Why the future of work will depend on the future of total rewards

Prioritizing employee wellbeing and reward choice translates into a distinct competitive advantage.

Three years ago, a new CHRO was at the front end of a massive HR transformation program. She had many issues she was grappling with and she didn’t know where to begin. She needed help understanding how to align and sequence the puzzle pieces of HR within a transformation to help her determine the strategic role her total reward framework could play in the process.

This CHRO’s journey happened to coincide with EY’s own People transformation journey. At the time, EY had been named among the top 25 World’s Best Multinationals (WBMs) by the Great Places to Work Institute three years running — and they were proud to be one of the few professional services organization to reach this milestone achievement. WBMs have proven track records of putting their people first, maintaining high employee engagement levels, prioritizing their commitment to their communities and crafting creative ways to care for their people.

We were both excited…and curious.

• What were we doing right to achieve this prestigious recognition?
• What were other companies who had achieved similar recognition doing right?

Thus began our journey of research and exploration into the role that total reward frameworks play in supporting employee engagement. We believe that there is a high degree of correlation between employee happiness and corporate financial results. However, we wanted to be more forensic about understanding the specific activities and elements of each organization’s total reward framework that improved employee engagement, supported employee happiness and wellbeing, and drove elevated financial results.

Five global reward trends that drive higher employee engagement

Three years later, the results of what has now become our annual WBM global total reward research, has taken on greater importance as the COVID-19 pandemic significantly changed the world of work, disrupted business operations and rapidly accelerated future of work trends seemingly overnight.

EY completed a proprietary analysis of the total reward frameworks offered by the top 25 WBMs. Our team created a matrix that documented - and tracked over time - reported total reward program elements offered, while highlighting common themes and outlier programs.

Our analyses indicate that organizations with the highest employee engagement levels typically share the following five total reward framework characteristics: 

1. Expanded scope of total reward (TR) strategy, frameworks, and program components: Leading organizations are extending their total reward strategies beyond traditional compensation and benefit programs to include broader employee value proposition (EVP), wellbeing, talent development, work environment/ schedule/ location, and other employee experience elements.
2. Integrated cost efficiency planning and holistic employee wellbeing outcomes: Organizations are integrating their total reward optimization and employee wellbeing (emotional, financial, physical and social) planning processes to develop and deliver cost effective and sustainable TR frameworks that support organizational wellness while retaining and motivating employees.
3. Increased reward choice/ personalization that leverages refreshed reward segmentation profiles: HR functions are expanding flexible reward choices to employees, where permissible, while updating their reward segmentation/ personas profiles (beyond typical demographics & life stage, to include work schedule and location preferences) 
4. Enhanced consumer grade, digital total reward experience: Leaders are implementing consumer grade digital reward tools to increase employee awareness, enrollment and remote access. For example, instead of having to go to HR to determine their vacation balances, employees can now readily access this information through apps on their smart phones.
5. Embrace inclusive and future focused reward eligibility requirements: Many WBMs report that legacy hierarchical approaches to determining reward program eligibility are rapidly evolving.  They indicate that today’s eligibility requirements are more inclusive across their broader employee populations and that eligibility distinctions between full time employees (FTEs) and non-FTEs are blurring, where permissible. Similarly, these organizations routinely evaluate the diversity, inclusivity and sustainability of their reward frameworks.

Pandemic-driven total reward trends … that may be here to stay?

Many WBMs report that legacy hierarchical approaches to determining reward program eligibility are rapidly evolving.  They indicate that today’s eligibility requirements are more inclusive across their broader employee populations and that eligibility distinctions between full time employees (FTEs) and non-FTEs are blurring, where permissible.  Similarly, these organizations routinely evaluate the diversity, inclusivity and sustainability of their reward frameworks.

In addition to the five reward characteristics above, our analysis has surfaced six emerging total reward trends that organizations introduced during the pandemic as short-term remedies to support their people. We will continue to monitor these programs to determine whether they become permanent fixtures of each organization’s total rewards framework.

1. Enhanced work schedule and work location policies: Throughout the pandemic there has been a significant shift to offering work schedule and work location flexibility, where permissible. We expect post-pandemic total reward programs to become more agile to accommodate increased usage of flexible and hybrid work models.
2. Allowances or stipends to support remote work: To help employees adjust to remote working, organizations have been providing allowances and/or stipends to help them establish home offices, offset energy and internet costs and support grocery delivery.
3. Upskilling and reskilling: During the pandemic organizations have introduced enhanced access to digital learning solutions, skills development resources and recognition for certifications completed.
4. Enhanced physical wellbeing support: The pandemic has necessitated that organizations boost medical safety protocols, support and access. These have taken the form of reduced financial and administrative employee burdens, such as waived employee payments, waiting periods, and precertification requirements, as well as the deployment of enhanced virtual tools, such as telehealth and wellbeing apps.
5. Expanded leave and dependent care programs: Programs implemented during the pandemic include increased eligibility and reduced documentation requirements, expanded program duration, expanded per diems and flexible work hours.
6. Premium pay and one-time bonuses: In response to the burden placed on front-line and mission critical employees, organizations have been offering premium pay and special and/or one-time bonuses.