Understanding Employee Experience: Rewards

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1 TO P O F M I ND Understanding Employee Experience: Rewards Pete DeBellis, Vice President, Total Rewards Research Leader Bersin, Deloitte Consulting LLP Overview A company s rewards program is a highly effective, but underutilized, lever for elevating employee experience. Many companies fail to recognize the full extent and power of their rewards offerings, especially those beyond compensation and basic benefits and thus neither monitor nor manage how these programs impact employee experience. To take advantage of this often-missed opportunity and enhance their ability to attract and retain talent in today s increasingly tight job markets, organizations should adopt a more comprehensive view of rewards that addresses the entire employer-employee relationship. These organizations should also design and deliver rewards offerings in ways that not just meet but exceed employee expectations. This article in our Understanding Employee Experience series identifies the key areas that companies should consider as they undertake these tasks. In This Article importance of a customer-centric mindset in creating rewards aathe packages that bolster employee experience a more comprehensive view of rewards not only engenders a aahow more meaningful work experience for employees but also provides benefits for the organization focus areas for designing and delivering rewards programs that aakey enhance employee experience Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

2 Understanding Employee Experience: Rewards In Rewards, Employees Are the Customers Just as the products and services that a company offers are a tangible measure of the value it places on its customers, so too are the rewards packages that a company offers a concrete measure of the extent to which it values its employees. And yet, when it comes to rewards, many companies do not treat their employees like customers. Too often, companies unilaterally dictate the terms and conditions of their rewards programs with little or no employee input, transparency, or communication. One result of this became apparent in our recent HighImpact Total Rewards research, which revealed that the Net Promoter Score (NPS) for rewards among nearly 1,200 organizations was a shockingly low negative 15. In other words, rewards programs strongly detract from the willingness of employees to recommend their company to others.1 This is a serious problem in and of itself, but it is exacerbated in today s competitive talent markets, where talented candidates are increasingly commanding rewards premiums and looking for the best fit among multiple employment options. In such conditions, employers need to bolster employee experience by every available means including their rewards programs or risk being relegated to a disadvantaged position in the talent markets. In fact, our research shows that an engaging and personalized employee experience is one of the factors that differentiates high-performing organizations from their low-performing counterparts.2 KEY POINT: Employers need to bolster employee experience by every available means including their rewards programs or risk being relegated to a disadvantaged position in the talent markets. 1 Seven Top Findings for Redefining Total Rewards, in the High-Impact Total Rewards series, Bersin, Deloitte Consulting LLP / Pete DeBellis and Anna Steinhage, PhD, Ibid. 2 Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

3 Understanding Employee Experience: Rewards To help ensure that their rewards programs are supporting, and not undercutting, employee experience, companies should think of employees as rewards customers. A customer-centric mindset enables companies to appraise their current programs in a more empathetic way. Empathy is a foundational element of effective design thinking, and it is a prerequisite for evaluating and improving rewards programs that can reinforce a positive employee experience. A More Comprehensive View of Rewards Offerings KEY POINT: To help ensure that their rewards programs are supporting, and not undercutting, employee experience, companies should think of employees as rewards customers. As they consider their rewards offerings, companies should take an expansive total rewards view. Such a view increases the number of avenues and opportunities for using rewards to enhance employee experience. The best organizations address many kinds of offerings in their total rewards philosophy. These various rewards can be organized into four elements (see Figure 1). 3 Figure 1: The Four Elements of a Comprehensive Rewards Offering Compensation Base Pay Variable Equity Sales Executive Benefits Retirement Health / Welfare Time Off Perks Gateway / Voluntary Wellbeing Mind Body Wealth Purpose Experience & Actualization Learning & Development Career Paths & Opportunity Mentoring & Coaching Culture Diversity & Inclusion Environment& Workplace Design Recognition Exposure Source: Bersin, Deloitte Consulting LLP, Total Rewards Framework: Offering Design, in the Total Rewards Framework series, Bersin, Deloitte Consulting LLP / Pete DeBellis, Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

4 Understanding Employee Experience: Rewards Compensation. Cash is what typically first comes to mind when people think about rewards base pay and assorted forms of variable pay such as bonuses and commissions. Many organizations also offer equity programs or other long-term performance vehicles to select groups of employees, such as executives. But most organizations set and revisit compensation offerings only once a year, which restricts what could be a more powerful positive effect on employee experience. Benefits. Benefits include retirement programs, health insurance, paid time off, and an increasingly broad array of voluntary and gateway offerings, such as pet and legal insurance, discount programs, group buying and refinancing platforms, and so on. Unlike compensation, employees may interact with and need to manage benefits offerings throughout the year, which creates an ongoing opportunity to use them to enhance employee experience. Wellbeing. Wellbeing offerings are aimed at a host of goals that benefit both employees and their employers. These goals may include reducing stress, establishing healthy exercise and dietary habits, improving financial wellbeing, developing workplace connections, and increasing community involvement. This rewards element also entails a high level of employee interaction, and because employee participation is usually voluntary and customizable, wellbeing offerings provide companies an opportunity to enhance employee experience in a personalized and thus highly differentiated way. Experience and actualization. These offerings include learning and development, career paths and opportunity, mentoring and coaching, recognition programs, the organizational culture, and others. Even though these offerings may fall outside the direct span of control of the rewards function, high-performing organizations expand their definition of rewards to include them because their career-spanning and career-enhancing nature can contribute significantly to employee experience. KEY POINT: Because employee participation is usually voluntary and customizable, wellbeing offerings provide an opportunity to enhance employee experience in a personalized and thus highly differentiated way. Focus Areas for Creating Experience- Enhancing Rewards Programs With a comprehensive rewards program on offer, companies can turn their attention to delivering rewards in a way that enhances the positive impact of rewards on employee experience. Organizations should consider three aspects of rewards delivery: Tools and technologies. Even a generous and comprehensive rewards program can fail to enhance employee experience if workers can t navigate or manage it with ease. Our research shows that high-performing organizations are 4.5 times more likely than are lower-performing companies to provide employees with tools and technologies that make managing rewards easier. 4 They offer employees easy-to-use, self-service technologies that can be accessed via multiple channels (e.g., web, 4 Seven Top Findings for Redefining Total Rewards, in the High-Impact Total Rewards series, Bersin, Deloitte Consulting LLP / Pete DeBellis and Anna Steinhage, PhD, KEY POINT: Our research shows that highperforming organizations are 4.5 times more likely than are lower performing companies to provide employees with tools and technologies that make managing rewards easier. 4 Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

