Rethinking Total Reward Strategies | strategy + business

As workers’ attitudes and preferences continue to shift, employers are rethinking their total rewards strategies. This article provides a four-step approach to designing reward packages that fit today’s changing world: 1) start with the data, 2) customize, 3) communicate, and 4) continually monitor. A few data points include: The relative importance of financial compensation has declined by 11% over the past decade. Many employees will trade 20 to 25% of their salary for a much better work-life balance. Training and career development have tripled in importance, and supplemental healthcare offerings, such as dental care, have a perceived value of at least 1.5 times the cost. Workers who perceive their firm operating with a sense of purpose consider that to be worth as much as 20% total rewards than companies in the same industry that do not. Since the primary drivers of worker preferences and perceived value are an individual’s life stage and career aspirations, firms should offer some customization in reward offerings. The authors recommend an 80/20 approach: maintain 80% of the current offering and redesign 20% to personalize to the needs of different worker segments.