Men focus on the cash components of the rewards program, women tend to view it as a complete package.
With employees across the globe becoming increasingly conscious of the rewards they deserve, organisations are also realising the importance of a strong total rewards strategy to keep their talent engaged and motivated.
The working population around the world is now a dynamic mix with organisations employing different sets of people with diverse needs and preferences. This added to a disruptive business environment, makes it extremely crucial for employers to focus on having robust reward mechanisms including both financial and non-financial benefits and matching the expectations of employees.
The EY Rewards Survey 2016, was conducted with a view to capture employers’ perception of what they believe they are doing ‘right’ and how well these initiatives or programs are received by employees, and to understand gaps if any.
It revealed that one in four employees is dissatisfied with the rewards programs provided by the employer.
Although the term ‘Total Rewards’ has been doing rounds in the corporate world since long however organisations still need to think beyond mere compensation and benefits; and make work-life effectiveness and performance and talent development a part of the reward scheme.
Arvind Usretay, executive director, Rewards Consulting Leader – India region, people advisory services, EY, says, “Present day workforce is extremely dynamic; but many employers have held on to archaic approaches to managing talent. On the subject of employee rewards more specifically, employers continue to rely on traditional benchmarking reports that showcase ranges, prevalence and quantum of compensation and benefits. While these do provide some statistical inputs, they fail to capture the pulse or the mood of employees or employers”.
The survey stated that the base of a robust compensation package is a well-defined and executed performance management system. Having said that, while 76 per cent of the employers surveyed believe that the performance of employees impacts their compensation, only 55 per cent employees agreed to the same.
Usretay, says, “Consistent gaps are observed between employers’ perception and employees’ preferences and responses in – a) understanding and communication of the rewards program, b) tailoring the rewards program according to the employee demographics in an organization and; c) relevance of various components of the rewards programs in today’s work environment”.
The survey also shared insights from both employees and employers which show a distinct variation between the overall employer and employee view. While 24 per cent employees are clearly dissatisfied with the rewards program at their organisations, 20 per cent employees are unsure, whereas 65 per cent employers are satisfied with their total rewards program.
Interestingly, the level of satisfaction among millennial employees is low, but it sharply increases in the 30–35 years age group and again decreases in the 35–45 age group. The age group 35-45 represents people who are at the peak of their careers, looking at larger professional roles with more responsibility and hence the higher expectations on pay. This is also the group that is looking to achieve various milestones as part of their personal goals, and also possibly have an eye on retirement.
Another interesting insight regarding the satisfaction level with rewards is that employees in organisations with less than 250 people come across as the most satisfied with their rewards program. The level of satisfaction gradually decreases in larger organisations. This also means that smaller organisations have a well-knit way of internal communications that ensures the employers are consciously aware of the employees’ expectations from the rewards programs.
The survey unveils an interesting fact about the difference in how men and women look at rewards and benefits. Around 66 per cent women cited satisfaction with their pay as compared to 50 per cent men – this probably indicates that while men focus on the cash components of the rewards program, women tend to view it as a complete package, wherein benefits are assigned more values than any other reward components, stated the survey report.
The survey asked a few industry leaders as to how important it is to offer flexibility in total rewards, to which K Ramkumar, ex-executive director ICICI Bank, says, “The key reason why rewards should have flexibility is that the value that one derives from rewards has to be left to the recipient, which is the employee.”
“Only in a world where paternalism rules can employees determine what value they seek to derive from the remuneration that is due to them. Now a day, even when we give gifts, we give gift vouchers and not gift articles because gift vouchers give the flexibility to the recipients,” he adds.
The survey stated that more than 60 per cent employees at all management cadres understand the factors that determine compensation. In addition, over approximately 45 per cent employees in all the industries said that they are either unsure or clearly dissatisfied with compensation.
Going further, to the one factor that fails an organisation’s total rewards programs, Ritu Anand, deputy head global HR, Tata Consultancy Services, says in the report that it is “Inflexibility and making one shoe fit all”.
More employees now prefer long-term benefits over the usual annual hike. As many as 62 per cent junior and 60 per cent middle-management employees reported a keenness to earn long-term rewards over just a year-on-year pay hike. This number for senior cadre employees stands at 49 per cent. Again, on this front as well, employees in smaller organisations are open to the idea of long-term rewards and 74 per cent of them chose the same over a year-on-year hike.
In terms of the market parity, the survey reported that overall, 66 per cent employers believed that their organization’s compensation is competitive compared to the outside market and 62 per cent said that it helps to attract and retain high-performing employees.
These findings clearly point towards the fact that organisations need to plan the reward programs keeping in mind the employee expectations.
Usretay says, “The reward programs must reflect the employer’s intent and core values. It is important that employers understand the pulse of the organization and truly ‘listen’, before initiating a program. Both employee pulse and employer intent must be reflected in the rewards program”.
Moreover, to enhance the positive perception it is important to ensure effective communication of the rewards program. Communication must be simple and crisp and should speak the language of the target audience. Last but not the least, all employers must scientifically track the effectiveness or success of the programs specifically, apart from generic employee satisfaction surveys.