The great global resignation phenomenon has seen anxious employers go to extraordinary lengths to sweeten job offers – from salary counter offers and sign-on bonuses to free Peloton bikes. But could it also be an opportunity to reset your reward strategy for the long haul?
Under pressure to meet post-pandemic growth plans, it may be tempting to focus on short-term tactics to attract or retain talent. But these incentives are financially unsustainable, especially if you want to protect pay equity.
What’s more, they may not fundamentally address the true reasons great hires join you – or the root causes of attrition. Higher pay is only part of the problem, with employees telling us they also want and expect a sense of purpose, meaningful work, a clear career path and training, and a focus on wellbeing.
Given organisations are already fundamentally rethinking how and where work gets done, now is also the perfect time to completely overhaul the way it is rewarded. Because, beyond any short-term attrition blip, there is also a chronic talent shortage to consider. Even before the pandemic, Korn Ferry research found the Asia-Pacific region had the most significant future talent crunch as a percentage of the economy. A skills shortage of 47 million people by 2030 would result in an unrealised output of $4.238 trillion.
With regional mobility still relatively restricted, this problem has only become worse.
A more holistic approach to rewards will not only ensure you are ready to ride the inevitable next wave of the talent market, but also be in the best possible position to attract a growing cohort of future employees looking for something different.
The ‘Big Quit’ may not be financially motivated – but it will cost you
The disruptive force of the pandemic gave employees time to re-evaluate their careers and the meaning of work in their lives. Many senior professionals feel depleted after almost two years of intense around-the-clock workloads, along with the emotional energy required to manage dispersed and disconnected teams. Burned out managers, in turn, are more likely to see their team members resign.
A raft of recent global surveys indicates almost one in two employees are thinking about resigning. And that scale of attrition will undoubtedly cost organisations – the Center for Accountability and Performance (CAP) found that the average cost to fill an executive role is 213%. It can also take up to two years for a new hire to hit peak productivity, with potential shorter-term impacts on team morale, customer service lags or errors.
So how can you avert this crisis in your own organisation? By shifting your rewards focus from what your organisation needs to what talent expects – at an individual level. And that means giving employees more control and flexibility over their own rewards package. Like the emerging hybrid workplace model, it’s all about choice.
A strategic spectrum of rewards
Consider all the tangible and intangible elements of your total rewards strategy – from base pay, commissions and stock options to benefits, allowances, culture and career development opportunities. There are so many possible ways to incentivise performance – and what motivates each individual is likely to be very different.
It’s not simply a case of categorising what millennials want compared with Generation X. It goes far deeper, into their personal ambitions and aspirations. We see some younger employees leave to join a big brand so they can tick off a CV goal, while others are more concerned about joining an organisation with aligned values and culture. And it will vary by location as well – for example, benefits are less important to employees in Australia, with its Fringe Benefits Tax, Medicare and superannuation structures, than in other Asia-Pacific countries where cars, gym memberships and health insurance are core to the employer value proposition.
To systemise a spectrum of benefits, you need a platform that can be managed at a local level. Employees could choose a ‘pick and mix’ arrangement of benefits around development, performance, allowances, social purpose or wellbeing – the themes that are most relevant to your people and purpose. Managers can also be empowered to reward and recognise their people on a daily basis because you can’t wait for an annual HR review to retain your best people.
Traditionally, rewards packages were binary: you are either on this benefit, or you aren’t. Now, differentiated rewards can give employees more control over how their efforts are valued. By acknowledging the value of difference in what motivates and matters to individual employees, you can also promote inclusion and diversity, and align with flexible workplace culture.
Given 70% of employees say they want flexible work options to continue, imagine how they’d feel about flexible rewards. Start by surveying your employees to make sure you understand their individual needs, and then make this spectrum of choice explicit and accessible to all.
In today’s market, the balance of power is clearly with your talent. For too long, rewards have been designed to fulfil the needs of organisations. It’s time we re-invent this, to fulfil the needs of your closest customers – your employees.
To do this, you need to know your employees and listen to their needs. Korn Ferry can bring you that 'outside-in' perspective, bridging the gap between internal voices to organisational priorities to ensure rewards revolve around employees – and make the maximum positive impact.
To learn more about 4 ways you can reset your rewards strategy, watch this video.