5 Understanding Employee Experience: Rewards mobile, wearable). Perhaps most important, they provide employees a single, integrated platform to manage their rewards. In short, they deliver digital solutions that simplify the tasks and access to information associated with rewards programs and integrate decision support into tools wherever possible. Communication. Increasingly, employees expect transparent and open communication about rewards. Unfortunately, our research finds that most employers are significantly less than comprehensive in this regard. But when they are, it pays off in performance dividends. In fact, our research reveals once again that top-performing companies are 4.5 times more likely than are their low-performing counterparts to have a well-defined communications strategy. 5 A more comprehensive approach to rewards communication that includes indirect value (such as training opportunities) as well as direct value (such as salary) offers organizations another opportunity to set their employee experience apart. They can achieve this by placing more emphasis on rewards education and regular communications that retain the human element whenever possible. Surprisingly, our research finds that decision-makers always personally communicate their rewards decisions, such as raises, to employees in only 9 percent of organizations. 6 Organizations also can customize rewards communications for different employee groups based on personas, journey maps, or other demographics. By fostering open, transparent, and comprehensive communication with employees, organizations can not only more effectively promote and improve their rewards offerings but also motivate and engage employees. KEY POINT: By fostering open, transparent, and comprehensive communication with employees, organizations can not only more effectively promote and improve their rewards offerings but also motivate and engage employees. Third-party vendors. Finally, organizations should consider the significant effect that rewards vendors may have on employee experience. Most companies rely upon a host of external providers to help support and deliver their rewards offerings. Our 2018 Global Human Capital Benchmarking research 7 found that the average U.S.-based company with more than 1,000 employees uses 16 different vendors to deliver its rewards offerings. These vendors are essential, but they can make or break the employee experience. Therefore, they must be managed carefully and held accountable for the experience that they provide to employees. We ve found that high-performing organizations are more than five times more likely than are their low-performing counterparts to report using a consistent vendor management process across all their rewards providers to a great or very great extent. 8 KEY POINT: Companies must manage thirdparty rewards vendors carefully and hold them accountable for the experience that they provide to employees. 5 Seven Top Findings for Redefining Total Rewards, in the High-Impact Total Rewards series, Bersin, Deloitte Consulting LLP / Pete DeBellis and Anna Steinhage, PhD, Ibid. 7 Global Human Capital Benchmarking 2018 research, Bersin, Deloitte Consulting LLP. 8 High-Impact Rewards 2018 research, Bersin, Deloitte Consulting LLP. 5 Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

6 Understanding Employee Experience: Rewards Reflection In a time when talent is an increasingly scarce and valuable commodity, organizations need to pull out all the stops and provide a superlative employee experience. Part of that mandate includes understanding the critical role that rewards programs play in the overall employee experience. Creating a comprehensive selection of rewards offerings is one aspect of this challenge. The second aspect is delivering those rewards in ways that wow the employees much like the kinds of consumer experiences that they get outside of work. Companies that successfully rise up to this task will enrich employee experience and capture all the benefits that confers in talent acquisition, performance, and retention. Key Takeaways Rewards programs are an underutilized lever for bolstering employee experience. Employees are your rewards customers. If you don t treat them as such, you may lose them. Take a comprehensive approach to rewards: include both wellbeing and experience and actualization elements in your definition of rewards to help make them meaningful to your employees. Provide employees with user-friendly digital rewards tools that also support their decision-making. Allow employees to manage their rewards on a single, selfserve platform available via multiple channels. Leverage a comprehensive rewards communication strategy to foster open, transparent communication with employees to excite and engage them around rewards. Don t hand off your rewards program to third-party vendors and walk away. Manage vendors closely to ensure that the services they deliver provide a great employee experience. 6 Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.

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8 Publication date: July 20, 2018 About the Authors Pete DeBellis Vice President, Total Rewards Research Leader Bersin, Deloitte Consulting LLP Pete possesses extensive rewards practitioner experience, having served as an in-house corporate rewards professional for public companies in biotechnology and financial services and as a cross-industry rewards consultant in both large and boutique consulting firm settings. Pete also has senior HR executive experience and understands first-hand the critical linkages between total rewards, HR strategy, and overarching business objectives. He holds a BS in industrial and labor relations from Cornell University. About Us Bersin is the indispensable digital destination for the HR Professional to build capability, community and credibility, stay informed, and lead on workforce issues. Our membership delivers research-based people strategies designed to help leaders drive exceptional business performance. A piece of Bersin research is downloaded on average approximately every minute during the business day. More than 5,000 organizations worldwide use our research and consulting to guide their HR, talent and learning strategies. As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. Copyright 2018 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited. 8 Copyright 2018 Deloitte Development LLC. All rights reserved. Not for distribution. Licensed material.