The future for rewards in a changing world
This article was published via HR Magazine on 4 September 2018 and written by Carole Hathaway, global practice leader, rewards at Willis Towers Watson. A link to the original article can be found here.
As workforces become more diverse, rewards need to become more and more personalised. So what does this mean for HR? And what should you be doing now to prepare for the future?
Employment is changing. As we saw in the first article in this series we have an ageing work population. Someone who starts work tomorrow will almost certainly go through several changes of career before they reach retirement. As well as working for longer, employment styles are also changing. There will still be a place for full-time employees, but more and more will choose more flexible ways of working, with many opting for short or long-term contracts and self-employment.
Companies are also recognising that they can get work done through alternative channels than traditional employment. Indeed, if the need is for specialist, hard to come by skills, does it even make sense to create a job and try to recruit for these roles?
As a direct result, the ways in which companies decide to reward our work will have to change too. There simply isn’t going to be a place anymore for a one size fits all mix of rewards. This simply won’t work anymore with the new dynamics of employment. So what should take its place, and what are the likely impacts on both employee and employer?
It would be no surprise if the idea of a more complex and personalised mix of rewards immediately set alarm bells ringing, not least about the amount of time and cost needed to administer such schemes. But the rapid growth of new technologies has the power to take much of the pain away. Not only can technology streamline the process of managing fragmented, multiple reward offers, but it will also have the added benefit of freeing up time for HR to concentrate on more strategic issues. As automation takes over these processes, HR will need to develop new skills, especially around the analysis of the data which technology now has the power to generate and which can lead to better informed decision making.
There is also a growing move towards using technology to communicate more effectively with employees about their rewards, and to give them greater control over many aspects for their employment, from pension contributions to holiday entitlement. Mobile technology has put the power to manage a plethora of functions directly into the hands of employees. Having said that, all too often there is a disconnect between the experience an employee has of consumer technology (such as online shopping and banking) and that offered by their employer. This is changing, and there are many exciting innovations in how companies are communicating with their employees, but if the technology route is to really work it needs to mirror the same level of interface employees have when using consumer technology.
The power of the data which technology provides also offers an opportunity to re-evaluate the mix of rewards companies provide. Analytics can allow you to ensure that as an employer you are getting the optimum return from the rewards provided – and gain greater understanding of just what impact these have on the business as a whole. In many cases what employees might value highly are relatively low cost options, for example, the ability to undertake additional training or access financial advice. So don’t make assumptions about what rewards are most important. Instead research these. Use techniques like total rewards optimisation tools to gather data directly from employees – dig deep into that data – and be prepared to respond accordingly. Greater flexibility or segmentation of your mix of rewards need not necessarily come at a higher cost.
Though the future may be moving towards a more diverse range of rewards, it’s important not to lose sight of the way these impact your overall talent value proposition and the overall image of your business – and its attractiveness as a work destination. Rewards say a lot about who you are as a business and whatyou value, so they still need to be aligned with your strategy and reinforce the behaviours that will lead to success – as well as attracting the best talent to you.
So be prepared to review your approach to rewards – using technology to understand what your employees value and effectively deliver your rewards to maximise engagement and appreciation. But never lose sight of the need to align rewards strategy with your business. One size no longer fits all, especially as our workforce becomes more diverse, but that doesn’t mean that greater segmentation and employee choice shouldn’t together add up to one exciting offer.