performance or any issues relating to the internal fairness of compensation awards such as salary increases or bonuses.

An effective total rewards approach contributes to the near- and long-term success of an organization. By monitoring costs and other vital statistics, HR can more readily identify the need for corrective action.

2. Is the total rewards offering competitive?

There are two major types of considerations when it comes to assessing the competitiveness of a total rewards package: the level of investment (both overall and by program) and the types of programs offered. With good market data, HR should be able to assess the competitiveness of compensation programs, including base pay, annual incentive opportunities and long-term incentive opportunities. Some consulting firms also conduct surveys that enable organizations to assess the competitiveness of the pension and benefits plans and paid time off policies.

Some vital signs to monitor include:

*The market positioning of an organization’s compensation opportunities relative to competitors.

*The level of value delivered to employees by an organization’s total rewards programs relative to what is offered by competitors (such as how the benefits package or retirement savings plan compares to market practice).

*The types of programs an organization offers versus competitors.

Effective total rewards include both monetary elements, such as pay and benefits, as well as non-monetary elements, such as satisfying work, development opportunities and a great work climate. To that end, the right balance or mix of total rewards elements for one organization may not work at other organizations.

One organization, for example, may want to attract more risk-takers or those with a more entrepreneurial spirit, and so may lag the market in terms of base pay but lead in terms of annual and long-term incentive opportunities. Conversely, another organization may want to appeal to those seeking more work-life balance and choose to pay less than competitors but offer more flexible work arrangements or paid time off.

The key is to ensure decisions related to investments in total rewards reflect an organization’s overall strategy for aligning total rewards with the needs of the business.

3. Do the total rewards meet employee needs?

To effectively attract and retain talent, a total reward offering has to deliver value to employees. While most workers generally want a fair and competitive pay package, good benefits and opportunities for learning and advancement, priorities will vary by individual and demographic group. For example, older workers may put more emphasis on the importance of a retirement savings plan while younger workers may be more concerned about career opportunities.

Personal circumstances also influence priorities. For example, an employee with benefits coverage through a spouse’s plan may have little interest in an organization’s benefits program. That’s why flexible benefit programs, which allow employees to select from different levels of coverage, are so popular.

Some important signs to monitor include:

*employee feedback gathered either informally or through employee surveys or focus groups

*the level of employee participation in programs with voluntary enrolment

*turnover statistics

*feedback from recruitment interviews with respect to job offers

*feedback from exit interviews.

4. Do employees understand the total rewards?

While having a strategically sound and well-designed total rewards offering is vital, its value won’t be fully realized if employees don’t understand all the pieces and how they come together. Effective and ongoing communication will help ensure employees appreciate the many facets of their employment deal.

Some vital signs to monitor include:

*repeated employee questions about how particular programs work

*complaints or concerns about the effectiveness or fairness of particular programs

*participation rates in voluntary programs.

Effective total rewards communication supports an organization’s efforts to both retain talent and foster strong performance. When employees understand the complete package, they can make more informed career choices and are less likely to leave for a job that offers higher pay but a less comprehensive benefits package.

Reward programs operate more smoothly – and can have a more positive impact – when they are clearly understood. For example, incentive plans can have a more powerful impact on performance when employees understand what is expected of them and how their contributions are rewarded.

5. How would you reduce total rewards costs by 10 per cent?

While there’s rarely an easy or obvious answer, the same considerations used to shape a total reward offering apply when refining one. What changes will have the least adverse impact on the organization’s ability to attract, retain and engage talent and to achieve its business objectives? By understanding what matters most to employees, an organization may be able to identify programs that deliver limited value, making them easier to cut or eliminate.

By: Jennifer Paterson, Employee Benefits; London

Many diverse elements can be included in an employer’s total reward strategy, adding up to a valuable employment package, says Jennifer Paterson

Total reward has no hidden meaning – it does exactly what it says on the tin. But in some cases, the term is used to describe total reward statements that are used alongside perks such as a flexible or voluntary benefits scheme.

However, a true total reward strategy comprises much more than this, including salary, bonuses, pension and healthcare benefits, plus wider aspects of the employment package such as training and development, the working environment, and an employee’s work-life balance. These can all add up to a total value of everything staff receive as a result of working from their employer.

The concept of total reward began in the 1970s and 1980s, growing out of the term ‘new rewards’, says Peter Reilly, director of HR consultancy at the Institute for Employment Studies (IES). “One of the characteristics of that new reward movement was to take a much broader view of what reward constituted rather than simply concentrating on the tangible, extrinsic rewards,” he says.

In the context of total reward, the employment proposition has historically been split into four categories: pay, benefits, career development, and the work environment. Over time, the boundaries between these have blurred. Julia Turney, head of benefits management at Jelf Employee Benefits, says: “Total reward today encompasses a large range of offerings, broader than the standard four brackets, including the nature of the leadership, corporate social responsibility, and work-life balance.”

