New study debunks some myths about the rewards equation

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Published on November 5, 2007
BusinessWorld Wealth Manager Section

By Mylene Masangkay and Stella Garcia, CCP

Employers tend to underestimate the impact of workplace stress on their employees. While many of them think that employees leave primarily in pursuit of higher pay, a recently concluded Watson Wyatt Global Strategic Rewards survey showed that high tension levels were more likely to push an employee to turn in his resignation.

The survey that covered both employers and employees in 22 countries including the Philippines showed that each group expressed different views on rewards. For this reason, the study which will be available in a few weeks is a must-read for companies who are serious in attracting, retaining and engaging talent.

Drivers of Attraction and Retention

A noteworthy survey finding was that employers and employees did not share the same views on why people join and leave an organization.

While base pay is an important component of attraction and retention, from the employees’ perspective, it is not the top priority. From his viewpoint, the top reason for joining is the nature of work while the top reason for leaving is the level of stress. The survey revealed that stress levels and work/life balance provide tangible returns -- employees are more likely to stay and recommend the company to peers as a good place to work if they like what they do and are not overly stressed in doing it. It will take roughly a significant 25% salary increase for employees in this enviable situation to leave the job for another. Less-satisfied counterparts are likely to be hired away for less.

Management of Total Rewards

Companies are more and more going beyond the basic of rewards and becoming more creative in considering how to attract, retain and engage employees.

More than half of the companies surveyed have or are developing a company-wide rewards plan and even a greater number are introducing a company-wide job classification approach to facilitate global mobility and establish globally consistent total rewards programs.

This sets the stage for employers to address the rewards priorities of their targeted workforce segments more effectively, but they must avoid two pitfalls in order to maximize return on investment:

• Misguided investments -- Allocating resources to rewards programs that are not important to employees is unlikely to produce the desired returns.
• Poor execution or implementation -- Employee awareness and understanding of reward programs is required for these programs to have any power in attraction, motivation, or retention. Low employee awareness suggests that many companies have ineffective communication programs.

The rewards promise must align with business imperatives and strategy, be relevant given employee priorities and, noteworthy, be effectively communicated and understood by all employees. In turn, rewards delivery must be consistent with the promises set out at the beginning of the performance cycle.

ASIA-PACIFIC FINDINGS

Employers in the Asia-Pacific region undergo the same types of challenges as experienced by employers in other parts of the world. In contrast, there appears to be different reasons why employees join or leave their companies. Employers in Asia-Pacific overestimate the importance of company culture and underestimate the significance of job security in attracting employees. In terms of retention, only Japanese, Korean and Malaysian employers consider the level of stress among top three reasons for leaving the organization.

Asia-Pacific had the highest favorable responses about how well managers are doing their job in relation to performance and rewards.

In summary, to improve employers’ ability to attract, engage, and retain employees using rewards, employers need to:

• Complete workforce planning -- They need to assess the nature and quantity of the talent they are likely to need given growth, turnover, and retirement projections? Where will they source this talent?
   
• Understand employee rewards preferences -- Without considering employee rewards priorities, employers are unlikely to design rewards programs that are meaningful to employees and thus lose out on their investments in pay and benefits programs.
   
• Articulate the rewards promise and deliver on this promise -- Improving the effectiveness of performance management, both prospectively (in communicating reward opportunities and associated goals) and retrospectively (in communicating pay decisions and its link to performance).
   
• Address stress in the workplace -- Performance expectations should be aggressive but realistic. Appropriate organization and job design, along with clearly prioritized responsibilities and effective training, can mitigate employees’ stress and improve their work/life balance.

A compelling employment deal requires a win-win relationship -- For the employer, the relationship is one that allows him to create business value through committed employees. For employees, the relationship translates into a meaningful work experience!

Note: The Global Strategic Rewards Survey spans information gathered across 22 countries in five continents. It covers responses from 946 companies representing 15 million employees spanning multiple industries. To supplement this, opinions from 12,000 employees across the world were considered in the comparisons. For Asia-Pacific, the survey covered 400 employers and opinions of 4,000 employees.

Stella J. Garcia, CCP, is Watson Wyatt Manila’s Office Practice Leader for the Human Capital Group. Mylene Masangkay is a Consulting Specialist and is the Philippines’ Champion for the Global Strategic Rewards Survey. Watson Wyatt is the trusted business partner to the world's leading organizations on people and financial issues. For more information on the Global Strategic Rewards Survey, please contact Stella Garcia at stella.garcia@watsonwyatt.com or call (02)841-5188 and Mai Masangkay at mylene.masangkay@watsonwyatt.com or call (02) 841-5137.