ORLANDO, Fla.—With the lowest U.S. unemployment rate in decades and younger workers expecting greater rewards flexibility and personalization, companies are fine-tuning their total rewards packages to attract and keep top talent, speakers said May 6 at the WorldatWork 2019 Total Rewards Conference & Exhibition.
Generous rewards can send the message that employers want to retain their workers and help them do their best work, said Scott Cawood, president and CEO of WorldatWork, an organization of total rewards professionals.
To ensure that employee rewards provide value, "listen to employees and understand what they need," he advised.
Egan Cheung, vice president of product at employee-recognition software firm Achievers, agreed: "People do their best when they feel empowered and listened to."
"There is a bull market for talent," said Sheila Sever, senior manager at Deloitte Consulting. As of March 2019, the U.S. unemployment rate hit a low of 3.8 percent, among the lowest in decades.
According to U.S. Labor Department data, 7.1 million positions are waiting to be filled—more than the number of unemployed workers. The unemployment rate is extremely low for people with college degrees: 2.1 percent.
"Everyone is fighting for the right kind of talent," said Aiya Abad, global services HR management partner at VMware, a digital workspace technology firm. "Companies are redefining job requirements and asking, 'Does this position really need a college degree?' "
In addition, social media has allowed employees to weigh in on whether or not their company is a good place to work, Sever pointed out. These developments together highlight the pressing need to remain competitive with pay and benefits packages.
Forty percent of workers are now employed in alternative work arrangements, such as contingent, part-time and gig work, Sever said, citing a recent Deloitte survey, and more firms are offering benefits to these workers.
"Employers need to address the challenge of moving to a different kind of relationship with their employees and to offer a different employee experience," she noted.
While the term "total rewards" used to refer to compensation and benefits, several speakers said the definition has expanded to include learning, development, well-being, recognition, financial health and flexible schedules.
"Employers should address the full well-being spectrum: physical, social, emotional, financial," said John Bremen, managing director for human capital and benefits at consultancy Willis Towers Watson.
"Ask whether your benefit programs meet participants where they are and where they want to go," said Amy DeVylder, director of human capital and benefits at Willis Towers Watson. "How well do they help employees navigate life's ordinary and unexpected events?"
Justin Sun, compensation program manager at global travel and e-commerce company Expedia Group, noted that job seekers who have recently graduated from college aren't just motivated by pay. Many are willing to take 10 percent to 15 percent less pay so they can work for an organization that inspires them.
Sever encouraged employers to find out which benefits their employees view as most important. After surveying its employees, Deloitte increased paid family caregiving leave to 16 weeks, not just so workers can care for children, but also so they can care for aging parents.
Workers at VMware said "the flexibility to work in different areas" was important to them, Abad said, so the company created a program allowing employees who've been there for at least three years to take a two-week sabbatical in another department, working on projects unrelated to their day-to-day jobs. This allows them to gain experience that could help them to shift roles. "If I'm in HR, I can go into legal or finance and do a two-week assignment," Abad said. "If you've been with the company for five years, that turns into a three-month assignment."
[SHRM members-only toolkit: Designing and Managing Flexible Benefits (Cafeteria) Plans]
Getting Strategic with Pay
Employers are reframing rewards as a way to reinforce achievement and motivate high performance, Sever said. For instance, jobs can be ranked and rewarded based on replacement difficulty and the value these positions generate for the business, and compensated accordingly. HR plays a vital role in helping managers to use these metrics, and then in factoring the results into the compensation system.
At both VMware and Expedia Group, short-term incentives, such as annual bonuses, are used to reward top performance. Long-term incentives, such as restrictive stock awards, are used to encourage retention, since their value can increase over time.
Abad noted that at a former employer, the workers had indicated that they wanted to work for a performance-driven organization. Under the company's compensation structure, base pay was made competitive with market pricing, and the company gave no merit increases; instead, it adjusted base pay to stay in line with what market data suggests.