Total Rewards – Total Relationships

Driving towards a Simply Irresistible Organization demands a shift in Total Rewards

Posted by Arthur Mazor, Chad Atwell and Jason Flynn on February 2, 2018.

Total Rewards leaders (Compensation & Benefits) are increasingly pressured from both inside and outside the modern organization. Long-time experts in this profession are accustomed to balancing the needs of the workforce, business, and regulators. Now more than ever there are new challenges for Total Rewards professionals to get ahead of – or risk being caught off guard.

In July and September, we posted two articles about how traditional HR centers of excellence can move from siloed “centers” to design-led “communities of expertise.” The first article introduced and defined the Community of Expertise approach as part of the High-Impact HR Operating model. The second described how CoEs can drive increased business impact and play an instrumental role in HR’s creating sustainable value. Here, we’ll build on these ideas and focus on the disruptions and opportunities facing a specific CoE: Total Rewards.

Total rewards based on worker preferences vs. the external market
The success of any Total Rewards offering has traditionally been measured based on whether it is “competitive” with an organization’s peers and relevant labor markets. Professionals in this field are known to spend countless hours collecting and analyzing market data, which is often frustratingly out-of-date and reflects only those reward programs best measured in concrete dollars and cents. Some may push to outpace the market, while others are comfortable to lag a bit behind, but their focus is consistently outside the organization.

Compare that to the results we see in Deloitte’s 2017 Global Human Capital Trends report, where nearly 80 percent of surveyed executives rated employee experience as very important (42 percent) or important (38 percent), while only 22 percent reported that their companies are excellent at building a differentiated employee experience. At the same time, many organizations are coming to grips with increasingly vocal populations of employees who expect more transparency, more choices, and more say in future total rewards offerings. Rather than focusing on competing externally in the market, organizations should consider responding to their employees’ desire for a personalized and meaningful experience.

From Total Rewards to Total Relationships
The preferences of today’s workforce go beyond traditional rewards. Workers are looking for Total Relationships with organizations that offer a personalized, flexible experience that feels tailored to the individual. As a result, organizations are working to foster a Total Relationship, with rewards that are differentiated based on worker expectations and tied to the business priorities and success outcomes. Shifting from traditional “compensation & benefits” to “Total Rewards” – and now to “Total Relationships” demands re-positioning rewards to consider a broad suite of programs beyond compensation and typical benefits to include recognition, career development, wellbeing and more. Creating Total Relationships embeds rewards as a critical component to shape the experience for all of an enterprise’s workers – employees, gig workers, and alumni.

Fortunately, Total Rewards professionals are uniquely positioned among many in HR to meet this challenge. By applying analytical capabilities to employee preferences (e.g., using conjoint analyses), they can help leadership understand not only what is offered more widely “out there” in the market but also what combination of programs would best drive them toward becoming a Simply Irresistible™ organization.

De-linking pay and performance?
The reinvention of performance management is a well-published and discussed topic. Many organizations are experimenting with more continuous performance management practices – some with performance ratings and some without ratings at all. By comparison, very little research has been conducted on how organizations plan to adapt their compensation plans to these new approaches and still maintain a “pay-for-performance” strategy. The Cutting Edge Performance Management study from the Center for Effective Organizations indicates a missed opportunity for total rewards professionals to demonstrate their expertise and value to the business1. This survey of 244 organizations shows that, “Rewards leaders are playing a secondary role in the adoption and design of cutting edge practices” with only 39 percent being “heavily involved.” In order to deliver on employee experience, total rewards and performance management together must drive the employee-centric approach.

More important than whether ratings are used or not is one of the underlying reasons organizations are redesigning performance evaluations in the first place: the changing nature of work. The way we work is going through a dramatic shift, and “the need to align goals, provide feedback, and coach for performance is real-time, continuous, and multidirectional”, as mentioned in Deloitte’s 2017 Global Human Capital Trends report. As ways of working rapidly are rapidly changing, workforce and enterprise expectations around rewards are changing as well. Total Rewards leaders are quickly finding a need to even more closely link with business leaders and the voice of the workforce to address the emerging and rapidly shifting priorities with solutions that drive sustainable organizational performance.

To best address these impending disruptions, Total Rewards leaders should examine their priorities, how their teams are organized, and where they spend the majority of their time. Three key changes today could help add more value in the coming year by moving from “how we’ve always done it” to High-Impact:

  • Ask your employees: Understanding how rewards are viewed within your organization will open up a host of new insights and potential for improvements. Applying analytical skills on your team to help with this effort, combined with some help from marketing or consumer research teams can illuminate insights and open new possibilities about how to reconsider rewards programs.
  • Define your rewards brand: Establishing a vision from the perspective of how employees, managers, executives, and other groups like gig workers experience their rewards and bring new life and intention to the role rewards play in your organization. A brand mindset can help focus on how rewards are offered with linkage to the broader employer brand rather than only focusing on what rewards are offered.
  • Help drive team performance: As workers increasingly accomplish their jobs by operating as networks of teams, elements of total rewards and organizational performance are intersecting in different ways. Working with a business leader or a small team to define and reward success on an important initiative can provide opportunities to test new combinations of rewards strategies and approaches to enhance performance of teams while redefining the role of Total Rewards in your enterprise.

Creating or enhancing your organization’s Total Rewards Community of Expertise is likely to follow a somewhat unique path based on your starting point, business priorities, and workforce expectations. The challenge of driving towards Total Relationships demands rewards professionals pivot their focus, upgrade capabilities, and engage in new ways to play their important role in this shift.

Arthur Mazor is a principal with Deloitte Consulting LLP and the practice leader for HR Strategy & Employee Experience and Global HR Service Delivery. He collaborates with complex, global clients to achieve high business impact with a focus on transforming human capital strategies, programs, and services.
Chad Atwell is a senior manager with Deloitte Consulting LLP. He focuses on how Total Rewards can best be designed and delivered to prioritize employee experience and drive sustainable organizational performance.
Jason Flynn is a principal with Deloitte Consulting LLP and the practice leader for Total Rewards, covering pension, healthcare, compensation, M&A, and retirement provider services. Jason has more than 20 years of experience helping companies across a variety of industries design, deliver, communicate, and manage the financial and human resources aspects of total rewards programs.

1Ledford et al. “Cutting Edge Performance Management: What about Rewards?” CEO Working Paper Series: CEO Publication: G16-05 (672).

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