The job market is witnessing a significant shift in the face of economic uncertainty. As of 2022, 4.5 million employees had quit their roles within a company, while 11 million vacant positions indicated a significant worker shortage.
The main issue employers experience with retention is meeting the needs of the modern workforce, and what they find most important. According to Gartner, 82% of employees seek to be seen as individuals with recognition of their mental health and increased paid time off (PTO) as vital components of benefits.
In short, when it comes to retention, the best defense is a strong offense. To create your offensive strategy, consider the importance of total rewards. They are a combination of compensation, benefits, and other incentives an organization provides to attract, motivate, and retain employees.
Total Rewards Framework Examples & How It Relates to Retention
A total rewards framework encompasses various elements employers can use to create an attractive work environment. The five pillars of a total rewards framework include compensation, benefits, work-life effectiveness, recognition, and development opportunities.
1. Compensation
Compensation refers to financial rewards provided to employees in exchange for their work. It includes elements such as base pay, performance-based bonuses, and other cash incentives. The aim here is to ensure employees are fairly rewarded for their skills, experience, and job responsibilities. This leads your workforce to have motivation to stay in their current position.
2. Benefits
Benefits include non-monetary rewards given to employees to support their overall well-being. These can consist of wellness stipends, or other benefits that enhance employee satisfaction, health, professional growth, etc. They’re the why of the incentive to work.
3. Work-Life Effectiveness
Work-life effectiveness is an important total reward element. It creates an environment that allows employees to effectively manage their work along with their personal commitments. It can include policies and programs for flexible work arrangements, or outside-the-box solutions like gym memberships. The trick here is to help employees achieve harmony between their work and personal lives.
4. Recognition
Your employees work hard, and they want to know their employers see it. Acknowledging and appreciating employees for their contributions doesn’t have to be elaborate, but it makes a big difference. Informal methods such as employee recognition can boost morale, while performance-based rewards or spot bonuses help avoid absenteeism.
5. Development and Career Opportunities
Initiatives aimed at supporting employee growth, skill enhancement, and career development help engage your workforce and retain employees. These rewards offer them a sense of personal and professional development. Consider training programs, mentorship opportunities, or tuition assistance stipends.
By implementing a total rewards framework, companies can create a mutually beneficial relationship with their employees. This aligns their needs and aspirations with the strategic objectives of the organization.
The Importance of Total Rewards in Workforce Retention
Workforce retention is a critical issue for businesses as it directly impacts organizational stability, productivity, customer satisfaction, and financial performance. Retaining skilled employees saves on recruitment and training while ensuring continuity.
However, employers face common challenges in maintaining worker retention, highlighted by intense job market competition, changing employee expectations, and limited resources for rewards and benefits.
Analyzing the importance of total rewards provides valuable insights. While compensation affects an employee’s perception of fair market value, benefits contribute to overall well-being and satisfaction.
On the other hand, a healthy work-life balance helps employees stay engaged during working hours, and recognition programs motivate desirable outcomes. At the same time, the efficacy of development programs refers to a long-term commitment to a company.
To illustrate these points, the restaurant mogul McDonald’s not only circumvented the effects of 2020’s Great Resignation, but their employee roster also grew from 2021 to 2022, according to Business Insider. Speaking about the huge success, CEO Chris Kempczinski noted a total rewards framework for recruitment and retention which also incentivized continued education.
If you want to start on the path of total rewards, consider leveraging Juice FinTech’s innovative solutions for employee payments and rewards. With cutting-edge technology and a user-friendly platform, you can offer you and your employees more payroll and reward payment flexibility – including Earned Wage Advance.
Total rewards are not about having the highest-paid positions. They’re about offering the most attractive incentives within an industry. Communicating that a company is willing to meet its employee’s needs and desires in a reasonable combination.
Strategies for Implementing Effective Total Rewards Programs
Implementing a total rewards incentive entails a personal approach not only to your employees, but to the specific industry as well. Conducting thorough research, benchmarking against industry standards, and seeking employee feedback helps organizations design a total rewards program that powerfully attracts and retains frontline workers.
A SHRM survey highlights a disconnect, with workers prioritizing compensation (53%), work/life balance (42%), and benefits (36%) as top reasons for resigning. Meanwhile, employers believe the motive is due to benefits, career advancement, and discomfort.
Customizing total rewards and benefits to suit your workforce needs means gaining an in-depth understanding of your employees’ demographics, values, and aspirations. Know your workers and give them what they want by:
- Conducting Surveys: Targeted surveys can provide valuable insight into your employees’ backgrounds and future goals. Think about how you can support them.
- Have an Open-Door Policy: Encourage a culture of open communication where employees can approach managers to discuss aspirations, concerns, or needs.
- Analyze Data & Trends: Leverage HR analytics to identify trends and patterns related to engagement levels, career progression, and critical turn-over markers.
- Know Your Industry: Use industry research, trends, and best practices to gain broader insights and benchmarks about your workforce demographics’ needs.
- Have Performance Discussions: Better understand employees’ ambitions and make sure there are opportunities to meet those by having regular discussions about goals.
Communication also plays a significant role in ensuring employees grasp the value of your total rewards program once it’s developed. Employees can’t see value in something they’re unaware of. Have regular mass emails, intranet portals, or workforce-only newsletters to ensure workers know what their benefits are and how to access them.
The Importance of a Total Rewards Program
Navigating the changing job market will require a collaborative approach between employers and employees. Workers have made it clear that they have particular needs, and employers are feeling the effects of a staffing shortage. The importance of total rewards has become increasingly clear.
Want to boost your retention rates with benefits, but you’re unsure where to start?
Discover how our FinTech solutions can elevate your total rewards strategy! With us, you can build a benefits program that empowers your current workforce! Start on a journey to place your company at the forefront of leading employers today.