How can employers strike the right balance between financial and non-financial rewards?

Need to know:

  • With vacancies at record levels as the economy recovers, getting the right balance between financial and non-financial rewards is more important than ever to retain and attract employees.
  • Non-financial benefits can improve employee satisfaction, self-confidence, security, engagement and productivity.
  • Employers need to be proactively surveying and talking to employees to understand what they really want and will value, and digital reward platforms can be a great way of showing this ‘value’.

After 18 months where many employees hunkered down in their home offices and employers either froze recruitment or left vacancies unfilled, perhaps it’s not surprising that, as we gradually emerge from the pandemic, we are seeing what is being termed ‘the great resignation’.

With job vacancies hitting record levels at the economy recovers, the imperative for employers is, on the one hand, to hang on to valued employees as best they can but, on the other, to make themselves as attractive as possible to those casting around for new opportunities.

Competitive salaries, golden handshakes, bonuses and share-scheme incentives can, of course, be part of this. But non-financial rewards are equally important, especially now, highlights Graham James, director of commercial development at Sodexo Engage. “We’ve got high employment churn in a lot of sectors; employees are now starting to move. When we start to look at the real reasons for this, it isn’t necessarily about salary,” he says.

“It is often about how employers have been during the lockdown; how well they’ve treated employees, how good their engagement has been. Every [employer] should therefore be reviewing their pay and benefits, because the world has moved on,” he adds.

Strike a balance

How, then, in this new world can benefits professionals make sure reward packages have the right balance of financial and non-financial rewards? What difference does this make to motivation and engagement? And what is the best way to articulate or communicate the ‘value’ of this total package to employees?

To find the right balance, benefits professionals should be proactively surveying employees to understand what they really value, including potentially carrying out total reward optimisation studies, advises Eva Jesmiatka, director, rewards at Willis Towers Watson.

“If an organisation is wondering if [it is] offering the right balance of rewards, the right package, [has it] considered just asking employees? There is no perfect solution that will fit for everyone; there is not one answer,” she says.

Formal recognition schemes, or even simply encouraging managers to say ‘thank you’ more regularly, are an important part of the non-financial reward mix, says John Deacon, head of employee benefits at Buck. “Especially at the moment, after a very difficult 18 months for many people, I think people just want to be recognised for their efforts.”

Visible career progression, too, matters right now. “People will be drawn towards [employers] that promote a message of support and encouragement. If you’re at [an organisation] and thinking ‘where’s my career going?’, you can bump an extra few thousand pounds on your salary but in six months’ time what will have changed?” Deacon adds.

Health and wellbeing-related benefits are also proving popular, highlights Michael Rose, director of Rewards Consulting. “Providing wellbeing/health-associated benefits and support has been, I think, a significant issue on many employers’ checklists. Within that, the non-financial element has been a component, and is very much directed at trying to support people in the particular circumstances we are in at the moment,” he says.

Employee satisfaction

Non-financial rewards resonate and motivate in a number of ways, argues James. “The impact can be felt in employee satisfaction, the self-confidence of that employee, the employee feeling more secure, and feeling that the [organisation] has invested in them. That has a knock-on effect in that they feel more engaged, they are likely to be more productive, more creative, more of a problem-solver rather than just turning up and doing their job.”

When it comes to how best to present non-financial rewards as part of the total reward package, total reward statements do still have their place, Rose argues. “Whether [an employer] goes to an external provider where they manage it all, or if [they] just run it internally as a mail-merge letter, it can be very effective,” he says.

However, the days of doing a once-a-year leaflet or brochure through the internal post or intranet do appear to be disappearing. “More and more employers are using digital platforms that are almost like a one-stop-shop where an employee can engage on a personalised basis with the organisation’s total rewards. They can have it on their phone so they can engage with it in the way we are nowadays used to engaging with almost anything in our lives,” highlights Jesmiatka.

The fact many workplaces are still dispersed, even with hybrid working, means such digital platforms are playing an ever-more important communication role, agrees Alexandra Powell, director of client culture and engagement at Reward Gateway.

“[Employees] can see [their] organisation’s peer-to-peer recognition, rewards, information about [their] pension, how to order smart tech gadgets and so on. Within this, it can be powerful to take examples of recognition that have been shared between colleagues and put those in recruiting and hiring documentation, so people can see those stories. That really speaks to people about the culture of appreciation in [an] organisation,” she says.

Against the backdrop of our reawakening jobs’ market, ultimately the focus for employers needs to be on as much creating a culture of collaboration, progression and recognition as it is about money and bonuses, advises James.

“Don’t assume. Go out and ask your employees what they want. Don’t assume what you were doing before the pandemic is still correct,” he says.