Total reward for the modern workforce

total reward

Need to know:

Total reward strategies must develop in line with the profile of the modern workforce, including part-time and flexible-working employees, as well as a greater generational diversity.
Employers should offer benefits around career and personal development, wellbeing, and recognition to attract and motivate a wide range of employees.
Employers need to first assess what is important to employees to then target their total reward packages to the workforce.

There can be no doubt that the modern workforce looks and works differently to that of even just 10 years ago; there are more part-time workers and five generations of employees in any one workplace. The Office for National Statistics' (ONS) Labour force survey, published in March 2017, found that in the three months to January 2016, there were 8.52 million people working part time, 10,000 more than the previous year.

There are also more fluid job needs. For example, portfolio workers will carry out projects for multiple employers at the same time, while boomerang workers, those that leave an employer and return after a period of working elsewhere, are also present in some organisations. But have employers’ total reward strategies changed in line with this new landscape?

Changes to the workforce

There is more change to the make-up of workforces now than ever before, says Martha How, principal at Aon Employee Benefits. “That’s partly a response to the shape of the population and all the things that go with that; it is a macro-economic change, which is reflecting itself in changes in the workplace,” she says.

One example of this is the considerable number of older workers in the workplace. In the UK in 1992, ONS figures showed that 5.5% of those aged 65 or over were in work. In 2016, that number had risen to 10%. “Older workers do have slightly different demands,” says How. “More will be willing to work part time or flexibly, so that brings up a headline for a lot of the changes in the workplace, which is that fewer [employees], by proportion, are traditional workers, working nine am to five pm, five days a week.”

Individuals are choosing to work in different ways, and employers need to be ready for that. If a person changes jobs more frequently, or potentially has more than one job at a time, there are some elements that immediately come into play, says David D’Souza, head of engagement and London at the Chartered Institute of Personnel and Development (CIPD).

“How flexible are the benefits that [the employee] has access to and how relevant are they?" he says. "For instance, what happens to pension contributions when [a person] works for four or five employers at the same time? Would [the individual] differentiate if [they] are working for an organisation that could simplify the pension enrolment process for [them]?”

Total reward for the new workplace

The new ways of working may bring greater diversity of job types to the workplace, but have approaches to total reward developed to ensure that the benefits on offer are both rewarding and appreciated by employees? Alastair Woods, partner in the reward and performance practice at PricewaterhouseCoopers (PWC), says: “On one level, total reward has not really changed and the reward offering overall has not adjusted to the new world. The core elements of reward: salary, bonus, share plans, pension, medical insurance, still exist and dominate, however, I think we are reaching a tipping point where all those come together plus more technology, greater demand for different things, and having different needs and more openness. This will start to change and we will see a new-look total reward opportunity of the future.”

Non-financial reward could become more fashionable, says Woods. This could see items such as access to training programmes that develop skills for life become more prevalent in total reward strategies. “I think it’s less about total reward but more about the employee value proposition (EVP), which within it includes things like recognition, career development, training and flexible working, and overlaying that there will be much more choice,” says Woods.

If an employer is keen to offer a total reward proposition to employees that may only be with the organisation for a set period of time, such as portfolio workers, it will have to acknowledge that the time frame changes what the employee might be interested in. An employer can use its total reward strategy to create a sense of employer loyalty, says Nick Throp, co-founder and director at Like Minds. “It is saying, ‘what is it about us as an employer that is likely, not necessarily to keep people beyond the time that they want to leave, but will draw them back again,” he adds.

Schemes that are really motivating to those employees might be softer benefits, more about the culture of the organisation and what it is like to work there. “Some of them will be related to career development and personal development,” adds Throp.

A benefit of working for one employer for a period of time is the learning and development opportunities it provides to employees. “Intrinsic to it is keeping [an employee’s] skills up to date so that [they’re] employable, and one of the areas that organisations need to look closely at is ‘how am I enhancing someone’s employability while they are working for me?’” says the CIPD’s D’Souza.

This could extend to include outplacement support when an employee leaves an organisation, or CV review services. “[It's about] a far more rounded reward experience that is based around the need of the individual so that in a competitive market landscape, rather than the more generic benefits that we’ve seen historically that tend to hit large volumes of people,” says D’Souza.

Many workforces now consist of five generations, so total reward strategies that attract and retain individuals will vary greatly. The millennial, or generation Y, employees, those born after 1982, can be greatly motivated by appreciation and recognition, says Andy Philpott, sales and marketing director at Edenred.

“Millennials have quite a high demand for being recognised in terms of the importance of their own work-life balance, and their own physical and financial wellbeing," he says. "We see a lot of demand for reward and recognition [schemes] that are very digital and social based. It needs to be instant and it needs to be fast: they need to be able to receive and use it quickly, and see it shared with as many people as possible."

Wellbeing programmes are becoming a key feature in a total reward strategy, even those that do not have a huge financial value attached to them. “That could be sports running groups or healthy eating [options] in the office,” says PWC’s Woods. “Auxiliary benefits, that aren’t necessarily expensive to the [employer] but are quite meaningful and help to create office cohesion, will grow.”

Communicating total reward

Promoting non-traditional or non-financial benefits to employees as part of a total reward proposition can be a challenge, and, in some cases, will require employers to change the way they see their role. “There’s got to be a change in perception in the relationship between an employer and employee, so that rather than [the employer] being seen as the provider of reward and benefits programmes, it’s more of a facilitator role,” says Throp.

“That impacts on the style of communications. It’s less about ‘how do we promote the way this benefit works and its value to the employee’, to a more profound idea of saying ‘let’s start with an understanding of what the employee really is excited about, concerned about, [or] stressed about’, shaping messaging around that and matching that up to the reward offering.”

Rather than simply looking to offer new or different benefits as part of a total reward proposition for the modern workforce, employers should reassess the way in which they are presented to employees. For example, because of the growing number of older workers, healthcare might be of a particular concern, says How. “Employers which either fund or part-fund healthcare benefits for part-time workers are going to be in a good position,” she says. “We might see more of a focus on how those funding models are built on the part of the employer, and some more communication to the growing number of part-time and flexible-hours workers.”

There is no doubt that the way in which employees work is changing, and whether it is a slow or rapid evolution, employers must change with it. As D’Souza says: “We’re seeing a greater understanding that roles that have traditionally been quite static are now potentially going to be done in a more project-based way, and we would expect the reward and benefits market to meet that.”