First give employees what they want, then remind them of the value

Total rewards is less about coming up with new programs and policies to attract and retain as it is about communicating what is already in place

Many employees now expect much more from their employer than a paycheque every two weeks — they can probably get the same paycheque somewhere else.

They have higher expectations and so employers must methodically put together a package of compensation, rewards and benefits to attract and retain employees.

Depending on the circumstances of the workforce and the nature of the work itself, the definition of rewards and benefits can be straightforward — base pay, health benefits and pension — while other organizations cast the total rewards net widely to encompass everything from training and development opportunities and work environment.

Some employers even consider the organization’s reputation in the community as a reward for employees; anything that can make people feel better about themselves and coming to work becomes a reward for employees.

However, a common problem is that the value of those benefits either isn’t immediately clear to employees or worse, it is taken for granted. So if the first step is putting together a good package, the next step is selling it to employees so that they understand the value of that package.

Total rewards is less about coming up with new programs and policies to attract and retain as it is about communicating what is already in place so that employees understand and appreciate exactly what they are getting, says Susan Bean, vice-president of HR at Sony Canada.

Sony made the move to a total rewards program as part of a larger culture change initiative in 1997, says Bean. The company’s leadership wanted to get employees excited about working for the company again.

“We felt we were maybe a little complacent and we wanted to rejuvenate employees again,” she says. Once employees understand the full scope and range of rewards they receive, they naturally feel a little bit better about working there, she adds.

“We view it as a five-part wheel,” she says. There is direct and indirect financial, organizational affiliation, career and finally job content.

Direct compensation includes salary and variable pay. Indirect financial includes benefits, vacation and recognition. Organization affiliation is the term used to describe the importance of a good reputation for the organization. With the kind of brand recognition Sony enjoys, the company has a head start, she says. “Right off the bat, people want to work with us.” But organization affiliation also includes ensuring the organization demonstrates strong ethics and values.

Under the heading of careers, Sony’s HR department works to make sure employees have a good sense of where they can advance within the company and how they can get there. And finally, job content refers to each employee’s current job, including performance management.

Almost everything the Sony HR department does is attached in some way to the total rewards program. When the company last rewrote its employee handbook, every guideline was attached to one of the five total rewards elements, she says.

A lot of companies already have the elements of a total rewards package; they just don’t call it that, she says. “It is not that we are doing anything different. We are just telling employees about it and making them think about it,” she says. Sony plans to improve the way it tells employees about what exactly they are getting from the company beyond a paycheque every two weeks.

“Right now, all we do is talk about total rewards, we don’t actually give them a statement. That is something we are working on,” likely using the company intranet to deliver the information to employees on a regular basis, she adds.

Edmonton-based utilities provider Epcor isn’t the highest payer in the market, and it does not need to be to attract and retain employees.

“We think it is all of the other things that put us beyond our competitors,” says Robert Armstrong, vice-president of HR, explaining why the company adopted a total rewards approach in the mid-’90s. “It is really easy to think it is pay and benefits, but those things anyone can match,” he says.

He added, however, that it can be a challenge to convince managers of this when they are having staffing problems. Their instinct is still just to give employees more money. “They think, ‘If I could just pay people more, then all of my problems would go away.’” It doesn’t work that way, he says.

Epcor has designed a total rewards program that includes, besides pay and benefits, recognition programs, learning and growth opportunities, meaningful work, good work-life balance, a solid company reputation, fairness and equity (which includes a respectful workplace program, for example) and the promise of strong leadership.

All of these combined help keep turnover down around five per cent at Epcor.

“A lot of them don’t cost money,” he says. If the employer can provide employees with a work environment they feel comfortable in, if they can develop a reputation in the community so that employees can talk with pride about working there, turnover will stay down without the organization being pressured to provide the best pay in the market.

The total rewards program is constantly under review and changes are made when necessary. The company used to give employees free gym memberships in Edmonton but as the corporation expanded across the country, the benefit was lost for employees outside of the city. “We have replaced that with a wellness account,” he says. Now, any money an employee spends on physical fitness is matched by the company up to a certain level.

The company’s leaders are key to making a total rewards strategy a success, says Armstrong. They must model the behaviours required for a total rewards strategy to be effective.

“We really need people living these things,” he says. “There is no point in having recognition in your strategy if nobody is doing it or if they are doing it in a way that people don’t see as valuable to them.”

Toronto-based Hydro One, an electricity distribution company, uses a total rewards approach without actually calling it that, says Debbie Vines, manager pension and compensation.

“It’s not the terminology that we use around here,” she says. Ultimately total rewards is simply about giving employees reason to take a job or stay with a company when he could make more money at another organization.

At Hydro One, the key is providing good pension and benefits, she says. Some organizations include other elements, but it is important to be realistic about how important those elements are in attracting and retaining people, she says. Hydro One, for example, has what it calls the President’s Award for exceptional service, but the program probably has little impact on retention, she says.

“I don’t think anyone would stay here because they happen to win one of the President’s Awards.” It’s a similar story with the organization’s work-life balance programs.

“We talk a little about work-life balance and we have a wellness program, but to be honest, I don’t think people assign a lot of value to it,” she says. Not long ago Hydro One increased the work week from 35 to 40 hours. The change made it harder to convince employees that the company cares about work-life balance. However, the company is now looking at expanding the telecommuting program, which should have more value to employees than other work-life initiatives launched thus far.

Hydro One has been working to educate employees about how, aside from base pay, they are rewarded by the company, says Vines. For example, in the last couple of years, the organization made improvements to the annual benefits statement. Now, beyond being reminded what benefits they qualify for, employees get a personalized tally of how much the employer spent on those benefits for them that year.

Improvements could be made and more could be done, she says. But at some point the employer has to decide if it is worth the cost. Some employers provide tools for employees to calculate the current and future value of their pensions. That is helpful because unless they are considering leaving, employees seldom think about the value of their pension, she says. While in theory it is helpful for employees to see how much the company has invested in their pension, there is a cost involved and the employer has to figure out if the investment is worth it, she says.

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