Why companies need to rethink total rewards & retention to strengthen EVP
To say that this year has been topsy-turvy, especially from a recruitment standpoint, would be an understatement. It began with a continuation of the Great Attrition, followed by a period of hiring freeze, and now, as the year draws to a close, even layoffs, announcing a winter of discontent for many. The oscillating fortunes of companies and professionals notwithstanding, even today, monetary benefits continue to be the fulcrum for the discourse on total rewards, EVP and retention. It’s an emphasis that urgently needs to be broadened. Research, exit interviews and employee surveys show that while monetary benefits continue to be a big driver in a high-performing professional’s decision to remain with a company, there are other key factors that company leaders need to actively consider.
Let us start with the absolute no-brainer: psychological safety. From Uber to Ola and now Twitter, industry in recent years has been rife with news of executives and employees effecting an exodus from their organisation, due to an egregious boss, a toxic work culture, unrealistic timelines and expectations, lack of recognition and a general culture that is mistrustful, exploitative or non-inclusive, or a combination of such reasons. Attrition apart, this affects the mental health and wellbeing of those, who have to work under these circumstances. Which in turn has a real impact on motivation, focus, productivity and earnings. A Deloitte report published in September 2022, estimated that the annual cost to Indian employers, from poor mental health, absenteeism and presentism is a whopping $14 Billion. Piecemeal implementation of EAP offerings, employee surveys and group interventions will not move the needle. What is essential is stakeholder commitment to enhancing mental wellbeing at work.
This is where organisational culture plays a big role, and is by itself an important contributing factor that informs employee decision-making. that starts with establishing a culture of candour and trust. By developing an empathetic culture of employee engagement, leaders can create resilient business processes, teams and individual professionals. Infusing empathy into the very fabric of a company’s culture encourages employees to view the business and their work from an outside-in perspective, incorporating new insights and ideas drawn from the needs and goals of customers, partners, even competitors. This also empowers employees to build technology that’s more personal, predictive and tailored to customers’ unique needs. Two main drivers that determine the success of any cultural transformation in a company are leading by example, and communication. Leaders have to visibly demonstrate that they are living by the same beliefs and values that they espouse, and in tandem with this, the sustained rolling out of a communications programme. Such a programme may, for instance, focus on the three culture related aspects of clarity, consistency and authenticity – as advocated by Gallup.
Job satisfaction is another important factor – and especially for millennial and Gen Z professionals, closely linked to the level and quantum of learning opportunities that an organisation provides. Intellectual curiosity aside, the main appeal for learning is that it directly leads to value addition for the individual. In today’s workplace, this value addition stands for a dynamic corpus of equity that increases employability and the chances of higher increment, if one remains with the organisation. For employees, regular learning is an effective means of future-proofing against system shocks, shifting customer trends and economic uncertainties. All of this underscores the need for renewed focus on learning and development. Companies that follow a traditional, business-as-usual approach to training should seriously revisit their strategy. Two considerations are crucial, when conducting a training needs assessment. First, the continuous programme of reskilling and upskilling with regard to technical skills, which have a diminishing shelf life. And second, an equally robust programme of developing the behavioural competencies of the future, e.g., workplace resilience, social and emotional intelligence, a growth mindset, and optimism.
Rewards and perks, not included in the compensation, are another key consideration. An important means of showing that an organisation and its leaders really cares about its people, such perks can extend all the way from medical insurance for family members and educational loans for children to memberships in industry fora, dedicated parking slots, club and corporate privilege card membership, paid up subscription for yoga, meditation and fitness programmes, and so forth. There is, of course, a monetary cost associated with each of these. As organisations go on a hybrid mode of working, and as the proportion of gig work increases, such perks should focus increasingly on the individual, moving away from office-specific perks, for instance, restaurants, recreational rooms and basketball or badminton courts. But the perceived value to an employee, from a range of varied perks, is greater than the value from the additional cash in hand, if the same amount were to be added to the employee’s salary.
Considering options such as the above, is a significant addition to the arsenal of total rewards. This lessens the pressure on monetary benefits, in retention conversations. HR and company leaders can instead leverage other options from the strategy basket, and increase the overall value offered to the employee, even in instances when the compensation is not raised to the extent desired. And other aspects remining the same, these measures and initiatives enhance the organisation’s EVP in the eyes of existing employees and aspiring candidates.