Elevating the Impact of Your Organization’s Total Rewards - The Human Resource Consortium (2024)

Issues and Considerations with Total Rewards Needs Assessments

Issue #1: Are employees familiar with their total rewards package, including cost? How recently have you provided total rewards statements? If not within the past year, now is the time.

Consideration: If not, you should consider providing advance information to employees on their perceived total rewards in concise, easy-to-understand terms. Simplicity is key. For instance, rather than just providing a statement that the 401(k) plan provides a 100% match on the first 3% of contributions and the amounts of annual employee/employer contributions, also provide employees with a resource where they can model their retirement income based upon your plan.

Issue #2: If you conduct a needs assessment, you will generate awareness that you are, at a minimum, assessing current status or potentially considering change – which you will want to be perceived as a good thing. However, with this heightened awareness among employees and in asking employees for their input, you will likely create some expectations for which you need to be prepared to respond to in your results, most especially communicating what and why and what not and why not. Participants will want to see that they were ‘heard’ and their suggestions considered.

Consideration: Effective, transparent communications with employees is key. Be cautious to not set expectations that there will be wide-scale change, if that is not feasible. Instead, assure that your messaging reminds employees that it is an assessment. Changes, if any, will need to be evaluated upon results of the internal needs assessment and external competitive market study, in context of organizational strategy, culture and affordability. Change may not be necessary for some or many items. Communicate the results to employees, including areas where no changes are planned.

Issue #3: With surveys, be cautious about asking for open-ended or unconstrained suggestions. Some survey recipients may have a specific or recent issue that causes angst (e.g., base pay) and may cause hyper-focus, to the exclusion of other topics. Others may suggest that improvements to everything are needed – whether or not that is a realistic consideration from a budgetary perspective. If there are some new types of benefits you may be contemplating, it makes sense to inquire staff about their specific importance before incurring the cost. Writing exceptionally clear and direct questions for surveys requires thoughtfulness and careful review.

Consideration: If you simply utilize a survey for data gathering methodology, ask recipients to rank order their priorities, provide preference “weightings” or ask them to divide up a hypothetical budget to each item. However, still include the ability for employees to provide additional, free-form responses. You might be surprised at the creativity and/or items that you did not believe are important, but actually are.

Issue #4: Resist the temptation to “monetize” every component of Total Rewards when communicating a total compensation amount. When communicating certain elements of total rewards to employees, keep in mind that some components of Total Rewards are impractical to which to assign a dollar value within a total compensation calculation. The reasons for this include programs or polices with variable utilization (e.g. sick time, leaves of absence and adoption assistance benefits) as well as employee-paid or low-cost benefits or recognition programs.

Consideration: If you can’t assign a dollar value to a policy or program, instead provide an extensive definition and proposed value in other terms (e.g., comparison to other employer practices or policies). Attempting to monetize everything to construct a total compensation dollar amount will harm your credibility. There are other methods to illustrate the value of a particular element (or several elements) in your total rewards package. For example, you can calculate the approximate value in terms of percentage of average base salary or provide the relative value (e.g., exceeds/competitive/lagging) of your plan, program or policy to surveyed institutions or competitors.

Issue #5: Be cautious of a one-size-fits-all solution. Extensive studies of generational preferences highlight a wide disparity in what employees value in the employer-employee proposition. Emphasis on pay, tuition benefits, retirement plans and work-life balance are just a few examples of where generational, cultural, family structure and other factors or perceptions may vary widely across an organization.

Consideration: Find creative solutions and offer choice and options (where possible) that fit your employee census. For example, student loan/debt benefits are increasing in popularity, especially for recent graduates with high loan balances. How might you provide these benefits to some while being fair and equitable to other employees who have no student debt?

Since most typically an organization’s top two expense line items are salaries and employee benefits, assuring a strong ROI for your organization is essential. As a general practice, a Total Rewards review should be conducted bi-annually, at a minimum. When you are considering developing or reviewing your Total Rewards program for your institution, remember to start with your philosophy, then develop an appropriate strategy that aligns to your philosophy. Communications, stakeholder buy-in and voice of the customer (i.e., employees) are all critical in every step of the process.

If you would benefit from expert assistance with conducting a total rewards assessment or creating a more highly impactful TR strategy or program, please contact us at The Human Resource Consortium (203.495.1500).