Rewards, perks and compensation: what matters most to top talent?
27 April 2023
Top talent interviews you, not the other way around. As sought-after roles and skills become increasingly more challenging to attract and retain, organisations must clearly differentiate how people are compensated, rewarded and supported.
For perks to be effective, they must align with company culture
The Economist recently published a great piece on 20 April 2023 titled ‘what makes a good office perk?’. The authors argue that perks and rewards are often confused with each other, with the key differentiator of a perk being ‘dispensability’. Discretionary benefits such as bottomless espresso is an example of a perk universally well understood by most employees. However, some perks have shifted to becoming rewards – and even a standard expectation of basic benefits or total compensation.
Flexibility is a case in point - prior to the COVID pandemic the ability to work-from-home was seen by many as a ‘perk’, which has now surpassed reward and went all the way to a basic benefit. Traditional perks that were primarily office-based, such as coffee machines, canteens and snack bars, are receiving less budget and focus. Even large employers in the tech space are doing away with or reducing many of the elaborate office-based perks all the way from dry cleaning services to day care. The Economist sums it up nicely: “Anyone who still describes flexibility as a perk fails to grasp how much the world has changed”. It is time to redefine what is considered a ‘perk’ in 2023 and to discover where opportunities lie for new perks to be introduced.
Furthermore, perks should reinforce the culture of an organisation. If the snack bar is a spree of saturated fats and sugars at a company that is trying to nurture a wellness-driven culture, that perk is out of step with company culture and actively undermines it.
Re-writing the rewards playbook for a post-pandemic world
Rewards are challenging to maintain in especially large organisations, where employees may feel that a cookie-cutter approach is applied to the entire organisation. Generation z and Millennials appreciate a tailored approach to rewards, the former more so than the latter. Offering team leaders and executives a playbook approach as opposed to a blanket approach empowers leaders to offer some degree of customization to respond to the unique needs of their team.
For example, if leaders have the ability offer an additional degree of flexibility as reward without having to go through layers of approval, it will go a long way. Teams are typically even more engaged knowing that their direct manager or executive is empowered to have some influence over their rewards structure without HR or the talent management team having to become involved. Furthermore, if flexibility is the reward that is offered it helps no-one if the team leader or executive requires that same person who received the reward to be in office. A recent example we’ve seen is a team member who requested to work from anywhere for a week was inevitably requested to come into the office for an urgent matter. This is a clear example of where the appropriate selection, alignment and tailoring of rewards are important.
Compensation and basic benefits are no longer everything
Similar to the focus on customer personas and customer experience, modern talent management trends are seeing a focus on the development of employee personas as part of employee experience objectives. Leading talent research suggests that employee personas across different generations value compensation and basic benefits differently compared to others.
For example, traditionalist personas may rank compensation and benefits as first on their priority list, while other personas may only rank this as 3rd or even 4th place. Employee personas centred around priorities driven by independence or the care of others close to them typically ranks career development, purpose or meaning in work, support for wellbeing and flexibility higher than total compensation. This trend becomes even clearer as one considers personas among younger generations.
It is therefore important to be able to map employee personas, along with employee experience, and align employee value propositions (EVPs) tailored to these personas. The result is an EVP that is segmented based on what people want, and not purely driven by nett-pay received at the end of the month.