With attrition levels well above the norm in many sectors, employee total rewards are coming into their own.
“Three to five years ago, total rewards still meant compensation for most people, maybe with a couple of bells and whistles attached. Today, total rewards include greater focus on health and well-being, culture and the values of an organization,” says Rahim Bhayani, managing director at Principle Rewards Consulting based in Burlington, Ontario.
Behind the scenes, it’s all about amped-up attraction and retention efforts as employers variously respond to labour shortages and widespread, pandemic-induced reassessments of life’s priorities.
“I’ve never seen the environment like it is now, where everything is so tilted in the employee’s favour,” says Bhayani. “The net number of employees in the system has not really changed but people are getting very crisp on their personal value proposition and really aligning to companies that are a better personal fit.”
Fortunately for many employers, enhancing their total-rewards offering may be a relatively simple matter of crisply communicating what’s already exists. “It’s a beautiful thing when employees understand and take advantage of the resources that their organization has already made available to them,” says Bhayani.
“Clients are much more interested in communicating their total compensation, including benefits, retirement programs and ancillary benefits such as wellness supports,” agrees Chantell Arsenault, group benefits, pensions and wellness advisor at CapriCMW in Kelowna, B.C., a member firm of Benefits Alliance.
Part of that comes from a greater understanding of how the pieces need to be considered as parts of a whole. “There has definitely been a major shift in how employers view total compensation and total rewards and how that relates to attraction and retention. More are evaluating everything under the one umbrella and communicating that to employees in employment agreements and consistently in the daily work environment,” says Arsenault.
She adds that the role of benefits advisors is changing as a result. “Employers really rely on us for competitive intel. You can’t benchmark some of what’s going on in total rewards today.”
Advisors are increasingly helping with communications as well, says Arsenault. “We can help develop strategies and campaigns and many of us have the capacity to communicate directly with plan members.”
Arsenault and Bhayani share their thoughts on five of today’s major trends in total rewards.
1 – SOMETHING TO TALK ABOUT
Whether it’s RRSP matching or health spending accounts (HSAs), employees can’t appreciate what they don’t know. Rule number one, says Bhayani, is to communicate from the plan member’s point of view.
“Communication needs to be tailored to how an employee thinks versus how a company thinks. Employees don’t care about the sophistication of a program, they care about what it can do for them. It’s all about showing tangible value to them,” he explains.
Next, clear and simple language not only promotes better awareness but also prevents misunderstanding. “If you use jargon and they don’t understand it, employees may discount the information – or worse, they may think you’re trying to pull a fast one on them. This results in a lack of trust that’s hard to recover from,” emphasizes Bhayani.
He also urges employers to put in the time to produce total rewards statements, which includes not only compensation but also benefits and retirement-plan contributions made by the employer. “That’s a huge, missed opportunity to break down how much a company invests in employees beyond the base salary. They bring the rewards to life.”
And while employers should be able to lean on their advisor for communications support, the magic only happens when the right leadership is in place. “More companies are hiring rewards people. The focus is more on creativity and less on compliance to encourage new thinking. Effective communications flow smoothly from there,” says Bhayani.
2 – LEAD WITH BENEFITS
The pandemic forced employees to think about health care like never before, and it will be many months before hospitals and physicians’ offices return to pre-pandemic service levels. As a result, the spotlight is on workplace health benefits plans.
“Before the pandemic, I’d say HR people would spend about 98% of their time worrying about compensation and 2% worrying about benefits. That split needs to change to a 70/30, or at minimum 80/20. Employers need to think about benefits really deeply because their employees are,” says Bhayani. “In today’s environment, I am counselling employers to re-focus on holistic benefits and retirement plans in their total rewards strategies, which may also have the advantage of being tax-efficient in some cases.”
For example, the HSA is a “very underutilized, phenomenal tool, especially for large families that may have healthcare expenditures not fully covered by the basic plan,” he notes.
Wellness dollars or accounts, while not tax exempt, are also increasingly valued. “As part of total rewards employers can offer a choice between an unlimited membership in headspace, the meditation app, or 10 more stock options.” He also predicts that resources that help with lifestyle changes, such as weight loss and smoking cessation programs, will be increasingly valued options for wellness dollars or accounts.
Last but not least, more employers are starting benefits sooner for new hires, for all job titles – in some cases, on the date of hire. “We’re changing waiting periods in the contract a lot more frequently,” confirms Arsenault.
3 – THE RIGHT FIT
Innovative companies like Shopify are leading the charge on total rewards that can be tailored to meet employees where they are in their personal life journey.
Within certain parameters employees get to choose between base salary, benefits, bonus, equity and other rewards. “A single employee may want all the company stock the plan allows while an employee with a family and dependents may opt for more enhanced healthcare coverage,” suggests Bhayani.
The sky may literally be the limit on what employers can do to tailor total rewards to capture the hearts of employees. Airbnb, for example, allows employees to work in other countries, for up to three months at a time. “That’s huge for employees and families who want interesting, global life experiences,” says Bhayani.
4 – INVEST NOW OR PAY LATER
Sectors experiencing higher churn rates have come to smell the coffee when it comes to investing in total rewards.
“Employers considering the out-of-the-box items are looking at the cost of attracting and training employees and the impact of turnover on culture, and ultimately the impact on their ability to keep and attract business,” says Arsenault.
While it’s hard to measure the savings, employers are realizing they need to commit fully to total rewards consistently over time to realize an ROI, she notes.
5 – THE “IT” FACTOR
Of course, all the bells and whistles in the world mean nothing if employees are stretched too thin or feel unappreciated. The “it” factor of total rewards is rooted in a culture that walks the talk of work-life balance. Both Arsenault and Bhayani can attest that today’s tough environment is separating the wheat from the chaff.
“Companies that have not created a positive culture are getting a lot of resignations. Great companies with clear and positive cultural identities are able to engage and retain their employees better,” says Bhayani.
Under the umbrella of total rewards, here are some offerings that “great” companies are embracing or considering:
- Unlimited vacations or paid time off, which give employees the autonomy to determine the amount of time off without restrictions (coordinating with their manager and team).
- Production-based incentives for all team members. Rather than (or in addition to) cash, the incentives aim to build relationships in today’s hybrid workforces; e.g., a trip to a luxury resort for employees and their families.
- Quarterly parties, recreational outings or volunteer events, again to foster teamwork in hybrid workforces.
- Long-term cash- or equity-based incentives, e.g., if the company’s earnings double in five years, employees get a share.
- Financial assistance for education and training, which may include paid time off to attend classes.
- An annual lifestyle account for work-related expenses, e.g., childcare, home office equipment and commuting costs.
- Employee share ownership plans; while these may not be new for high-tech, start-up or publicly-traded companies, more employers outside of these cohorts are introducing stock or ownership options.
This content is powered by the Benefits Alliance Group.
Cox Financial Group is a proud member of the Benefits Alliance Group, a national organization consisting of 28 independent firms with more than 200 advisors. Collectively, we administer over 8,000 employee benefit plans with $1.4 billion of group insurance premiums, as well as 1,500 group retirement plans that have over $3.5 billion in plan assets. Learn more at benefitsalliance.ca.