There is no single approach to constructing a total reward strategy because different employees will be interested in different aspects of the proposition. The IES’s Reilly says: “A catering assistant or cleaner may be attracted to an organization primarily because of the intrinsic rewards, pay and good working hours, whereas for professional staff, like engineers, the principal issue will be the career offered and CV building. In the public sector more than the private sector, it is the mission or value of the organization. Staff work for [companies like] Selfridges or Virgin because they like the name and what it conveys. Equally, staff might work for a charity like Save the Children or Oxfam because they believe in what it does.”

Andrew Erhardt-Lewis, senior manager at Deloitte, adds: “At Google, total reward would include the fact that staff can wear jeans and can bring their dog into work.”

Career development

The opportunity for career development is an important aspect of total reward for staff looking to add value to their future. Chantal Free, director and head of reward, talent and communication at Towers Watson, says: “Employees are much more self-centric, and it is a lot more about them and their lives. The deal with the employer is that they know they are not going to be together for ever, and what [employees] want to get out of the employer while they are together is fair reward for [their] contribution, but also the right skills and capabilities to make them marketable for their next job.”

During the recession, learning and development opportunities were often among the first things to go, but these have now started to return, says Mark Childs, director of Total Reward Group. “Longer term, as employers have attached more importance to experience rather than qualification, a lot more staff are going through on-the-job training,” he says.

Another important element of total reward is the working environment and organizational culture. For instance, at private equity firm Apax Partners, staff have access to a free breakfast and lunch every day. Erhardt-Lewis says: “The climate, or the culture, at an organization can engage staff and pays for them in the non-traditional sense.”

Jelf’s Turney adds: “I had a client that moved to a new office with a gym on site, subsidized canteen, plants and a wide, open place to work. It had a lot of feedback from people coming through the office and that was a big thing – to create a pleasant place to work.”

Helping staff achieve a good work-life balance is another part of total reward. This can include flexible working and career breaks. Free says: “This plays to the diversity agenda. If an employer has the right environment and a nice work-life balance, it can look at issues more flexibly and have more diverse talent.”

In the current economic climate, the concept of total reward strategy is coming to the fore, especially as employers widen their packages to include more than traditional pay, bonus and perks. Stuart Hyland, UK head of reward services consulting at Hay Group, says: “Organizations are thinking how to motivate staff and get more return on investment from their people. A lot of the stuff in that intangible bracket can be fairly low-cost development work. This is attractive when budgets are low but an employer is aiming to improve engagement and motivation.”

Total Reward Group’s Childs adds: “Employers will be reluctant to hike up base salaries. Instead, they will try to differentiate themselves through a total reward offering.”

The term total reward is often confused with total reward statements, which are a tool to communicate the value of a package. Mark Carman, director of communication services at Edenred, says: “A total reward statement is the pinnacle of the communications programmed, but it is also worth researching employees’ perceptions of their benefits.”

Total reward statements carry details of salary, pension contributions and the benefits an employee receives, but the concept of wider total reward can be harder to communicate. IES’s Reilly says: “It can be communicated well at the attraction stage, but it is harder to do while in employment.”

A total reward strategy should also be aligned with an organization’s brand and culture, says Hyland. “Many organizations are trying to ensure their reward practice is aligned with company performance.”

If you read nothing else, read this

* Total reward has traditionally been divided into four categories: pay, benefits, learning and development, and working environment.

* It takes account of the fact that no two employees are seeking the same thing from their employment proposition.

* Total reward will see a resurgence as the UK emerges from the downturn.

* A true strategy is very different from just offering total reward statements.

Author(s): Beth Zoller, (XpertHR, New Providence, New Jersey, USA)

Each new year brings changes in the workplace, government, society, culture, technology and the legal landscape that translate into challenges and obstacles for employers. To gain insight into these challenges, XpertHR conducted a survey in October 2017 soliciting input from over 1,000 HR professionals on their view of the most significant compliance challenges in 2018.

Workforce planning amid an evolving workforce

With an evolving workforce and changing societal demographics, workforce planning appears to be one of the top challenges for employers. In today’s increasingly global environment, twenty-first-century employers need to respond to both external and internal factors that shape and impact the recruiting, hiring and retention of workers.

The use of technology and mobile devices allows workers to communicate in more effective and productive ways with employers, managers, coworkers, clients and customers. Brick-and-mortar offices and the traditional 9 to 5 workday is quickly fading, and we continue to see an increase in flexible working arrangements, remote working and a focus on achieving a greater work-life balance. Employers are witnessing the rise of the gig economy and alternative work arrangements, as workers are no longer swayed by the promise of a steady paycheck and benefits and crave freedom and flexibility. Notions of automation, smart devices, robotics and artificial intelligence are beginning to disrupt the workforce and challenge traditional workers.

