Do incentives truly make a difference when it comes to employee turnover? The answer is yes – the right incentives can have a significant impact. However, it’s important to note that not all incentives are created equal.
In one survey, the majority–70% of employees–indicated that personalized benefits would earn their loyalty. For employers, loyalty means more productivity and less turnover. Engaged, happy workers tend to get more done, leading to better production numbers and less waste. They also stay longer, reducing turnover and all of the associated expenses involved in recruiting, hiring, and training replacements.
Programs that focus on total rewards compensation might be the missing piece of the puzzle, helping employers personalize incentives to foster loyalty and drive engagement. Let’s take a closer look at what it is and if total rewards compensation is really worth it.
What is Total Rewards Compensation
Total rewards compensation provides a holistic view of all forms of employee compensation. Historically, the US workforce has focused on base wage or salary as the primary metric for employee compensation. While this number is widely recognized, it’s an incomplete value assessment.
An employee is actually compensated through a variety of methods, including:
- Wages
- Insurance Premiums
- Paid Time Off
- Bonuses
- Development Opportunities
- Flexible Working Arrangements
- Lifestyle Perks
- And More
The real value of total rewards compensation can vary from one company to another. By focusing on total rewards compensation, employers are able to articulate deep value to attract and retain employees, making the process of recruiting, hiring, and training more efficient.
This model also drives engagement and loyalty, which promotes efficiency across the organization. Employers can benefit from a positive impact on workplace culture, reduced turnover, and stronger engagement by shifting to a total rewards compensation approach.
Benefits of Total Rewards Compensation
While employees receive the compensation, the biggest benefits are for the employers who are able to attract and retain talent, increase employee engagement, and improve performance across the board.
Attracting & Retaining Top Talent
According to a 2019 LinkedIn Report, 94% of employees will stay at companies that invest in their growth. This is a growing trend that is encouraging many employers to add tuition assistance, upskilling, and other growth-oriented benefits to their total rewards compensation plans.
Increased Engagement & Satisfaction
There’s a link between recognition for our effort and job satisfaction. Up to 80% of workers report feeling more engaged in their work when their bosses provide recognition beyond a paycheck.
This recognition can come in many forms, but well-matched perks as part of a total rewards compensation program are a sure bet to fuel the employee satisfaction engine.
Better Employee Performance
Why is increased engagement and satisfaction important? Because it leads to better employee performance. Employers want their workers to feel connected and content in order to drive an intrinsic motivation to perform that ultimately benefits the employer.
Better employee performance means more pieces per hour. It means fewer mistakes and less time spent correcting or reworking those mistakes. And it means higher outputs per labor hour–otherwise known as efficiency.
And that’s not just wishful thinking. Research published in the Journal of Personality and Social Psychology indicates that a little gratitude–like a well-timed thank you–can make employees 50% more productive because employees who feel appreciated, perform better.
Total rewards compensation can provide a little structure, helping drive better employee performance by continuously showing gratitude through personalized incentives and value transparency in compensation.
Measurable Cost Savings
How much money does employee turnover cost an organization? Probably a lot more than you think. Did you know that it costs an average of $1,278 to train a new employee? And that’s just a fraction of the total cost.
After adding up the costs of advertising job openings, interviewing candidates, training, lower production, and quality issues stemming from inexperienced workers, and dozens of other related costs–US businesses (10k+ employees) spend an average of $16.1M annually on turnover.
Best Practices for an Effective Total Rewards Compensation Program
Offering a bunch of different perks and benefits can be a great way to personalize your program and increase effectiveness–or it can be a drain on your budget. It’s all a matter of planning and implementation. To get the most out of your total rewards compensation program, follow these best practices.
Tailor the Program to Meet Workforce Needs
Personalization is key. Remember that almost three-quarters of employees consistently tie personalized benefits to long-term retention. This means employers that take the time to understand what their workforce needs most–like earned wage access for front-line workers or higher education upskilling for tech workers–see the most success with total rewards compensation programs.
For example, Amazon has recently reinvigorated its recruiting efforts with a series of commercials that highlights how current employees have developed new skills and increased their income by impressive sums–often twice or more than their starting wage.
Through this campaign, they are systematically debunking the myth of getting stuck in a low-wage fulfillment job by sharing success stories resulting from the company’s total compensation benefits. In a similar effort, Target and Walmart have both rolled out education and growth-related benefits.
Actionable Takeaway: Survey your employees and find out what they really want in terms of compensation. Use this feedback to structure a total rewards compensation program that aligns their needs with yours.
Invest in Effective Program Communication
The best-designed programs are wholly ineffective if the employees don’t know about them–or how to use them. Internal marketing should be a big priority when rolling out a new program. Take time to consider how you will distribute information and include money in the budget for printing promotional items that support effective communication.
Try this:
- Use Digital Messaging with Links to Full Program Details & Sign Up Forms.
- Place High-Visibility Banners or Displays in Main Areas (Lobby, Breakroom, Etc.)
- Use QR Codes & Grab-and-Go Literature for Pocket-Sized Convenience
- Plan a Big Kickoff with Informational Meetings or Buzz-Generating Giveaways
- Keep the Momentum Going with Additional Rounds of Communication
Monitor & Evaluate Program Effectiveness
In the same way that consumer behavior changes over time and marketing campaigns can be optimized for effectiveness, internal HR programs also benefit from continual monitoring and evaluation.
From the get-go, understand the purpose of your total rewards compensation program. This means identifying the specific business strategy goal you are trying to accomplish, such as reducing turnover by 10% or increasing productivity by 5% through error reduction or increased engagement.
Actionable Takeaway: Choose relevant key performance indicators (KPIs) and set up a simple tracking method to monitor and evaluate program effectiveness. Revisit your program at least every quarter to optimize performance.
Is Investing in a Total Rewards Compensation Program Worth It?
Without hesitation, investments in a holistic approach to employee compensation can bring value to both employees and employers. The truth is–many employers have been offering a garden variety of perks and benefits for years with lackluster ROI (return on investment).
By shifting to a total rewards compensation structure, employers can be more intentional in how they align those perks and benefits with the needs of their employers–and far more transparent about how these benefits factor into employee compensation. So, it’s a win-win! Juice Financial is a leading provider of reloadable pay card FinTech that can bring all the pieces of an effective total rewards compensation program together.
A Total Rewards Compensation Program can Revolutionize Your Workforce
From trimming hiring costs to boosting operational efficiency with higher engagement levels, a total rewards compensation program offers many benefits for employees and employers alike. Employees get access to benefits they actually need to help them grow and navigate life. Meanwhile, employers benefit from value-driven cost savings across all facets of workforce management.
Now is the perfect time to consider implementing a total rewards compensation program. Contact Juice Financial to learn more about how FinTech is changing the game for employee compensation options.