Staff look for total reward package

In the scramble to secure the brightest talents, conveying the total reward package can help give employers a vital competitive edge in recruitment, explains Victoria Furness

Twenty years go, conversations between candidates and employers about remuneration would have focused exclusively on pay and benefits. Fast-forward to today and the picture is a lot more varied.

While pay, bonuses and perks remain key issues for candidates considering joining an organisation, of rising importance are a number of other factors, such as flexibility in working hours, career opportunities and the corporate culture. Today’s graduates are increasingly taking their career development seriously, and are also concerned with an organisation’s environmental record and its brand, according to a poll of employers for The Association of Graduate Recruiters’ Graduate recruitment survey 2008, Winter Review.

It’s not just college leavers, though, who are looking for more than a competitive salary from their employer. After compensation, senior managers place most value on an organisation’s reputation when considering an employment offer, according to WorkTrends, an annual survey from the Kenexa Research Institute, published in July 2008.

Smart employers are responding to these wider concerns of employees by talking to candidates about the total reward package during the recruitment process. They are not limiting their conversations merely to pay and benefits, and are also including anything potential recruits might find rewarding or motivating in a job. Of course, some employers have always talked about the non-monetary benefits they offer; for example, those in the public and charity and voluntary sectors where it is often harder to compete on pay and benefits. Likewise, in highly competitive sectors such as banking and professional services where the remuneration package is similar from one firm to the next, the advantages of talking about the less-quantifiable benefits of working at a company, such as training and culture, are obvious.

Communicating the total reward package is important because employers will not know what motivates individual job applicants. Paul O’Mally, principal at Mercer, says: “By communicating the total package it enables you to identify what that person is actually interested in and then you can talk to them further about it. Also, if you don’t cover the things people place value on, you could potentially be underselling yourself.”

Professor Paul Sparrow, professor of international resource management at Lancaster University Management School, believes communicating the total reward package to potential recruits indicates that the company cares. “It signals what psychologists call ‘perceived organisation support’, which is essentially an attitude that ‘this organisation is demonstrating [a] willingness and commitment to negotiate because it believes I’m important,’” he explains.

Integrated marketing agency, Iris, which employs 530 people globally, uses the concept of total reward to help communicate its reward package to candidates. Helen Brown, group talent director at the agency, says: “It certainly helps with retention and also attraction. Feedback from employees suggests the reward package is popular and the uptake of benefits from new starters is very high too.”

In the case of some benefits, Iris gives recruits an idea of how much it costs the organisation to provide that perk; they can see how much will be spent on their training through the Iris Academy, for example. “It’s really helped when we’ve been in the negotiation phase, since a candidate can see the monetary value of their total reward and take that into consideration as part of their total package,” she says.

Employers elsewhere provide potential employees with sample total reward statements, which give a financial breakdown of the pay and benefits package, so that they have some idea of the value of the total remuneration they would receive. Other employers have made use of online systems to give candidates a chance to fully consider all the rewards on offer and help provide them with information on a general basis.

However, employers should be wary of allocating a monetary value to every benefit they provide, warns Mercer’s O’Mally. “That can actually be counter-productive and annoy people. So think about what you want to include and whether you give it a qualitative or quantitative value,” he says.

Organisations also need to consider how they can demonstrate commitment to their staff in other ways. While many employers claim to support equal opportunities and diversity, few would be able to prove it if called upon to do so. O’Mally is an advocate of letting candidates meet the team they will be working with so they can investigate for themselves the culture and chat to potential colleagues about the non-tangible elements of the reward package, like training opportunities or the organisation’s diversity policy.

For some organisations, such as Danone, it is natural to demonstrate their values. Gareth Ashley-Jones, head of flexible benefits at Aon Consulting, says: “When you walk into their head office, they have full-size pictures of employees on the walls. They believe in their products too, so they have Actimel drinks on tap. It all helps to bring their own values to life as part of their total reward offering.”

Not everyone will want to follow Danone’s lead, but there are plenty of other ways for employers to convey the total reward package to candidates. “You can bring out some great stuff in recruitment literature, such as case studies which [demonstrate how] people have grown and developed in the organisation over time,” he suggests.

Integrating total reward into the recruitment process may be time-consuming, but it can make the difference between whether a candidate chooses one employer over another. In today’s market, when skilled employees are scarce and finances scarcer still, it’s an approach more employers might want to consider. †

Case study: BT†

For BT, the advantages of promoting the total reward package are obvious. Martin Thomas, head of recruitment at BT, says: “We operate in a very competitive marketplace and sometimes without the buying power of organisations in other sectors, so it’s important that we maximise the attractiveness of BT. To do that, when we sell a role, we sell it not only on the base salary but the total package that’s on offer, so not just remuneration but our culture, work style, training and work-life balance, since we recognise that performs an integral part of the whole employee proposition.”†

Total reward is especially important in recruiting senior managers. Clare Hawthorn, BT Group’s head of performance and reward, explains: “At this level, they probably have a number of offers on the table if they’re good. So this is where some of those softer issues might swing them to work for us over a competitor.”†

BT’s careers section on its website features case studies and interactive tools to convey the training and cultural benefits of working at the telecoms giant. BT also communicates its total reward offering to senior managers through face-to-face interviews and a matrix template that highlights different elements of the reward package. Thomas explains: “Different elements of the reward package are important to different people. So we give people a choice and we highlight that choice during the recruitment process.”