Making the most of total rewards investments

Context is key when analyzing gaps, defining priorities

By Claudine Kapel

It’s an age-old question with no easy answer: How does an organization maximize the value of its investments in total rewards?

It’s a helpful question to ask, as the ensuing analysis can help organizations prioritize or redirect their total rewards investments.

But as two recent pieces of research indicate, the answers may vary depending on what you’re trying to achieve – and the lens you use when asking the question.

For example, a new Mercer study on employee benefit preferences found Canadian employees would prefer an additional week of paid time off over any other benefit covered in the survey. In fact, Canadian respondents ranked getting additional paid time off even above getting a salary increase.

Employer contributions to a retirement savings plan ranked number two, followed by improved health and dental coverage.

The Mercer findings are from a global survey covering 10,000 respondents. As part of the research, respondents were asked to indicate their preferences in trade-off analysis. In addition to covering a selection of market-specific benefits of roughly equivalent value, the study also included a salary increase of $500 among the potential options to be compared.

Notes Mercer: “Where an additional salary increase was offered (all markets but Hong Kong), it was preferred over all other options offered. The exception was Canada, where employees ranked an additional week of paid time off above a salary increase – not surprisingly, as many Canadians place an increasingly higher value on work/life balance.”

Yet a recent article in Gallup Business Journal offers a different angle on areas of focus that can add value for employers. It suggests companies seeking to enhance employee wellbeing should focus on employee engagement over paid time off or flextime policies.

Citing new Gallup research, the journal reports “employee engagement is a much stronger predictor of overall wellbeing than factors such as hours worked, weeks of vacation time taken, and flextime allowed.” The study used a sample of 4,894 U.S. Gallup Panel members.

“Though workplace policies such as hours worked, vacation time and flextime do relate to employee wellbeing, the quality of the workplace trumps policy in affecting overall wellbeing.”

In fact, the journal reports employees who were engaged in their work but took less than one week of vacation had 25 per cent higher overall wellbeing than actively disengaged employees, even those with six or more weeks of vacation.

So how can you best determine if you’re making the wisest choices with respect to your organization’s total rewards offering?

Some key questions to consider include:

  • Are there any evident gaps or areas of employee discontent with respect to particular aspects of the total rewards offering?
  • Are there specific objectives you are seeking to support through the total rewards offering – such as enhancing the organization’s ability to attract and retain talent or fostering specific workplace characteristics or cultural elements?
  • What types of changes are desired and how challenging might these be to implement (for example, from a cost, time or risk perspective)? Are there any low-hanging fruit that might represent an easy win for the company and employees? Are there opportunities to redirect dollars from lower-value elements to higher-value elements?

The path forward often requires a multi-faceted strategy that balances both broader human resource priorities and program-specific objectives. To that end, you may decide to retool your benefits plan while also developing a strategy to enhance employee engagement levels.

What’s most important is you start by defining the employment proposition that’s right for your organization – and then address potential gaps within that context.

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

Claudine Kapel

Claudine Kapel is principal of Kapel and Associates Inc., a human resources consulting firm specializing in compensation design, performance management, and employee communications. Claudine is also the co-author of The HR Manager’s Guide to Total Rewards and Straight Talk on Managing Human Resources.
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