It used to be quite common to use money as a motivating factor for employees. However, things have changed, and people are becoming more intentional about the roles they accept and where they perform those roles. More employees are looking to find meaning in their work, make valuable contributions, and experience a sense of belonging to their organizations.
In this third part of our series on global employee recognition programs, we focus on employee total rewards programs and exploring why it matters to the employee experience.
What is Employee Experience?
Employee experience describes how employees feel about various organizational factors such as leadership, trust, respect, communication, camaraderie among coworkers, meaningful contributions, opportunities for growth and development, tools and resources, work processes, and recognition appreciation.
According to an article published by the Society of Human Resource Management (SHRM), employee experience involves a total redesign of outdated workplace practices. It focuses on putting employees at the center. Like customer experience, where brands ensure that their customers are happy since “happy customers make loyal customers,” we can apply this concept to the workplace. I make this comparison because, according to Gallup, “employees are consumers of the workplace.” Therefore, happy employees make loyal employees.
Also Read: "Impact of Employee Rewards and Recognition in Employee Experience"
Why focus on Employee Experience?
For companies to succeed in today’s highly competitive global market, they must find creative ways to attract, motivate, and retain talent. Since an average employee spends over one-third of their adult life at work, employers need to give employees the best experience possible. It starts with a candidate’s first encounter with your company and continues during their journey along the employee lifecycle—from the recruitment phase until the separation phase.
An MIT research has shown that a great employee experience predicts twice the innovation and 25 percent greater profitability in companies. Therefore, companies looking to benefit from improved bottom-line results need to prioritize the employee experience.
Many business leaders recognize the importance of employee experience, but they do not know how to go about it. A study has shown that “nearly 80 percent of executives rated employee experience as very important, but only 22 percent reported that their companies were excellent at building a differentiated employee experience.” So, what does it take to create a differentiated employee experience? Now, this is where you, as an HR leader, can help.
One way companies can create a positive employee experience is by implementing an employee total rewards strategy. According to SHRM, a total rewards strategy rewards employees who achieve business goals by offering them compensation, benefits, and personal growth opportunities in a motivating work environment. In other words, a total rewards package provides a holistic employee experience because it covers different components that drive employee satisfaction, engagement, wellness, and alignment. Consequently, companies enjoy better financial success since total rewards motivate high-performing employees to remain productive.
Tying Total Rewards to the Employee Experience
An attractive total rewards package offers companies a competitive advantage and plays a crucial role in influencing people’s decisions to join and remain with a company. In creating a positive employee experience, companies can offer a well-designed total rewards package, often comprising monetary and non-monetary rewards, to meet employees’ needs and expectations.
Total rewards are quite essential to the employee experience. At different touchpoints of the employee experience, total rewards play a significant role in attracting, motivating, and retaining employees. For example, during the recruitment stage, prospective employees make several assessments of your company. Using a popular website like Glassdoor, which makes it easy for current employees to share details about your company, candidates can easily find the information they need about culture, salaries, incentives, and benefits.
In addition, the onboarding phase is another critical touchpoint in the employee experience. When candidates accept an offer of employment and join the company, they go through an onboarding phase. Based on my experience as an HR professional, “onboarding is a make-or-break period for a new hire.” HR professionals need to guide new hires through everything they need to know, including their compensation, benefits, and other non-monetary rewards, to create a positive experience.
Typically, monetary rewards constitute any form of monetary payment offered by a company in exchange for an employee’s contributions, expertise, and time. With monetary rewards, employees can calculate their financial value and weigh them against those offered by other companies. Some key components of monetary rewards include:
Base Pay: This refers to an employee’s basic compensation, usually offered as a wage or salary. Base pay helps employees compare how well they are being paid with what other employers could offer them for doing similar work. For a better employee experience, workers need to understand how their pay is determined. It helps them know if what they are being paid is equivalent to their expertise.
