Rethinking Total Rewards for the Future!!!

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The future of total rewards is shaping up to be dramatically different from its current look and function. Artificial intelligence, workforce analytics, agile organizations, employee experience and more are just some of the changes in store.

Artificial Intelligence - The interconnection of artificial intelligence (AI) and compensation marks a new age in total rewards theory. Machine-powered analytics can provide greater insight into the challenges of job matching and talent selection, which could lead to significantly improved recommendations and higher performance. Soon, AI will lead to "job descriptions that write themselves”. Survey-based data may not be replaced, however, we might be seeing real-time peer data which will help in better and faster pay decisions.

Agile organization - Organizations are becoming more agile and flexible. Within a constantly evolving business climate, it is crucial for an organization to move quickly and effectively. With the advent of technology and digitization, there is a demand for new and unique skills. Hence, an organization will need different approaches to their total rewards. We can now handle bigger data sets and can gather workforce insights through predictive modeling which means we can deliver Total Rewards in ways, which can deliver customization and employee delight. With deeper insights, we can focus on target segments and do things differently for unique employee groups. While segmentation is not new in an organization, the challenge will be to identify the employees with critical, highly sought after skills and create tailor-made reward solutions.

ROI Accountability - Organizations spend billions on total rewards. Traditionally the success of the reward programs was based on implementation rather than results. It will be essential to understand what returns organizations are getting on their vast investments, which will lead reward professionals to deliver outcome-based results. Measuring reward programs will be based on factors like what do employees value, talent retention rates, employee engagement levels, employee behavior, etc.

Employee Experience - Based on recent surveys and research it has been found that employees expect to be treated as consumers. This means there is a need for personal delivery of total rewards (flexible in choosing benefits, flexibility in terms of how they work in the organization, flexibility in managing their careers)

Transparency - Transparency has become the key themes around the world with various legislations like:
  • CEO Pay Ratio in US (thousands of US companies will reveal the CEO pay against the median of the annual total compensation, required as part of the 2010 Dodd-Frank Act)
  • Salary History Ban in some places in US (salary history ban makes it illegal for employers to ask candidates how they are currently or were formerly compensated at work)
  • Gender pay gap reporting in UK
With the people sharing more information about pay, merit increases, last bonus :) on social media (ex glass-door) means organizations can no longer run black box reward programs. Surveys have revealed that employees (more than 50%) do not understand how their pay is determined. This means organizations have to invest heavily in educating employees about the programs.

Inclusion & Diversity - There is a high focus on inclusion and diversity across the globe, which means programs need to be built in ways, which can attract and retain a diverse workforce. Also, the reward programs must communicate and govern in a way that promotes an inclusive culture.

The future is now. The pace of change is unprecedented. Reward professionals must start embracing technology to its advantage, which will enable them to be highly data-driven and efficient. Total reward matters and your approach to it needs to adapt to fit with the world we live in now. The total reward perspective should reflect an organization’s DNA, values and purpose.

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