Hiring today is challenging and complex amidst the many laws that restrict an employer’s ability to gain valuable and insightful information into job candidates. Additionally, there also may be a disconnect between the skill sets of individuals seeking jobs and the positions an employer needs to fill.

Generationally, millennials and Generation Z have joined the workforce in record numbers and are seeking new ways of working and have different expectations of their employers. Further, employers must confront and account for an aging Baby Boomer population, increased health-care costs and making plans for succession and retirement.

XpertHR’s survey confirmed workforce planning amid the evolving workforce as a top challenge:

• almost 50 per cent of respondents said this was among their top three workplace challenges;
• 52 per cent of respondents viewed increasing employee engagement, morale and satisfaction as very or extremely challenging;
• 48 per cent viewed retaining employees as very or extremely challenging;
• 47 per cent were very or extremely challenged by succession planning;
• 46 per cent viewed aligning talent retention strategy with business objectives as very or extremely challenging;
• 44 per cent viewed upskilling employees for future responsibilities as very or extremely challenging;
• 43 per cent viewed managing performance and providing professional development opportunities as very or extremely challenging;
• 29 per cent stated that joint employment and the changing definition of the employer was very or extremely challenging; and
• 28 per cent were very or extremely challenged by flexible working/telecommuting.

Respondents stated that “growth and retention”, “capacity planning, talent pipeline development”, “retention in a very competitive workforce” and “attracting and retaining skilled labor”, “the ever-changing laws and keeping up with them”, “recruitment of high performing individuals”, “providing training related to the changes” and “the declining and aging population in rural locations” were top concerns. Additionally, one respondent noted that “it goes beyond compliance — it’s how to create a transformative HR strategy”. Another respondent revealed that, “employee engagement/organizational health will continue to be a top focus for us”.

What an employer should do

Given these challenges, it is important to be proactive and prepared. An employer needs to be able to effectively plan its workforce to make sure that it has the right people for the right jobs at the right cost to be successful in a global and competitive marketplace. An employer also needs to take into account the unique factors that affect its business and shape its workforce.

To begin, HR should identify key stakeholders and members of management in different areas of the business and open up communications with them to understand the organization’s short- and long-term goals and how employees can play a role in bringing them to fruition. It is also critical to understand how to effectively use data throughout workforce planning, from recruiting and hiring to performance management to retention. Good data analytics can help to understand where and how to focus efforts and can assist in tracking progress. Primary goals should be to increase productivity and efficiency in the workplace and keeping costs low.

With respect to hiring, an employer should:

• focus on looking for experience in the industry, but also focus on the skills, competencies and talent individuals may bring to the table that can benefit the organization;
• keep budget and business goals in mind;
• consider whether when and how to use gig and contract workers as part of the workforce and what the primary objective will be (i.e. cost savings);
• understand how technology and mobile applications can aid recruiting; and
• be aware of new laws that ban an employer from seeking salary history information or criminal history and make sure recruiting is legally compliant.

With regard to training, an employer should encourage employees to continue professional development and work with them to develop long-term skills. A focus on leadership and development, along with mentoring and coaching programs, may provide support and guidance to employees who will be able to move into key roles in the organization. An employer can help close the talent gap by creating an atmosphere centered on education, professional development and leadership opportunities throughout an individual’s career. Employees should be able to highlight their key strengths and competencies and work to build on them for the better of the organization.

An employer should consider how it will handle performance management and reviews, what its goals will be, who will conduct the review and how often reviews will be conducted. It is important to evaluate employee retention and engagement and why the employer may be losing employees, which employees it is at risk of losing and how to retain them (i.e. increased compensation, better benefits, better work–life balance).

It is important to listen to feedback from employees, whether it be through informal meetings, employee engagement surveys, etc., to know what is, or is not, working in terms of employee engagement and retention as this can provide valuable information to employers on how to improve.

With aging Baby Boomers, an employer needs to consider retirement and how employees will leave the workforce, what packages and benefits it will offer, when employees will be eligible, who will replace them and will it be possible to retain older workers in an alternative work capacity.

The workforce is often an employer’s single largest cost. Therefore, having the right people in the right place and at the right time and cost is extremely important. With proper planning, you minimize risks associated with executing a business strategy. As the cornerstone of strategic human resources, workforce planning can have a positive impact on a company’s ability to acquire, inspire and retain talent.

Workforce planning is, and will likely continue to be, a primary concern for HR and one that will require thoughtful planning and development as the workforce continues to grow and evolve.

Clear Company, HR.com (2016) “Workforce planning: a forward-looking approach to getting the right people in the right Jobs”, available at: http://info.clearcompany.com/hubfs/Workforce%20Planning.pdf