Five strategies to future-fit your Total Rewards programs 

Job structures have spiraled out of control. The pandemic fueled record employee turnover, hybrid and remote work, a change in workforce attitudes, and major shifts around who does what. More recently, labor shortages, high inflation and the demand for hot skills have driven salary expectations higher than ever.

In response, many firms have added new roles, expanded job titles, and invented new salary ranges on the fly — without regard for how it all fits together. As the demand for pay equity and transparency continues to grow, this ad-hoc approach can’t survive.

Simplifying your job architecture and pay structure is a crucial step toward fair compensation. This is even more important if you plan to evolve your structures to incorporate future initiatives, such as skills-based pay. So, what should you do?

• You can start by auditing your existing structures for any redundancies and inequities.
• From there, leverage market analytics to determine the value of different job activities, levels, skills and other qualifications.

You may well find that there’s no difference in the business impact of a range of different roles, and starkly different salaries among a whole host of people doing essentially the same role. This is unsustainable - simplification is the solution.

Total Rewards programs are a huge investment in your people. Optimizing your spend for the best ROI is a must:

• The salaries, benefits, savings plans, and other programs you offer to support employee well-being should all reflect what matters most to the talent you need.
• If your workforce skews younger, why pay top dollar for world-class retirement benefits they aren’t using? Consider more relevant options, such as student-loan assistance, a more robust wellness program, enhanced learning and development programs and/or accelerated career opportunities.

As your workforce becomes more diverse, the one-size-fits-all approach is looking less sustainable (if it ever was). Today you can offer more flexibility than ever before:

• Many employers are leveraging digital platforms that allow people to personalize their rewards programs to meet their specific needs and circumstances.
• Tools like the Mercer Rewards Optimizer™ allow employers to differentiate total rewards packages based on the best mix for each employee segment — directing precious resources to programs that will provide the greatest bang for the buck.

Your labor market isn’t the same today. Countless firms adopted skills-based recruiting and flexible work models to expand their talent pools during the pandemic. As remote work expanded and the cost of living surged, many employees fled major cities and never returned. Fast-forward to now, and employers are competing across industries, time zones and geographies for the same talent.

For instance, if you’re a tech company in Silicon Valley, your market for tech-savvy employees now stretches far beyond the Bay Area. You may have painstakingly benchmarked your pay to a clear set of local competitors, but another firm with more creative recruiters may be hiring IT experts in a lower-cost area — paying less to get people just as good. Plus, employers across a whole host of industries, from banking and insurance to retail and entertainment, are also competing for the same tech-savvy knowledge workers as you.

So, what’s the answer?

• Evolve your Total Rewards strategy and programs based on these new realities.
• Keep abreast of a wider set of market data.
• Continue to adapt for key jobs and workers.

All of these steps will be essential to compete for talent successfully.

Are you making the most of your data? Organizations can use AI tools and analytics to scour their data for trends, patterns and insights that will help them to make smarter decisions. These new approaches can reveal key insights. For instance, more than half of employers are now measuring the take-up on new benefits programs to gauge ROI.

It is also helpful to audit your rewards programs to ensure that decisions about critical elements, such as salary increases, incentives and career advancement, are being made equitably across all employee groups. This sort of fairness is the hallmark of any sound Total Rewards program. It is a foundational expectation of today’s workforce, and it helps deliver meaningful action on corporate values around diversity, equity and inclusion.

In an environment where employees (and governments) demand more transparency around pay and advancement, top employers are using data to make more thoughtful, informed decisions that take everyone into account. This approach allows them to identify areas of concern that may require targeted actions, and to ensure that they are living up to their values.

It doesn’t matter how progressive your company claims to be — data can make you even better.

Your Total Rewards team is a lot like a sports team. Not everyone can play every position. You specialize — some run the cash, others do benefits, and some wrangle employee data. As any coach knows, it’s more efficient that way.

But what happens when you need to make decisions like:

• How much budget do we need?
• How do we manage scarce bonus dollars to engage our top performers?
• Where should we pull back so we can spend more on key priorities?

At these crucial junctures, all of your specialists need to work together and pool their knowledge and resources. You can’t compare jobs and skills without data, or fine-tune your spend without knowing the needs of different employee segments. Tasks like these call for open communication and a holistic approach to the rewards agenda.

In fact, teamwork is what ties all of these actions together and connects them to other key players in your organization. Structuring jobs, optimizing spend and plan design, knowing your competitive market, and making informed decisions about your talent are not mutually exclusive and must be considered as a whole.

Break down silos and get people to work together. Only then can you develop and offer an overall employee experience that is truly differentiated from your competition.