With compensation and rewards being major contributors to employee motivation, it’s natural that you’d want to have the best rewards strategy in place. But even the best strategy can be thrown off-kilter by a number of things.
Budgeting, business priorities, economic and legal factors – all of these can affect your business and, thus, how you reward your employees for their efforts. As a result, you may have to review your employee incentives and rewards program.
Here are some signs that make it clear that it’s time to do so!
Employee compensation and rewards are a form of extrinsic motivation to keep employee motivation high, so the easiest way to figure out that these rewards are not serving their purpose is when employees show dissatisfaction. Regular surveys can help you assess whether employees are happy with their rewards program and feel that they are being compensated fairly.
Any shift in behavior can indicate a shift in sentiment, so keeping an eye out for that is important.
A recent poll discovered that about 43% of employees consider themselves to be under-compensated. Compensation doesn’t refer to salary but also to PTO, bonuses, incentives, and other such things.
The purpose of a rewards program is to make employees feel that their efforts are valuable and recognize them as such.
Competitive Salary Packages
According to Forbes, salaries are rapidly increasing. Your competitors could offer a better salary and compensation package than you do. This scenario could easily lead to a few of your employees being lured away by your own competition.
As employee turnover rates increase, so do the number of key vacancies that companies have to fill – and fast! As a result, to get the best talent, they offer high salary packages with attractive benefits to try and get workers to leave their existing roles and join them instead.
To ensure you don’t lose your employees, you need to be sure that your employee compensation packages are competitive at a minimum and offer something more than your competition if you want to take it a step further.
If you haven’t reviewed your rewards program in a while, now is probably the best time to do so.
Changing Work Culture
As a result of the pandemic, employees switched to working remotely or with flexible hours. Though there was some trouble at the start, as employees and management tried getting used to the new normal, this new work culture is now very popular.
About 39% of workers would rather quit their job than come to the office. If your company insists on returning to the traditional in-office workplace, you’d have to revise your rewards strategy and offer some serious incentives. If you think your employees will return to their old routine – think again!
They may just quit and find a workplace that offers them the flexibility they want. If your company’s work patterns change to ones that employees aren’t satisfied with, you have to adjust your rewards program accordingly. Otherwise, your employees may not be motivated enough to keep working for you.
Unless you offer something in return for these changes, you may face high turnover rates instead.
Changes in Trends
When you look at data for what the rest of the market is doing, you may notice some discrepancies between your own rewards program and that of your competitors. There may be changes to retirement fund contributions or the extra benefits offered to employees.
Changes in data usually reflect trends: if all remote employees for a company choose to waive gym membership, then perhaps offering it to new remote employees is not a very reasonable option. Similarly, remote employees may require a stipend for their home office setup that wasn’t being offered in the past but is offered now.
You may recognize these trends in your own company, but it’s also important to look at them in the rest of the market – particularly as open enrolment season starts.
Looking at these changes, you may realize that some of the benefits you offer no longer match the requirements of your employees, and you have to adjust your rewards program accordingly. If you don’t act on these immediately, you may have trouble hiring new employees and even retaining existing ones.
High turnover rates are a major warning sign that something is wrong. Employees will generally leave for two reasons: they are unhappy with their job, or they found a better one.
The purpose of the rewards program is to show employees that their efforts are valued and thus reward them accordingly. As a result, they are inclined to stay.
But if your company is facing high turnover, this could imply employees feel that what they are being offered in return for their hard work is not worth sticking around, and they could instead find a better opportunity somewhere else.
As such, it may be time to review your rewards program and offer better compensation. Of course, turnover is due to a number of things, all of which need to be addressed if you want to retain your employees, but greater rewards and benefits can be one of the ways you can compensate for other shortcomings while you figure those out and correct them.
Employee rewards are more than just the salary. They include career growth opportunities, recognition, benefits that are actually useful, as well as an environment in which they feel they can prosper. A good rewards program that is focused on an employee’s well-being can help you retain them, even if your salary package is not the highest.
If you think it’s time for a review of your rewards program but don’t know where to start, our executive job search NY can help. CCY is a top organization with experienced and skilled professionals who can assess your rewards and compensation policies and help improve them. Contact us now for CFO job search service.