Employee rewards can be expensive, especially for enterprise-level multinationals. In many cases, the cost of rewards is increasing. The WTW 2022 Mid-Year Compensation Survey shows that the vast majority of companies (81 percent) are offering signing bonuses, 65 percent are using retention bonuses to retain employees, and over one-half (55 percent) are increasing training opportunities to employees.
That’s not to say businesses should cut corners when building total rewards packages, especially given their value. But cost is a factor. As such, it’s vital for rewards managers to maximize the value of every cent.
Data is an important weapon in the fight against bloated rewards budgets. And when rewards managers can aggregate data silos and analyze them in a meaningful way, the impact is even more powerful. Here’s what that looks like.
See Which Rewards Are Actually Being Used
One of the quickest and easiest ways to maximize the ROI of your rewards program is to remove rewards that are underutilized or not valued. Finding what those rewards are can be difficult, unless you can aggregate rewards data.
When you’re able to collate reward data in one place, HR teams can determine which rewards are highly valued, which are used most often, and those where funds may be better spent elsewhere.
Regularly assessing your benefits is essential, especially in a tight labor market, says Christina Petersen, cofounder and chief people officer at external workforce management platform Worksome. “Things are moving so fast that reviewing benefits even once a year may not be enough. By reviewing benefits on an ongoing basis, you can be sure you are considering the newest data.”
But don’t just think of this as a way to cut costs. Instead, take the approach outlined by Perry D. Wiggins, chief financial officer at American Productivity and Quality Center, and ask yourself: “How can I ensure the company is doing its best to take care of its people with the resources it has at this time?”
Personalize Rewards for Greater Impact
Rewards managers know that not every employee values rewards in the same way. While some want additional health insurance, others may prefer more time off or learning and development opportunities.
Employee feedback and surveys are the primary ways HR teams gather information about which rewards employees prefer. The problem is, they aren’t always actionable. It’s extremely time-consuming for rewards managers to personalize employee reward packages one by one. A better alternative is to aggregate all rewards data in a single platform and let employees customize their own.
The impact can be significant.
For instance, a U.S. insurance broker with 20,000 agents found many were leaving because of its outdated benefits plan, say PwC’s Andrew Curcio and Alastair Woods. In response, the company took the following actions:
- It designed performance-based compensation plans.
- It reduced equity awards.
- It upgraded supplemental healthcare.
- It created a personalized training and development program.
As a result, there was a five to 20 percent increase in agent sales performance, an increase in engagement of 21 percent and an increase in employee satisfaction and retention. At the same time, competition costs decreased between eight and 12 percent. Those are significant benefits, but they were only possible as a result of data.
Keep Global Rewards Competitive
A one-size-fits-all approach rarely works for global employee rewards schemes. That makes aggregate data analysis even more important — but also more difficult. Not only do you have to aggregate all of the different data streams associated with a reward program, but you also have to do so for every single country you operate in.
When you get a company-wide overview of your rewards infrastructure in a single view, however — as you do with uFlexReward — you can make optimization decisions on a country-by-country basis.
That’s vital given the nuances that occur between different countries. “Many nations provide high-quality subsidized healthcare services and mandate employers to contribute to an employee retirement fund,” writes Nadia Vatalidis, VP of people at Remote. “As a result, employees in these nations won’t place as much value on related supplemental benefits.”
Companies need to customize rewards and offer specific rewards to employees in each country. At the same time, you don’t want to over reward employees in one country at the expense of those in another. It’s only by having an aggregated view of the value of rewards across each country that rewards managers have the data available to keep global reward programs competitive and fair.
Model What-If Scenarios
If rewards managers can understand the potential impact of changing an element of their reward plan in advance of doing so, it becomes easier to maximize the value of rewards. That’s what “what-if” modeling can deliver.
“The process applies various ‘what-if’ scenarios to business contingencies so company leaders can make decisions based on the most likely scenario while staying flexible and able to adjust to changing conditions,” writes business journalist Lin Grensing-Pophal at SHRM.
From a rewards perspective, HR managers can examine the impact of different reward packages on employees and costs. This strategy will be pivotal to the future success of organizations, says Grensing-Pophal, especially companies dealing with hybrid workforces, high turnover rates, and other disruptions caused by the pandemic.
Take something like changing your company’s health insurance plan, for instance. “Changing insurance plan designs is an incredibly tough decision for an employer,” according to general insurance agency Rose & Kiernan. “It’s hard to know how changes to insurance plans will impact the overall budget. However, sometimes plan design changes are necessary to manage costs, particularly when cost drivers could be reined in by adjusting plan specifics.” Where that’s the case, plan modeling is the answer.
With an aggregated view of your rewards data, it’s easy to understand the impact that an increase or decrease in insurance costs will have. Where insurance rewards are personalized to employees, you’ll even be able to drill down to get a granular view of how changing your plan will impact each employee. As a result, you’ll be able to make the best choice for your employees and your company.
Maximize the Value of Data
The power of data to HR teams shouldn’t be underestimated.
“HR teams can use data to make better HR decisions, better understand and evaluate the business impact of people, improve the leadership’s decision making in people-related matters, make HR processes and operations more efficient and effective, and improve the overall wellbeing and effectiveness of the company’s employees,” says futurist, author, speaker, and advisor Bernard Marr.
Nowhere is this more apparent than in maximizing the value of rewards. When you aggregate data, you can perform more meaningful analysis to evaluate rewards, personalize them for each employee, model what-if scenarios, and keep global reward programs competitive.
Images by: Campaign Creators, Towfiqu barbhuiya, Csaba Balazs