As employers navigate through an unprecedented amount of change and uncertainty, leading organizations will use this upcoming quarter to take a fresh look at their total rewards program investments to ensure the arrangements meet the future needs and goals of the organization and its work force.
Grant Thornton’s first By the Numbers pulse survey, on the topic of total rewards programs, was conducted during the first few weeks in February 2021. Our results identified several areas that employers can consider as they examine their total rewards portfolio.
Cash remains king. Responding to questions asking which type of reward would most impact employee engagement, participants indicated they rated highly the importance of getting cash compensation right. These results reinforce the potential long-term residual effects of furloughs, pay reductions and reduced cash bonuses on engagement and employers’ future challenge to communicate their compensation programs in an effective and engaging manner. Other pulse survey questions indicated that nearly half of respondents believe that redesigning cash incentives to drive performance improvement is a top priority for 2021.
Remote work has enhanced value. Other pulse survey questions addressed the type of trade-offs that participants would be willing to make to receive less value for a reward item in exchange for more value from the other four. While a hypothetical scenario, participants indicated they were willing to reduce the value they receive from the current remote work or work-from-home arrangement for increased value from cash compensation, paid time off (PTO) and employer contributions to health care costs. On the other hand, only a small number of participants were willing to trade down PTO in order to receive greater value from cash compensation, remote work and benefits.
Employee reward preferences under massive change. The pulse survey results suggested that nearly one-third of participants believed that rebalancing total rewards to better meet employee preferences was a top priority for 2021. By applying consumer and market research methods such as surveys, focus groups and employee preference studies, an organization can incorporate many approaches and tools to help discover what aspects of the reward offerings are important to their employees.
2021 opportunities. It is crucial that organizations examine their total rewards portfolio on a recurring basis and from a variety of perspectives for the foreseeable future. Looking long-term, companies will need to continue to consider how COVID-19’s impact on financials may result in a reevaluation of employee performance expectations and discerning the trade-offs that may be required to accomplish broader stakeholder interests.
Regardless of the step taken to complete the review, business leaders should consider opportunities they have in 2021 to restructure the organization’s total rewards investments to ensure the arrangements meet the future needs and goals of the organization and its workforce.
Shown below are the By the Numbers pulse survey questions and the percentage response to each option.
Q1: Which of the following best describes the top priority for your organization's total rewards program (compensation, health, welfare, retirement, workplace, etc.)?
- Reduce cost of labor: 10.3%
- Restructure to support remote workforce strategies: 13.8%
- Rebalance to meet changing employee preferences: 20.7%
- Redesign cash incentives to drive performance improvement: 41.4%
- Improve communications to strengthen employment brand & culture: 6.9%
- Other - Write In: 6.9%
Q2: Which of the following do you believe the majority of your employees would be willing to receive less value in order to receive greater value from the other items in the list?
- Employer contributions (cost sharing) to benefit costs: 13.3%
- Paid time off: 10.0%
- Remote work /Work from home: 30.0%
- Short term incentive bonuses: 33.3%
- Base salary increases: 13.3%
Q3: Which reward category do you believe can have the greatest influence on employee engagement in 2021 if your company improved its current approach?
- Base compensation structure: 43.3%
- Culture & quality of work environment: 16.7%
- Bonuses & incentive compensation: 26.7%
- Performance & career management: 3.3%
- Health & retirement benefits: 10.0%
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