Employers expected to invest more in training, work-life balance and recognition
Total rewards is not a static concept. Maintaining an understanding of it is important to attract and retain talented employees and successfully execute corporate strategy.
Total rewards encompass all aspects of the employee-value proposition, both the monetary and non-monetary return given to employees in exchange for their time, skills, efforts and results. It is challenging to predict the direction of total rewards, but it is clear the current and future workforce is looking for more than just cash.
The economic downturn, rising fuel prices and impending talent shortage all affect where and how organizations choose to invest in total rewards. Over the next year, employers will allocate more resources towards non-cash elements, including training, career development, work-life balance and recognition, while employers’ investments in base salaries, long-term incentives and benefits will remain stable.
Monetary trends
Based on recent survey results from Hay Group, Mercer, Morneau Sobeco and WorldatWork, the national average for base salary increases will be 3.7 per cent in 2009. The average salary increase varies drastically by geography and industry. Therefore organizations need to examine salary survey data by city and industry.
Organizations will continue to look at variable pay programs as a means to motivate top employees and attract talent. Despite the prevalence of variable pay programs, spending on variable pay as a percentage of payroll decreased slightly in 2008 to 10.8 per cent and is expected to further decline to 10.6 per cent in 2009, according to Hewitt Associates. The majority of awards are signing bonuses, followed by business incentives, special recognition awards, individual performance awards and retention bonuses.
Flexible benefits continue to grow in popularity and a wider range of options are available to employees. Benefits are also becoming increasingly important to aging baby boomers and play a role in retaining these employees.
The Canadian Payroll Association recently conducted a study that looked at the popularity of various taxable benefits among Canadian companies. The study found the most popular benefits are financial protection, with 61 per cent of organizations offering group term life insurance and 42 per cent offering disability benefits. Canadian workers also appreciate professional development. This was indicated by the proportion of organizations subsidizing tuition (42 per cent) and professional membership dues (39 per cent). (For the complete survey results, see chart on page 28.)
Health-care costs are always a concern for organizations and Watson Wyatt uncovered the following trends in 2008 that organizations have implemented as a way to help contain costs:
• rewarding employees for good health
• providing preventative care benefits
• offering on-site health centers
• catering to individualized needs by offering voluntary benefit options (such as homeowner insurance)
• offering health-care savings accounts
• analysing dependant coverage.
Aging baby boomers will strain employer health-care dollars. The increases in the rates of chronic disease will force organizations to adopt new programs. For example, the incidence of cancer will increase from 145,000 cases in 2008 to 230,000 cases by 2015, according to the Canadian Cancer Society.
Non-monetary trends
Employers are able to motivate and engage employees with non-monetary rewards during difficult economic times. Employers that offer non-monetary rewards will see higher retention rates than those that do not. Flexible benefit programs are expanding to include work-time flexibility, training, choice in work assignment location and even sabbaticals, according to Hewitt Associates’ 2006 report The Future of Work.
The most effective reward tools for attracting and retaining top talent include training and development opportunities, flexible schedules and recognition vehicles that send a caring message to employees.
In times of economic turmoil and uncertainty it becomes even more important to motivate and retain top talent. Providing employees with the appropriate rewards packages for their circumstances will increase the likelihood they remain with an organization and are motivated to achieve corporate objectives.
Laura Hirsh is a senior consultant with OCG Strategy and Organization Consulting, a Toronto-based management consulting firm that specializes in developing cost effective strategic HR solutions. She can be reached at (416) 363-6700 ext. 230 or at [email protected].
Total rewards encompass all aspects of the employee-value proposition, both the monetary and non-monetary return given to employees in exchange for their time, skills, efforts and results. It is challenging to predict the direction of total rewards, but it is clear the current and future workforce is looking for more than just cash.
The economic downturn, rising fuel prices and impending talent shortage all affect where and how organizations choose to invest in total rewards. Over the next year, employers will allocate more resources towards non-cash elements, including training, career development, work-life balance and recognition, while employers’ investments in base salaries, long-term incentives and benefits will remain stable.
Monetary trends
Based on recent survey results from Hay Group, Mercer, Morneau Sobeco and WorldatWork, the national average for base salary increases will be 3.7 per cent in 2009. The average salary increase varies drastically by geography and industry. Therefore organizations need to examine salary survey data by city and industry.
Organizations will continue to look at variable pay programs as a means to motivate top employees and attract talent. Despite the prevalence of variable pay programs, spending on variable pay as a percentage of payroll decreased slightly in 2008 to 10.8 per cent and is expected to further decline to 10.6 per cent in 2009, according to Hewitt Associates. The majority of awards are signing bonuses, followed by business incentives, special recognition awards, individual performance awards and retention bonuses.
Flexible benefits continue to grow in popularity and a wider range of options are available to employees. Benefits are also becoming increasingly important to aging baby boomers and play a role in retaining these employees.
The Canadian Payroll Association recently conducted a study that looked at the popularity of various taxable benefits among Canadian companies. The study found the most popular benefits are financial protection, with 61 per cent of organizations offering group term life insurance and 42 per cent offering disability benefits. Canadian workers also appreciate professional development. This was indicated by the proportion of organizations subsidizing tuition (42 per cent) and professional membership dues (39 per cent). (For the complete survey results, see chart on page 28.)
Health-care costs are always a concern for organizations and Watson Wyatt uncovered the following trends in 2008 that organizations have implemented as a way to help contain costs:
• rewarding employees for good health
• providing preventative care benefits
• offering on-site health centers
• catering to individualized needs by offering voluntary benefit options (such as homeowner insurance)
• offering health-care savings accounts
• analysing dependant coverage.
Aging baby boomers will strain employer health-care dollars. The increases in the rates of chronic disease will force organizations to adopt new programs. For example, the incidence of cancer will increase from 145,000 cases in 2008 to 230,000 cases by 2015, according to the Canadian Cancer Society.
Non-monetary trends
Employers are able to motivate and engage employees with non-monetary rewards during difficult economic times. Employers that offer non-monetary rewards will see higher retention rates than those that do not. Flexible benefit programs are expanding to include work-time flexibility, training, choice in work assignment location and even sabbaticals, according to Hewitt Associates’ 2006 report The Future of Work.
The most effective reward tools for attracting and retaining top talent include training and development opportunities, flexible schedules and recognition vehicles that send a caring message to employees.
In times of economic turmoil and uncertainty it becomes even more important to motivate and retain top talent. Providing employees with the appropriate rewards packages for their circumstances will increase the likelihood they remain with an organization and are motivated to achieve corporate objectives.
Laura Hirsh is a senior consultant with OCG Strategy and Organization Consulting, a Toronto-based management consulting firm that specializes in developing cost effective strategic HR solutions. She can be reached at (416) 363-6700 ext. 230 or at [email protected].
