Employee Life Stage and Total Compensation

Monday, May 17, 2010

In an April 2010 WorldatWork Research paper titled, “Beyond Compensation: How Employees Prioritize Total Rewards at Various Life Stages”, authored by Margaret Leaf and Rebecca Ryan of Next Generation Consulting and published by WorldatWork, the two authors explore the relationship between an employee’s life stage and total rewards. The authors’ premise is that with a highly diverse workforce, some form of “customized rewards arrangements seems inevitable.” After all, in a society where most things come in a multitude of favors, colors, sizes, options, and configurations, why shouldn’t an employee be able to structure their individual rewards to fit their current life stage? Certainly, it must be obvious that a new college graduate does not have the same needs as a 40 something old in mid career. The authors’ study looked at 11 factors they perceive as being significantly related to the employee's life stage as well as their social status, those factors included:

1. Age ........................................................ 2. Years of experience in current field

3. Years of experience in organization ...... 4. Number and age of children

5. Number and age of adult dependents .... 6. Marital status

7. Supervisor status ..................................... 8. Employment status of spouse/partner

9. Gender .................................................. 10. Race/ethnicity

11. Income

One finding that did not surprise me, women with young children under the age of 6, traded compensation, benefits, career development, and recognition for flexibility in their work life when compared to all other members of the survey study group, … i.e., women with no children, women with children over age 6, and men with/without children. Although we live in an enlightened age, when it comes to child rearing, mothers are still the primary care giver for young children.

So why is there not a higher degree of “customized rewards arrangements” in the workplace? Many organizations have adopted a level of flexibility in health, welfare, and disability benefit options, including a whole array of voluntary benefits. Most mid-sized and larger organization have HR systems sophisticated enough to handle flexible pay and work schedules. The pervasiveness of the Web permits virtually anyone with Internet access to connect with their employer’s business networks with security. Is there still some social stigma associated with working from home and tele-commuting?

My own experience is very telling. While at a large insurance employer, an organizational initiative was undertaken to test the feasibility of tele-commuting for claims processors. The feasibility study revealed that supervisors had a level of dis-comfort with not be able to physical observe their employees at work. Although the production statistics told a different story, supervisors perceived that claims were not being processed. Only through extensive change-management was this perception altered.

In an atmosphere of cutbacks, lay-offs, frozen 401(k) plans, and higher health insurance premiums, employers need to recognize that employees can be retained through a number of non-monetary rewards. Even in a weak economy, good employees have options. Some of those options may include looking at employers who are willing to host flexible pay and work arrangements to accommodate the employee’s life stage. With 50% of the women surveyed in the “Beyond Compensation” study reporting they were dissatisfied with their employer’s work-life flexibility, employers are at risk of losing significant human capital.

Margaret Leaf and Rebecca Ryan may be contacted at Next Generation Consulting, 211 S. Paterson Street, Suite 280, Madison, WI 53703, Phone: 888.922.9596,