A total rewards strategy backed by effective communication can supercharge your organization in the new year
Compensation is a delicate subject. Even in the best of times, it most often brings about a lot of uncertainty and anxiety. Many pay structures are also complex, with many different perks and bonuses muddying the waters. This is why effective communication on compensation changes is absolutely essential.
In the simplest estimations, even base pay is increasing in 2022. On average, it is going up by 3.9%. That makes it the highest projected hike within one year since 2008. However, this increase does not cover bonuses or other payouts an organization may offer. With such significant changes, handling a merit increase plan the right way can make all the difference in your business's success.
An organization needs to adopt a forward looking strategy that empowers its workforce and inspires them to have the best interest at heart to achieve optimal business success. An effective total rewards plan combined with outstanding talent management can motivate your workforce, inspire a positive change of attitude and help your business prosper.
Merely having a plan isn’t enough. Communication is key when it comes to cultivating a culture of trust, educating and empowering your workforce. An effective total rewards strategy of pay, benefits, career development and wellness serves as a driving factor for retention and engagement of talent. Yet if they are not aware of all they receive, building a comprehensive compensation structure is a wasted investment.
Overall, the current labor market requires organizations to rethink their compensation structures. New methods must be deployed to attract new and retain old talent. An impactful total rewards strategy can help you gain a competitive edge by aligning your corporate objectives with your employee’s personal ones. Companies then need to effectively communicate these pay decisions that prioritize their workforce.
Getting Compensation Right Starts With the Correct Strategy
Organizations need to demonstrate clearly how their rewards systems are structured as well as how they link to the overall business and individual performance. This way, it boosts employee engagement by aligning a worker’s role with the bigger picture.
Every piece of your company’s total offerings should be included with a purpose. It should also clearly demonstrate value. Finally, it should be fair across the organization. These characteristics bring an even balance to a well crafted compensation strategy.
Link Business Strategy with Performance
The goals and objectives that an organization aims to reward should be crystal clear. From there, link these goals with an employee’s individual role.
That doesn’t mean pay should be purely incentive based. Rather, the entirety of the compensation plan should be framed in a way that demonstrates the context behind what an employee does. It improves the employee experience by fostering a more collaborative spirit.
Have a Clear Employee Value Proposition
Every piece of your benefits offerings should have a clear value and purpose attached to it. In this way, context is also important. It does no good to pay for complex employee benefits that no one ends up using.
When determining how much you should utilize in your package, ROI may not be the best metric. Too often, a return on investment merely focuses on the employer’s side, when benefits are all about the employee’s point of view. Measure success via a value of investment instead.
Many employees join companies that align with their personal values. Therefore, your organization can offer pay structures that are consistent too. A financial services company can include impressive retirement programs and financial literacy courses. Utility companies can provide incentives for environmental sustainability. Food processors can have health and wellness programs. There are more ways to align your goals than just directly stating it.
Transparency Can Help to Promote Equity and Justice
A big concern regarding compensation matters is pay equity. First, there must be consistency internally. Second, it must be fair across companies industry wide. Total reward statements can help with both.
This process distills all the different parts of an employee’s compensation into an easy to understand dollar amount. It can be tied to a merit increase plan, so workers can see just how much they improve by. Or, it can be set into tiers, so everyone knows what to expect at every level. This transparency is the basis of pay equity.
Total reward statements provide an easy comparison tool beyond just internally. It can be used to compare pay across different companies. More employees are considering leaving their current workplace to find a better wage. Companies that offer generous benefits and back up their claims with total rewards will have an easier time keeping those employees. They may even offer a favorable comparison to others seeking to leave their work.
Overall, organizations that design and execute total incentives with these ideas in mind will be better positioned to recruit and retain top talent in an increasingly flexible and equitable workforce.
Effective Communication Makes All the Difference
Every aspect of a business is built on the basis of communication. For total rewards, this is especially important. It must not only inform employees of all their available options, it must also persuade them that these options are valuable.
Consider creating separate messaging for employees who are affected in specific ways. Compensation messages that affect a small number of employees should be tailored. Don’t use blanket total reward statements. Instead, target those that use that specific benefit. Generic, irrelevant memos can undo all the hard work human resources put into crafting these statements.
Focus on the Channels
Just as the message should be personalized, so too should the way it's sent. Some organizations have gotten away with physical total compensation documents for a long time. Yet, a sheet of paper may not have the most recent information, and can’t be updated very easily.
Compensation changes can happen very suddenly. If communication is not sent via a channel that your worker will read, it can sow confusion on the next paycheck.
Leverage Total Rewards
Putting your workforce first and prioritizing a communication strategy that is sensitive and empathetic will reinforce your message. As for organizations applying total rewards principles while designing their compensation frameworks, they will be better equipped to attract new hires while retaining the old talent in a demanding workforce.