More and more, employers are redefining and allocating their mix of rewards based on individual needs – like a stock portfolio of investments – and finding trends amongst workers as they begin to look at work-life balance, flex-time and other original ways to keep people happy and productive.
There’s much talk today circling diversity in the workplace, both in the make-up of workers and the delivery of rewards. Smart companies have also discovered that contributions of this new “multi” workforce – multi-cultural, multi-generational and multi-otherwise – positively impact the competitive advantage of the organisation.
However, companies will not benefit unless they keep these widely-varied groups happily rewarded and retained. This presents a totally new compensation challenge: When designing total rewards packages that work for each employee, regardless of segment, it is now necessary to understand multiple needs and desires from different workers, and then compensate them accordingly.
When it comes to packaging pay, employers today are clearly challenged. In the average company, there are as many different vehicles to reward employees as there are diverse segments within the employee population.
To get a clearer idea of how to assess what is important to your top talent, let’s take a look at the four distinct employee population segments and what each group values in the work experience – ground zero for understanding what drives their rewards needs.
- Traditionalists (1909-1945), or Veterans, are part of the old school, command and control, brick and mortar chain of authority. And while they may be the “old guard” of a company, they are traditional in the best sense: They know that people, face-to-face communication and ideas are what make businesses run.They are willing to change and see new points of view, but it may not be easy. Hardworking and hierarchical, they have seen business change for decades – and adapted. They are “company” men and women.
- Baby Boomers (1946-1964) traditionally have been motivated by money and career advancement. Yet ironically, as Boomers age, yet remain in the workforce, flexibility and work/life balance have become much more important than the need to make senior partner – a goal that may have driven them two decades earlier.Today, many Boomers’ complex lifestyles have shifted to include caring for both their children and aging parents, sometimes in the same household. They have already made a significant mark in the business world, and while they may not be quite ready to relinquish life at the top, they have come to understand the value of balance and life beyond the board room.
- Among the most popular rewards requested today for the Generation X (1965-1978) crowd include better benefits: wellness, work-from-home arrangements, education reimbursements and, in some cases, child care in the office. For this independent group, it is critically important to set goals and then step away, letting them find their own solutions rather than “how things have always been done”.They are often unconcerned with long-term loyalty and have experienced significant downsizing during the dot.com bust, fostering a spirit of self-preservation, rather than survival of the company. They build strong relationships and serve as a bridge between older and younger groups.
- On the other side of the coin, Millennials (1979-2000), or Generation Y, are looking for a high level of engagement on a team and employment-based rewards, a concept they hold as near and dear as their 80 GB iPods. They like instant gratification over long term investments of time and effort and want to contribute to society and have full and balanced lives.They want responsibility, the ability to make a direct impact and be rewarded accordingly. And they continually redefine their commitment to the workplace with the knowledge that they are able to “move around” significantly until they find the best employment fit – and they will.
Given the variety of priorities across these four groups, it is nearly impossible for a company to be all things to all people. Therefore, an important first step toward developing a competitive package is to examine organisational demographics.
Understanding what people in your organisation value will help guide decisions on setting compensation opportunities and benefit options. However, in looking at demographics, you must consider expectations and timing of future shifts of the makeup of your workforce. Planning for these shifts can help retain high-performers, as well as attract new talent.
In addition to demographic analysis, collecting information that can add an essential qualitative aspect to a rewards strategy is important, sourced from:
- employee opinion surveys,
- exit interviews,
- focus groups, and
- recruiting feedback.
Armed with this knowledge, competitive compensation and benefits packages should be designed to reflect the values held by employees.
Increasingly, professional and office employees are willing to put pay at risk for the opportunity of being rewarded for superior performance. Team-based awards and project-based bonuses are becoming more prevalent and attractive to lower level employees.
The difference in values across generations can be addressed by varying opportunities at different levels in the organisation. Comfortable base salaries can be offered at the executive level, whereas individual recognition through significant merit awards and variable pay may be more appropriate for middle managers. Similarly, deferred compensation or supplemental retirement contributions will help to keep key leaders engaged and satisfied up through their retirement years.
Individualising rewards
There is no longer a “one-size-fits-all” approach to total rewards. It is time to shift your view on how you promote and reward employees. The system presently utilised in most organisations often promotes and rewards seniority, rather than results.
If you look at most companies today, you find the executive leadership tends to come from the older group and more of the entry positions are filled by the youngest. This approach needs to be exploded and rebuilt, to allow for a more collaborative team ethic that taps into the collective wisdom that all four generations bring to the table.
Younger employees are not going to be patient and follow the path that Baby Boomers set of working up rungs of the corporate ladder. If they are not engaged quickly, they will simply move on. Gone is competitive advantage, and succession plans crumble.
Perhaps the most important considerations employers can incorporate into how they pay today, include a strict performance management assessment process, that is based on individual goals and metrics, unrelated to seniority and utilising the “3-F” appeal to each job: balancing;
- family,
- fun, and
- flexibility.
In fact, an HR executive for one of the world’s largest Internet information portals recently revealed an experimental program for top employees to work in a “few months on, few months off” schedule, an extreme – and workable, in this case – solution to keep a talented team member happy.
Despite differences, all employees want some of the same elements when it comes to the work experience:
- the ability to be satisfied,
- valued,
- have clear objectives, and
- most importantly, directly report to a superior who empathises with a strong degree of work/life balance.
Using the same rewards vehicles – cash, equity, flex-time, incentives – employers can invest differently depending upon the needs of the individual.
CEO People Management 