The Evolution of Total Rewards

total rewards

You’ve no doubt heard of Moore’s Law; the theory that states the speed of computers will increase every couple of years. Well, whatever the Moore’s Law equivalent for Human Resources is, we’re living it right now.

Back when I started, the concept of “total compensation” was just emerging. There wasn’t a dedicated “total rewards” position in the department, and an “attractive” offer included a reasonable salary with health benefits (referred to as fringe benefits).

Since then, I’ve seen companies add everything to their employee rewards programs and candidate offer packages from philanthropic opportunities, tuition reimbursement, pet insurance to flexible vacation and generous parental leave policies. Why? All in the name of attracting and retaining top talent.

Change Is Coming

Let’s stop for a moment to consider some numbers. Microsoft recently reported that 40% of employees in the global workforce were planning to change jobs after the pandemic. Even if that number is off by half, that’s still 1 out of every 5 employees in your company who are going to leave. To view that through the HR lens, on average, it costs 6 to 9 months of an employee’s salary to replace them (SHRM). Add it all up and HR departments everywhere are facing a huge problem.

Attracting and retaining great talent have always been the top priorities for companies the world over. But they’re often the most challenging tasks the HR department tackles—especially now. It’s a job seeker-friendly market and your potential candidates are expecting more than basic offer letters or once-per-year total compensation communications. Employers must think differently about their recruiting and retention strategies – and the most progressive companies are relying on marketing to help them set their organization apart.

Shifting the Paradigm

Beyond compensation, I’ve seen companies try showcasing the myriad programs they offer or tapping into the trend for philanthropy, work-life balance, and clear career path options. But getting employees to care about any of that is going to require something of a paradigm shift. That’s when an idea hit us: what if we thought of our candidates and employees as customers?

Stay with me on this. If you think about the intersection of attracting new candidates and retaining them once hired, a large component of that is engagement. The same way you might get coupon reminders from Target or alerts about new programs at your gym, that’s the kind of engagement we should be aiming for. With employees as customers, total rewards become total rewards marketing.

We’ve seen companies like A+E have a lot of success treating their total rewards this way. With more than 1,400 creatives employed worldwide, keeping everyone engaged and fulfilled is paramount to the success of the network. Vice President of Total Rewards at A+E, Geraldine Potts, put it very succinctly: “timely communication and transparency are key in HR.” The evolution from hand-delivered paper statements once a year to an online platform ensures their distributed workforce has 24/7 access to valuable total rewards information, new program rollouts, and company announcements.

The Future of Total Rewards Marketing

Having been in this space for over 25 years, I’ve seen firsthand the hard work that goes into developing new programs and introducing new incentives to a workforce. I always feel the sting of disappointment when these endeavors aren’t met with the fanfare they deserve. But engaging employees with a marketing approach where these new benefits are the focus, and the employee is the customer, could be the answer.

What’s more, by thinking holistically about total rewards as a marketing exercise, companies can greatly support managers in both hiring and retention by creating a more compelling case for the company (especially as a significant portion of a company’s workforce plans to make a job move post-pandemic).

As marketing technology has become more sophisticated, the best total rewards programs have leveraged those same features to inform, layer and measure their programs and the adoption of them. Technology in the total rewards space has pushed the discipline light years ahead of its humble beginnings of static printed letters. Now, it’s a fully customizable platform that can be updated to reflect the latest company rollouts, all the great intangibles, and most up-to-date rewards values. And where managers might’ve had just a few days carved out every year to meet with their employees and deliver total compensation statements, technology now enables them to make their employees’ total rewards information available anytime.

In my work with TotalRewards Software, I’ve been lucky to witness the evolution firsthand. Recruiting and retaining talent, especially in hard-to-fill roles, has never been more challenging. But as this Moore’s-Law-esque HR landscape continues to evolve, embracing an interactive marketing approach to total rewards is an exciting next step and one that I believe can make all the difference for companies and their employees.

Ray O’Donnell is the founder and CEO of TotalRewards Software. To learn more about effectively marketing total rewards to employees, executives and candidates, get a free trial of TotalRewards Software today.