Did you know that one out of every two employees is disengaged and one out of every six is “actively disengaged,” meaning he/she is unhappy in his/her position? If you were to poll your employees about their work satisfaction, what do you think they’d say?
Identifying what your employees desire in terms of salary, benefits and rewards is critical if you want them to contribute and be actively engaged in your organization. Richard Kantor, partner at AON Hewitt and Tim Glowa, associate partner at AON Hewitt, refer to “total rewards” as everything the employee gets or perceives as valuable or rewarding from his or her employer.
They spoke recently at the North American Ag and Food HR Roundtable, sponsored by AgCareers.com.
AON Hewitt measures and evaluates employee preferences, then helps businesses implement successful employee-benefit programs.
Many businesses talk a good game regarding total rewards, but don’t follow through, says Kantor. “Organizations continue to have high aspirations for total rewards but too many have mediocre execution of the programs. We have to transform our approach to total rewards.”
The Best from the Rest
In a survey of 749 organizations and 825 respondents, Kantor and Glowa looked at the top 20 percent of the companies versus the other 80 percent. They discovered the best organizations:
- Articulate clearer and/or different goals and are twice as likely to have declared total rewards a focus area with a clearly stated strategy
- Are much more focused on achieving future above-average competitiveness in the upper quadrants of total rewards (meaning less difference in desired competitiveness of pay and benefits)
- Emphasize experiential rewards over other types of rewards
- Balance more inputs to make decisions, so it is a fact-based strategy
- Use data to drive decisions, specifically internal data, so programs are directly aligned with the business
- Define success differently – employee engagement is the single-most used metric in the top 20 percent and there is higher employee satisfaction with programs
- Do more pilot testing and are achieving better results for both HR and total business outcomes
Balancing the Variables
Conjoint analysis is a marketing technique used to assess the weights individuals place on different features of a given product or service. When using conjoint analysis, the researcher is concerned with the identification of utilities—values used by people making trade-offs and choosing among objects having many different attributes/characteristics.
“Conjoint is the best tool to measure preferences,” says Glowa. “Three academics founded this Nobel prize-winning science 30 years ago. Basically, we give people trade-offs and it helps us find out how receptive to change they might be.
The total rewards strategy has four integrated dimensions: external competitiveness, financial considerations, talent strategy and employee preferences (see chart). Companies can be successful when they follow a five-step process for improving total rewards based on the conjoint results: analyze, measure, define, control and improve.
“More often than not, the bottom right quadrant – employee preferences – is overlooked,” says Glowa. “What are their needs? What are they looking for? How receptive to change are they? The goal is to design a reward strategy that meets these four requirements.”
According to Kantor, the best companies are experiencing better results, and they’re putting more daylight between their organizations and the other 80 percent. He says, “These programs work over time, not overnight, and over time we see greater alignment.”