By Claudine Kapel
Like your car engine, your total rewards package also comes with an early warning system.
Early indicators of potential trouble can be helpful because they bring issues to light before they become serious problems. While you won’t find an oil light on your total rewards dashboard, here are five things to monitor that can alert you to the need for a total rewards tune-up.
1) Market competitiveness. Understanding how your organization’s pay levels measure up relative to competitive market practice is vital if you want to create an effective strategy for recruiting and retaining talent. Many companies conduct a competitive market review every year. Some may do additional analysis if they encounter high turnover levels within specific jobs or if they find themselves having a hard time recruiting for particular positions. If it has been a while since you last reviewed your organization’s pay practices, you may want to move this up on your priority list.
2) Hiring and turnover statistics. Some level of employee turnover is healthy and to be expected. The ebb and flow of talent can help infuse organizations with fresh thinking and new ideas. But if the rate of employee departures is becoming unmanageable, it may signal a problem that needs to be addressed. Further investigation may also be warranted if you are suddenly having a hard time filling job vacancies.
The challenge may relate to a specific group of jobs within the organization – or it may be more pervasive. By monitoring hiring and turnover statistics, overall and by job, you will be able to spot potential issues – and resolve them – more quickly. Keep in mind that people may be leaving the organization – or reluctant to join – for a variety of reasons. Don’t immediately assume, for example, that compensation is the issue, although it could be a contributing factor. Do your homework so you can get to the root cause of the issue and establish an impactful solution.
3) Exit interview feedback. Direct feedback from departing employees can serve as a valuable early warning system – especially if you uncover common themes or patterns. Although anecdotal information can offer some insights, you will get more meaningful data if you establish a formal exit interview process that includes reaching out to former employees after they have departed to get the real scoop on why they left.
4) Employee feedback. You can get a wealth of insights on the effectiveness of your total rewards offering by soliciting feedback directly from employees. You can get input through one-on-one interviews, focus groups and surveys.
You can explore specific total rewards elements or the complete offering. It helps to explore both what employees value the most as well as what they might change about their current employment relationship. It is also helpful to look at how well employees understand the various components of the total rewards package. Employee insights can help you identify areas where your total rewards offering is weak or not well understood. At the same time, you might discover that some elements are not really valued, creating an opportunity to redirect dollars to higher-value elements.
5) Costs. The costs associated with the total rewards offering are almost always top of mind because they represent such a significant part of an organization’s expenditures. While monitoring expenditures versus budget is always important, patterns showing escalating costs can signal the need for action. For example, rising benefit costs can prompt program design changes with respect to the level of coverage or the level of employee cost-sharing.
There are a variety of indicators that can provide valuable insights on how well your total rewards offering is running. By staying alert to these signals, you can help ensure your total rewards engine continues to run smoothly.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.