When personalised and customised rewards become mainstream
Our 2023 Payroll Proficiency Index, in which we surveyed over 4,500 companies in 16 European countries, reveals that employees already receive a wide variety of rewards, from technical equipment to mobility benefits and vouchers. At the same time, concepts such as pay-on-demand and Total Reward Statements are now widespread. Indeed, employers have learnt to do more with less – and that’s bound to remain the leading reward and benefits trend in the years to come.
#1 Holistic rewards
Long gone are the days when employees simply expected their paychecks at the end of the day or month and were fine with that. Today’s employees, particularly younger generations, have found a voice and are not afraid to raise it. They know all too well that they hold the cards in a tight labour market.
To stand out from the crowd, you need to support your employees holistically. It’s not simply financial wellness that matters, but also career development as well as physical, mental and social wellbeing. In other words, see each employee as a whole person.
If you’re breaking your brain over how to increase your salary budget, you’re asking the wrong question. Better to ask: how do I respond to my employees’ various needs and wishes with my current budget?
#2 Flexible pay systems
This best practice is inspired by the same need for customisation as the previous one but goes a step further. Instead of composing a holistic salary package yourself, you let your employees decide for themselves. For example, your recently graduated engineer might prefer extra vacation days and a gym pass over additional pension contributions or health insurance.
The idea of flexible pay is quite simple: you determine a fixed part of your employees’ salaries that they can spend on the benefits that are most relevant to them at that time. You provide a limited number of options, and they choose from them. In countries with high labour costs, like Belgium, this form of salary customisation is already very common.
To illustrate the possible benefits in such a flexible pay system, here are some categories that always seem to prove popular among employees: extra insurance options, (sustainable) mobility options, vouchers, wellbeing perks, pension plans, technical equipment and bonuses.
#3 Pay on demand
Earned wage access (EWA) or pay on demand – paying people for their work when they need it, instead of on payday – is gaining attention. The custom is generally associated with larger companies, but more and more SMEs are rightfully looking in the same direction to keep their best talent on board.
In many cases, a fintech company serves as go-between. They typically pay out an employee's earned wages ahead of payday, then collect the funds from the company at the end of the month for a fee. But there’s a rationale for you to bear that expense, as the costs related to replacing employees who resign are often much higher.
Instead, EWA could be a way to increase employee satisfaction. You give your employees access to funds at crucial moments so that they don’t have to rely on loans. With interest rates as well as the cost of living on the rise, they’ll be ever so grateful.
#4 Total Reward Statements
Sometimes, even though you offer above options, your employees will still perceive their salary packages as inadequate. To counter misguided perceptions, clear communication is of the essence. Explain to everyone what they are getting and why, as, on average, employees are only aware of 60 to 70% of their total remuneration.
A Total Reward Statement (TRS) is one way to go about it. This document offers a detailed and personalised overview of all financial and non-financial rewards an employee receives, which they don’t always ‘remember’. It generates awareness, transparency and appreciation.
Moreover, in every version you can highlight one or more less-tangible rewards, from holiday arrangements to insurances. The trick is to make your TRS as visual as possible, keep it concise, add tips and include a multi-year evolution.
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