Contrary to popular belief, what if the total rewards package is no longer what it has been set up to be? With the rise of inflation (specifically here in North America) and employees on the move, one is left to wonder about the totality relevance of each reward element.
The complete package has always been a key ticket in capturing the attention of potential candidates and a mechanism of keeping talent. The suite of offerings and allocation of base salary, incentive, benefits, career development, etc. became the generic narrative of how we articulated compensation and sold our value proposition.
Times are changing. The demands of employees, employers, consumers, and businesses face a new paradigm with harsh expectations to satisfy basic needs and meet deliverables. Where the total rewards “pie” may have been distinctly portioned by a set of unique offerings, we now face a more obsolete trend of just one element, that being salary. People want the cash; they want it now and are seemingly willing to jump ship to where it's being offered with limited strings attached.
The external market thus far has already painted a projected outlook of salary increases to rise to pre-pandemic levels. For some, preliminary forecasts are further being revisited to ensure the right talent is attracted and notably retained for the year ahead.
As rewards professionals, we know, we cannot satisfy everyone. Our reality has always been one to counteract the perceptions that more money is better and things are always greener on the other side. Albeit a little naive on my end, but what if it is?! Could it be that today’s demand requires recalibrating to a higher base salary, with the 60th percentile being the new “market median” of target positioning?
Over the next number of years, the workforce will be predominantly be made up of millennials. As the distribution of the workforce shifts, their reward preferences and what is seen to be motivating and rewarding will too. The cost of living, owning a home, starting a family requires more immediate access to pay. The rich pension/retirement plans may have been a draw at one time, but today and tomorrow’s outlook is seemingly more nearsighted in satisfying immediate short-term goals, whether in life, work, or both.
For years now, we have tried to achieve the elusive dream of “flexible” rewards. What if the most flexible of them all is having a higher base salary? Doing so, in part gives the employee the ultimate power of deciding how they allocate, expense, and prioritize their “spend.” This all sounds great, but we cannot be immune to the fact that there will (of course) be give and take; inadvertently the organization's benefits budget will increase too. To offset this, organizations will need to consider how they adjust employee and employer costs. In retrospect, this may very well be another “flexible” decision, where responsibility resides with the employee in determining how they ultimately slice each segment of their total rewards pie.
While pay is not the ultimate “fixer”, as we have yet to consider career development or performance management, this sentiment is simply food for thought in how we continually shape, reimagine and communicate total rewards amidst an ever-evolving work landscape.
Reena Paul (CCP, GRP) works as a Senior Compensation Consultant. She is passionate about all things “total rewards” and has experience in dealing with all stakeholders of an organization and strategizing optimum client-focused solutions. A lover of data and the story it tells, Reena enjoys the exploration of presenting and discussing compensation with a fresh perspective. Connect with Reena directly on LinkedIn.
Image source: iStock image with credit to Pablo Varela
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