Building a Total Rewards Strategy for 2023
Your workforce is the heartbeat of your organization. Understanding and addressing your employees’ needs through total rewards packages can help drive retainment and positive morale. Total rewards are not just compensation and benefits — they encompass anything an employer offers its employees in exchange for their time and skills. This could range from the day-to-day culture of the company to special inclusions, like sabbaticals or voluntary benefits.
Talent is one of the most significant expenses, which brings inherent risk. It is essential to develop, utilize and communicate a relevant total rewards package that serves your employees. Using these strategies can help enhance your employee experience and limit unhealthy turnover.
There is a real and volatile cost associated with attracting, engaging and retaining talent within an organization. The following are ways you can approach total rewards to mitigate risk.
Define Your Approach to Total Rewards
The first and most effective thing an employer should do is listen. Help your organization understand employees’ visions, values, culture, strategy and desired offerings.
Synthesize what you learn to build a long-term roadmap of offerings that attract, engage and retain the talent your organization needs. This roadmap can be followed through projects and initiatives and help define your total rewards philosophy.
For example, as a part of your total rewards strategy, you could address the need for mental health support with a roadmap. Nearly 20 percent of adults experience a mental health issue every year, many of which go untreated. To address this in your organization, begin with meaningful data, assess your programs and select the most relevant programs and tools based on your findings. Then, train your managers and clearly communicate your offerings to your employees. This comprehensive approach can be one aspect of your total rewards strategy.
Addressing Market Changes Through Total Rewards
The foundation of total rewards is to help combat turnover and increase employee engagement. Turnover and lack of employee engagement can be expensive.
Take the opportunity to create a fair base pay structure. Compare your base pay against those in the market and internally. New hires should be compensated fairly, and tenured employee salaries should be evaluated to determine if they are up to par with current market trends and their experience level.
Though different states have different legislation regarding pay equity, the common consensus is that employees should receive equal pay for equal work. This encourages employers to look at their job descriptions from a compliance standpoint and determine if the individuals in similar positions are receiving the same pay across gender, age, race, etc.
If your company has not evaluated its base pay structure, this upcoming year is an opportunity to create a plan for evaluation and budget for any changes stemming from it.
Additionally, since the COVID-19 pandemic, many organizations have had to decide if their offices will be entirely in-person, hybrid or remote. Companies are embracing this flexibility, which is attractive to the current workforce. However, when it comes to working in different states, it is important that employers are aware of differences in payroll systems and taxation to avoid risk or exposure to liability.
At 8.5 percent, the U.S. inflation rate is at its highest level since the 1980s. Although wage increases adjust for inflation, when these numbers reach all-time highs, raising everyone’s salary to meet these spikes may not be sustainable after the market regulates itself. Many employers jump to increase base wages as a reaction to the market but this could lead to layoffs down the road if the company cannot sustain them. Revenue does not necessarily keep up with inflation and decreasing wages would be an unpopular choice when inflation goes back down.
What matters to your employees during a tumultuous economy is what can be done for them right now. Consider addressing short-term solutions to address specific symptoms of the economy without increasing your fixed costs. Is it possible for your employees to work from home to save on gas? Can you add a one-time contribution to retirement accounts? Could you give out grocery cards to help with rising food prices? Can you afford to do a one-time bonus?
Talk with your employees and determine an action plan that works for them. Stay in tune with your workforce and up-to-date with emerging benefits trends, finding ways to help expand different forms of compensation.
Tyrone Jordan is a Vice President, Employee Benefits Practice Leader with Brown & Brown. He may be reached at 586-446-3511 or Tyrone.Jordan@bbrown.com.
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