For decades, rewards programmes in the Middle East were relatively straightforward. Salary packages consisted of basic salary, housing allowance and transportation allowance. Many organisations provided an annual leave ticket and health insurance as benefits. Companies differentiated between employees on a single or family status, where, in the latter case, dependents were also covered. Despite this, compensation and benefits approaches followed a rigid one-size-fits-all approach.
These days, companies are recognising the need to modernise their total rewards programmes. While other HR areas have evolved, most total rewards programmes remained inflexible, focusing on experience and company seniority. They seem to have forgotten the employee. Leading companies are consequently transitioning to a personalised total rewards experience.
As more studies are conducted in this area, the evidence is also supporting the move towards personalised total rewards. Paid back in higher employee engagement and increased business results, both the employee and the organisation benefit from personalising total rewards.
Payscale found that employees who do not understand the pay process are 60 percent more likely to leave the organisation. (Dave Smith, “Most people have no idea whether they’re paid fairly,” Harvard Business Review, December 2015.) Can your organisation afford this?
Companies have 27% fewer regrettable new hires in the first year, according to Willis Towers Watson. Deloitte also found organisations with highly engaged employee experiences have a 2.3x greater than average 3-year-revenue growth.
Understand what your employees value
While organisations may have the best intentions when creating or reviewing benefit plans, employees may have a very different perception. Moving towards a more diverse workforce with part-time employees, contract and project staff and a multi-generational workforce, employees have different needs. Companies may wish to segment their employee groups further, e.g. critical roles, highly sought after skills and high potential employees.
To learn more about their employees, companies shouldn’t just rely on the anecdotal stories from line managers. Employee surveys can give deeper insights into what employees need and value.
Wen Wan, director of talent and rewards at Willis Towers Watson, confirms “any initiative aimed at improving the total rewards experience must take into consideration what employees value most and how those preferences differ by employee segment.”
Total rewards and HR teams can analyse the data, identify recommendations for the most relevant programmes for employees and build tailor made programmes for the different employee groups.
Consider the various TR components
A few years ago, leading companies in this region moved from providing numerous separate allowances to one consolidated allowance. This was to simplify the administration process and to educate employees about the total package approach. Employees are ultimately responsible for how they spend (or save) their salary.
Despite an apparent still fixed approach to total rewards, 12.8% of companies participating in Informa’s 2019 Compensation and Benefits Employer Survey have already implemented flexible benefits. A further 22.9% of participants are considering introducing flexible benefits.
While many organisations have moved from fixed grade and step salaries, broader salary ranges give line managers more flexibility in deciding an employee’s pay. They can define the basic salary based on the criticality of the role, possession of skills critical to future success or, at the time of a salary review, achievement of team goals.
Companies can offer more flexibility to employees when it comes to benefits. In the UAE, Mercer at its post-TRS survey meeting identified medical insurance, dental and optical insurance, life insurance, and annual leave as four components ripe for flexibility. Employees can swap these at one time during the year (i.e. at renewal date), reducing the concern of increased administration.
Rising healthcare costs are a global issue. It’s not just the cost for medical appointments and prescriptions. 1 in 5 absences at work is due to workplace stress. The Global Wellness Institute calculated the cost of ill-being as high as 12% of the United States’ GDP. Companies need to realise the importance of well-being and make it a priority.
Even though wellbeing programmes need a holistic approach, organisations can start with purpose-driven activities for their staff. Linked to their industry, companies can emphasise specific initiatives. For example, pharmaceutical companies can focus physical wellbeing while financial institutions financial wellbeing.
In direct conjunction to wellbeing, employees are craving for more flexibility at work and a better work-life balance or integration. Businesses can review their working arrangements. Core working hours with a flexible start/finish and working from home can be implemented without a lot of bureaucracy. Leading companies offer working from other offices for a longer period (e.g. over the summer), allowing employees to strengthen relationships with colleagues in other locations and possibly combining this time with their annual leave.
Instead of waiting for the year-end performance review, more organisations are offering frequent performance check ins. While bonus payments are still only at the end of the year, line managers can use recognition programmes to acknowledge their staff’s performance. Monetary awards like cash and gift cards may be given. More research has found that non-financial recognition (e.g. dining experiences, social recognition) contributes to an individual’s happiness and has a longer lasting impact.
Utilise data and technology
For most organisations, flexibility stops with their IT systems. The administrative burden is too much to provide their employees with the flexibility they so desire.
Total rewards and HR teams should review their current procedures and streamline operations to optimise their internal and external resources. The region remains split on HR technology. While 31.9% of the participating companies in Informa’s 2019 survey will stick to excel programmes for data analysis, 44.7% of participants invested in technology compared to 2018.
By using technology, organisations can support their employees to make informed decisions and create an employee grade experience, which is characterised by its simple, convenient and personalised nature. Intuitive self-service at the push of a button provides the easy usage employees are looking for. Total rewards and HR teams can tailor their communication and education for employees according to the individual’s interests and needs.
Measure the cost and impact of your programmes
As with any other programme, total rewards and HR teams need to track and measure their personalised total rewards programmes. Business leaders will be interested in the financial costs and the non-financial impact. The financial costs may be kept neutral, although the more targeted spend will create non-financial returns. Leading organisations have seen positive impacts on employee engagement, their ability to attract and to retain employees.
Surprisingly, leading companies that have already implemented personalised total rewards are not talking about their financial ROI. Especially in times when we can expect an increase in skills shortages and a continued war for talent, it’s part of their overall employee value proposition (EVP) and their strategy of being an employer of choice.
Make a start and prioritise
The decision to move to personalised total rewards may be taken quickly. However, the implementation may require some time and businesses need to prioritise:
- Offering more flexible working arrangements can be the first step.
- Adding more health and wellbeing benefits may be reviewed prior to the annual renewal date and the insurer and broker may be heavily involved.
- Creating more personalised communication and aligning the total rewards/HR experience to the organisation’s brand may be a cross-functional project.
- Improving the organisation’s technology for administration purposes and employee communication may be a larger financial investment.
Find out how personalised total rewards can increase your employee engagement. Contact us today.