How to refresh a reward strategy to align with business goals

Need to know:

  • Employers need to ensure that their reward strategy not only helps to attact, recruit and engage employees, but also reflects the values and goals of the business.
  • Analysing data sets within the organisation can present gaps in benefits provision.
  • Surveys, focus groups and job and exit interviews are useful methods of gaining employee opinon on their benefits provision.

The past few years have seen employers make many changes to their reward strategies; from a greater emphasis on addressing pay gaps, to mental wellbeing and more support around the menopause, fertility and pregancy-related issues, employers have quickly adapted to ensure they offer benefits that keep their staff engaged, healthy and motivated. But how can they ensure their reward strategy is actually delivering on this?

Looking at the employee value proposition (EVP) is a key starting point, says Richard Morgan, principal at professional services firm Aon. Ensuring this proposition remains tempting enough to retain, recruit and engage staff requires the same ongoing focus as organisations give to their commercial markets, he says. “[Businesses] survey customers like mad to understand what is important to them so [they] can develop products with that in mind.”

A key building block of employee value comes from the benefits an employer offers and maximising the impact of these can make a huge difference to an organisation’s chances of meeting its ambitions.

“A business sets its goals and very quickly the question becomes: what is the people strategy to achieve them?” Morgan adds. “It will boil down to recruitment, retention and engagement.”

Employers need to define the guiding principles behind their EVP, perhaps focusing on a few critical areas such as sustainability, diversity, wellbeing and modern ways of working. Convincing current and potential staff that an organisation cares about these factors is as much about its employer brand as its customer-facing image, Morgan says.

“Younger generations are much more selective about the organisations they want to interact with, not just as consumers but as labour suppliers. We have seen a huge increase in electric car salary sacrifice schemes, which are helping employees feel they can contribute in the way they would like to on the environment,” he adds.

Consumer insight

However, with so many options on the market, knowing the right benefits to include in a refreshed strategy is not always straightforward.

Andrew Drake, director of people experience consulting at insurance broker and risk management adviser Gallagher, says clever thinking is required. Asking closed questions about what people would or wouldn’t like in their benefits package is a self-limiting exercise, he warns.

“Organisations can be smarter by trying to understand root causes of a need, rather than asking if someone wants dental insurance, ask them if they want financial security for their family.”

Morgan says some employers favour flexible benefits accounts, allowing employees to spend a certain amount of money each year on whatever they choose within set guidelines. Aon has also launched a tool that uses neuroscience to get to the essence of what people really think and feel.

“It has 25 affirmations, all positive statements such as ‘I am paid fairly’. [Employees] are told whether to answer yes or no but only given less than a second to do so, and the system judges how long [they] take.”

Interrogation and open mindedness is also key to the use of data in refreshing a benefits strategy, Drake says.

Medical insurance mental health claims may have spiked and an easy option would be to get in an employee assistance programme (EAP) with counselling support,” he says. “This is good but it feels like a sticking plaster.”

Gaps in provision

A more detailed look at different data sets, and conversations with the workforce, could reveal the source of deteriorating mental health, which could then be tackled through additional benefits such as mental health first aiders and flexible working.

Drake suggests organisations look to build relationships with staff as much as add options to a drop-down menu. “Often the biggest problem is not communicating well,” he says. “Small change can have big impact if employees think about things differently. I enjoy doing the school run every day and my boss is fine with it; that makes me happy but it’s not a tick box on a menu. A lot of leaders have over-platformed their business.”

Getting benefits in place that make a difference to individuals is right in line with all business goals, he adds. “Strategy is driven by people, so if benefits don’t allow you to recruit and retain the individuals you need then you won’t get the results you want.”

Generational differences

With several generations now working together, benefits strategies need to be flexible to suit different needs.

“Everyone should consider looking at their benefits strategies,” says Debra Clark, head of specialist consulting at intermediary Towergate Health and Protection. “By just leaving something in place, [employers] won’t get the best return on investment.”

Finding useful data is critical to meet employee demand for benefits; job and exit interviews are good opportunities to ask about what benefits are important to people, and staff surveys or forums can be used to garner opinions. “[Employers need to] be careful they don’t just hear from opinionated people; [they need] to hear from a broad range of staff. If [they] do a forum keep it small so people are not timed out by loud voices. If someone doesn’t fill in a survey ask them why not,” Clark notes.

Culture is critical to drawing out useful information from people, she adds. “Make sure people feel supported psychologically to answer questions honestly. Also do staff see change when they do voice something? Keep communications open at all times; [employers] have to show [they] are people-orientated every day not just when [they] ask for feedback.”

Data gathering

It can be useful for employers to see at a glance how many employees are engaging with which benefits.

“This is where technology can be useful, either to poll people or by having an analytics dashboard to spot trends in usage,” says Robert Hicks, group HR director at engagement specialist Reward Gateway.

Hicks advocates keeping employees at the heart of any benefits overhaul and stresses the importance of display and communication. “Keeping all benefits information and news in one place can help drive employee awareness and uptake,” he says. “[Employers]can add to this by having key people in the business, such as a member of the people team, draft a blog post with upcoming changes, and allowing people to comment with specific queries for the team to follow up on.”

Lucie McGrath, head of client strategy and proposition development at Willis Towers Watson, says employee feedback is critical. “Over the past six months we are seeing employers move away from annual engagement surveys and towards real time pulse checks: what is working, what isn’t, what needs to change?

“Virtual focus checks also work well through the pandemic: [with] have a group of 250 employees, everyone is anonymised and online and you ask them questions in real time.”

Lining up benefit portfolios with organisational strategy is becoming more prevalent, says McGrath. “A lot of HR teams say a business goal is to be an employer of choice for women, for example, so they then align benefits to meet that. There is a balance to be struck: how do you achieve a business goal while looking after the employee base you have?”

Moving in small steps can signal an employer’s intentions while maintaining the usefulness of benefits to existing employees.

Informed decision making is only going to grow. Willis Towers Watson’s Benefits trends survey, published October 2021, found that half of respondents (50%) were looking to enhance management information regarding their benefits and programmes. However, the survey also found that 15% of respondents said that they use surveys and focus groups to understand their employees’ wants and needs, and only 28% currently use data and analytics to understand the effectiveness of programmes.

Organisations often either have too much data, and it is overwhelming, or they don’t have enough, according to McGrath.

“A lot of organisations get standard data from providers that doesn’t give them the insight they need,” she says. “A big challenge is to get quantifiable data that can really be used by the organisation. Persistence with providers is key.”