Total Rewards, Good-Will, and Engagement

Tuesday, March 02, 2010

A total rewards philosophy sets the framework within which an organization manages its overall employee remuneration including direct and incentive pay, benefits, and rewards. Although not necessarily obvious, total rewards also includes the non-monetary aspects of the employer-employee working relationship. Employees often perceive value in a relationship with an organization that is well thought of in the local community, highly regarded among industry peers or recognized as a national or international leader in its field. Distinctions such as Fortune’s “100 Best Companies”, Forbes “America's 25 Fastest-Growing Tech Companies”, and U.S.News & World Report’s “Best Colleges 2010” convey a degree of value to the recipient’s employees by virtue of the employee’s association with the organization.

Organizations are often unaware of the advantage that “employee goodwill” can bring to attracting and retaining employees and fail to take full advantage of such leverage. This failure derives from the organization’s lack of direct line of sight between employee goodwill, current and prospective employees, and the organization’s skill-set needs. Many of these organizations have a far better understanding of their “brand” impact on target customers through extensive market analysis than an understanding of their own employees. This same type of “banding” and customer market analysis could be used to identify and create a strong linkage between the organization’s current and future employees and its skill-set needs.

As businesses continue to increase their degree of competition at all levels, employee organizational engagement becomes increasingly essential for the success of the organization in the global marketplace. It is easy to assume that increased application of technology, targeted marketing techniques, and communications that are more sophisticated can produce a winning product without considering the talent required to design and develop that product. To achieve engagement, the organization certainly has to compensate, reward, and recognize employees for their contribution towards the success of the parent organization. However, engagement goes beyond direct compensation and focuses on the holistic reasons that motivate the employee to remain with the employer and drive towards the goal of excellence.

Organizations such as: The Hay Group, Mercer, Buck Consultants, TalentKeepers, Hewitt Associates, Towers Perrin, Watson Wyatt, The Conference Board, and a host of others have been telling us for a number of years that employee engagement is key to sustained organizational productivity and growth. In an April 20th 2009 article in Management-Issues, the recruitment and outsourcing firm Kenexa reported engagement levels in India and Brazil ranked 1st and 2nd worldwide at 73% and 65% respectively. The US placed 3rd, while Britain and China tied for 12th place. http://www.management-issues.com

While employee engagement and satisfaction surveys will not cure what ails many US businesses, employee engagement is another effective tool in the organization’s toolbox when used correctly along with a total rewards philosophy.