Variable Pay: Here, employees receive performance-based compensation resulting from the individual, team, or organizational contributions over a certain period. Common types of variable pay include merit pay, bonuses, incentives, sales commissions, gain sharing, and profit-sharing. There is little room for comparison with variable pay since performance can vary at the individual, team, or organizational levels. Still, variable pay helps to motivate employees because it is usually commensurate with their contributions.
Benefits: Many employees receive benefits such as paid time off, health insurance, life, and disability insurance, retirement plans, perks, employee assistance programs, or wellness programs as a form of indirect monetary rewards from their employers. It is important to note that employee benefits differ across the globe.
For example, certain benefits are required in the United States under state and federal regulations, while others are discretionary. You will also find that employee benefits can be categorized as government-provided, government-mandated, and voluntarily provided by companies in other countries. If your company operates globally, expect to follow each country’s requirements for providing employee benefits.
Non-monetary rewards are often viewed as intangible rewards because employees cannot easily calculate or compare their financial value. Also, the perceived value of each reward can be relative to each employee. While an employee may value flexible work schedules based on their current life situation, another may prefer to have opportunities for career development.
Personally, I consider non-monetary rewards to be an important factor when considering job opportunities. An excellent total rewards package shows me how much the employer cares for my well-being and helps create an emotional connection with the company.
Many companies recognize the importance of non-monetary rewards on people. The Incentive Marketplace Estimate Research Study showed that 84 percent of businesses in the United States use non-monetary rewards to recognize their employees, sales teams, and customers, spending $90 billion annually. Some key components of non-monetary rewards include:
Opportunities for advancement: As humans, we crave opportunities for growth in our lives. Likewise, employees feel motivated when they have those opportunities in the workplace. When employees can’t find such opportunities, they leave for another company.
A survey conducted by The Harris Poll showed that most employees quit their jobs because they craved career development opportunities. Having understood how significant advancement opportunities are to employees, companies can motivate employees by investing in their learning and development, offering them stretch assignments, and defining clear career maps for them.
Flexible Work Schedules: Employees often struggle to find balance in their lives because they spend most of their time at work. In recent years, some companies—especially those in the technology sector—started embracing the flexible work culture. By allowing employees to work remotely or have flexible work schedules, you give employees more time to focus on their personal lives. When the COVID-19 pandemic started, companies had to adapt to remote working to curb the disease’s transmission.
According to a Gartner survey, 88 percent of organizations have encouraged or required employees to work from home since the pandemic started. Even though many workers are now working home, it is still important, now more than ever, for employees to have some flexibility since it’s easy to expect them to work longer hours.
During this time of social distancing and remote working, personal responsibilities, Zoom fatigue, and employers’ increasing demands can take a toll on employees’ mental health. You can create a positive experience for employees through flexible work schedules, which allow them to remain motivated to do their jobs.
Recognition: In part one of our series on employee recognition programs, we analyzed how recognition programs make employees feel valued and less likely to quit. Companies can recognize employees for their performance through many non-monetary options. For example, Xoxoday’s global catalog gives users 70+ countries access to 20,000+ reward options such as gift cards, experiences, perks, savings, vouchers, merchandise, subscriptions, and many more. When employees know that there’s an excellent employee recognition culture, they can feel motivated to work harder to enjoy those rewards.
Some companies have successfully used their total rewards strategies to create a positive employee experience. For example, one of Xoxoday’s clients, Luminous India, improved their employee experience by building a non-monetary and peer-to-peer rewards and recognition culture. They considered money or certificates less impactful on employees, so they needed more reward options, which Xoxoday’s platform provided. Luminous India’s new rewards and recognition program helped break down silos, encourage collaboration, and increase employee appreciation.
For employees to enjoy a positive experience through your total rewards package, here are a couple of points to note:
- Ensure that it’s cost-effective, sustainable, and effectively offering value to employees.
- Employees need to know what is available. You can help employees understand how to take advantage of their benefits and rewards options.
Do you need to implement a rewards and recognition program for your organization? Schedule a demo with Xoxoday. We specialize in curating unique experiences, gift cards and vouchers, perks and savings, and many reward options for different companies.