Creating a total rewards strategy 

Create a sustainable strategy that meets employee needs — working within the current economic realities.

Employees today are looking for something different — from their experience at work to the support they get from their employer. Mercer’s Inside Employees’ Minds research shows there has been a significant shift in the mindset around work, driven by the pandemic, global social and political crises over the last few years, and ongoing disruption to business models in many sectors. 

Despite the changes in the economy, the labor market has remained resilient — and is expected to stay competitive for some time. As a result, we see that half of employers are revisiting their total rewards strategy in the next six to 12 months, with the goal of attracting and retaining new talent.

Download the Total Rewards Guidebook, explore more with Mercer Rewards Optimizer® offering, or speak with a Mercer consultant to learn more. 

1. Lead with listening

Design an employee value proposition (EVP) that people care about, first start by listening to your customers — your employees — to understand their unique needs and preferences. Conducting an unmet needs study or total rewards optimization analysis which considers both employee preferences and cost, are two ways leading employers are embedding the voice of the employee into their total rewards strategy.

  • The vast majority of organizations (79%) use benchmarking to inform their total rewards strategy, while only 24% use employee preference insights as an intelligence tool on a recurring basis.

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    Only 39% of organizations agree that they align and optimize their rewards strategy based on employee preferences.

Source: Mercer US QuickPulse: 2023 Total Rewards and Recognition Survey

2. Get to the heart of the issue 

Take a holistic view of total rewards that incorporates broader elements of work experience, including career management, work design, well-being and more, rather than only focusing in on compensation and benefits programs. 
1 in 3 organizations do not take a holistic approach to total rewards, considering both tangible reward elements and intangible elements such as well-being, flexibility and career programs.
Source: Mercer US QuickPulse: 2023 Total Rewards and Recognition Survey

3. Identify where you want to shine

Link your total rewards and talent strategies together to identify specific areas where you want to differentiate yourself. 

  • Only 38% of organizations say they target their approach to key demographics within the organization.

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    Only 46% of organizations say they directly consider the needs and preferences of diverse groups within their total rewards strategy.

Source: Mercer US QuickPulse: 2023 Total Rewards and Recognition Survey

4. Engage for impact  

Invest in portal technology that gives employees mobile-enabled access and personalized tools for accessing their total rewards information in one place — a digital front door.

  • Only 46% of employers say employees have a good understanding of total rewards programs available to them.

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    2 out of 5 employers do not have an employee portal for total rewards, and instead rely on other communication vehicles such as emails, newsletters and manager discussions.

Source: Mercer US QuickPulse: 2023 Total Rewards and Recognition Survey

Build a total rewards strategy that stands out

Success lies in co-creating a compelling and effective total rewards strategy. Mercer’s four-phase approach to developing a total rewards strategy is flexible, scales based on your needs and is sustainable for your resources, capabilities and the work your team has already done.

  • Embark

    Establish the baseline
    Align on objectives and guiding principles.

  • Discover

    Identify the opportunity
    Identify critical gaps in the current total rewards employee experience.

  • Shape

    Build the strategy
    Shape the vision and strategy for the future of total rewards.

  • Drive

    Roadmap for change
    Build roadmap to design, communicate and implement the change.

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