Survey finds organizations missing out on opportunities to add value, manage risk
By Claudine Kapel
When it comes to total rewards, a lot of organizations are pretty good at talking the talk.
But a new survey by Aon Hewitt suggests organizations are not faring well when it comes to actually walking the walk.
The survey of 750 organizations found that while 41 per cent of participants said they want to be managing total rewards as a portfolio or package, slightly less than 10 per cent are doing this today.
And while a third of the companies surveyed said they want to see their total rewards as a differentiator, only 10 per cent said they are there today.
In addition, many reported underwhelming results. Some 60 per cent of the companies surveyed described employee engagement levels as low, and two-thirds indicated the level of employee engagement was either holding steady or trending downward.
“So, how does such a promising concept like total rewards produce such abysmal results?” queries Aon Hewitt in its survey report. “The answer seems to lie in how companies execute – or fail to execute – on their approach to total rewards.”
Key factors undermining the efficacy of a total rewards approach identified by the survey results include:
- No clear links to the business strategy or desired outcome. While 87 per cent of survey respondents acknowledged alignment between a total rewards strategy and the business strategy is critical, 74 per cent indicated they do not have a strategy for managing total rewards.
- Failure to rely on hard data and metrics. Only 46 per cent of survey respondents felt it is critical to gather facts to drive decisions on total rewards, and only 37 per cent are doing so.
- Not listening to employees. Only 37 per cent of survey respondents said it is critical to gather data from employees to manage total rewards – and only 28 per cent are doing so.
A total rewards strategy has a lot of moving parts, so it’s not surprising that many organizations are struggling with how best to connect all the pieces. But without a well-conceived total rewards strategy, an organization leaves itself vulnerable to a variety of risks. Without a total rewards strategy, an organization is left to manage each reward program discretely, and in isolation from other programs.
Such a disconnected approach makes it much harder to:
- Define overall investment priorities.
- Balance spending across programs or remix investment levels to better address business and employee needs.
- Limit duplication in what programs deliver or reward.
- Communicate an integrated and compelling employment value proposition to support the attraction, retention and motivation of talent.
If you’d like to take a more strategic approach to total rewards, consider developing a list or inventory of all the programs, policies and practices that shape what you have to offer as an organization.
Are you clear why all these programs, policies and practices are in place? Are there duplications? Are there any gaps or disconnects that need to be addressed?
One interesting point emerging from the Aon Hewitt survey is that most of the survey respondents (93 per cent) felt they needed to change how they address total rewards – with 38 per cent indicating they believe significant change will be necessary.
And that is a good place to start.
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.