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Growing importance of a Total Rewards philosophy is irreversible trend, HR study finds

The question of salary and bonus continues to be a key differentiator, however, not the only one. Savvy employees are increasingly looking for more modern and flexible compensation & benefits strategies that will both incentivise and reward them for their work.

In response, HR managers are designing compensation and benefits policies that offer a broader spectrum of benefits to attract and retain talent. This is the conclusion of the Compensation & Benefits Report published today by the Top Employers Institute. The insights of the report are supported by the global HR Best Practices Survey, based on a sample size of 600 companies in 96 countries.

“While salary is still hugely important, non-monetary elements like flexible hours, catering to changing life-stage needs e.g. when having a baby, learning and development, and recognition have become decisive factors in job offers and employee retention. Non-cash related benefits have a history of increasing and decreasing relevance, but the recent growth in importance suggests it is an irreversible trend,” said David Plink, CEO of the Top Employers Institute.    

Rewarding employees so they are keen to stay, has moved up from being a HR administrative task to become an integral part of HR strategy, getting top management attention. Employees increasingly look at the work environment as the key differentiating factor when considering a job or career change, rather than salary and bonus only. Whereas this has always existed to a certain extent, albeit with great differences among countries, it has now become a global mass phenomenon.  

53% of the UK companies surveyed (well above the 37% global average) have already reacted by using the & lsquo;cafeteria plan’ approach in which a mix of benefits, incentives and allowances that make up the Total Rewards model are put before employees, as if they were a buffet from which to pick or choose. This helps the individual create a bespoke package for the rewards that matter most to them, which may be determined by age, life-stage or career aspirations. 

89% of the UK companies participating in the survey have defined a specific Compensation and Benefits policy for their jobs 51% regularly communicate a Total Rewards Statement to their employees, explaining which components the overall Compensation consists of, and how they are weighted.  

The survey finds that many companies still struggle with the shift from primarily monetary compensation to a more individual and holistic approach of compensating employees, because many rewards gaining in importance – such as flexible working conditions and development opportunities – are difficult to quantify. Here HR professionals are challenged to find ways to illustrate the value of typically non-quantifiable rewards.    

The survey also shows that talent is becoming mobile again. Compared to the years following the 2008 economic downturn, employees today view job stability as relatively less important.

The long-term drivers of the change in Compensation and Benefits schemes are firstly, greater rewards for people with specialist skills due to global skill shortages, opening up new opportunities for global horizontal careers instead of moving up corporate ranks vertically within the same company and secondly, technology, which is a key driver for the integration of Compensation and Benefits with other talent management processes. HR systems continue to consolidate, linking data from performance management and career development into a unified system that creates a single database for employees and managers.

“We see that the market for HR systems is consolidating at a rapid pace, leading to an internationalisation of systems, which results in greater visibility and harmonisation of rewards across regions and borders. Technology creates global transparency in pay information, eroding local and regional variation and strengthening the position of the employee in negotiating rewards,” said David Plink.

Social and digital platforms further help in creating transparency concerning employers. The communication of the employment experience through employees’ online conversations further increases the need to adapt Compensation and Benefits programs to reflect the global development of Total Rewards schemes.  

The Compensation & Benefit Report is the fourth report in a series of reports on employee conditions. It is based on the findings of the Top Employers HR Best Practices Survey, surveying a sample size of 600 certified organisations in 96 countries with more than 3,000 employees each. Please find a free copy of the report here:


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