Engaging tomorrow’s workforce with human-centric total rewards 

Woman with tablet at office
Woman with tablet at office

Are your pay practices aligning with the evolving expectations of tomorrow’s workforce? 

Human-centered total rewards practices are anchored in fairness, personalization and transparency. They empower individuals to determine when, how and how much they will be compensated in ways that hold personal meaning and reflect the new work models and relationships that will shape the future of work.

Fairness and equity in the spotlight

In today’s society, fairness and equity are fundamental expectations. Whether viewed through the more common lenses of diversity (such as gender, age and ethnicity) or more specific perspectives (such as individual experience and performance), assurance of fair treatment in relation to peers and recognition for contributions are key for today’s workforce. The rise of data accessibility, social sharing, pay benchmarking tools, disclosure laws and powerful new AI tools has elevated transparency in pay and rewards to new heights.

According to Mercer’s 2024 Global Talent Trends study, high-growth companies are more likely to use pay equity and fairness insights to make better decisions when compared to low-growth companies. High-growth companies are able to identify:

  • 1.6 times as many underlying causes of pay inequities (52% versus 32%)
  • 1.6 times the extent of pay inequities (51% versus 32%)

Pay fairness goes beyond equitable compensation; it involves recognizing the worth of work and individual contributions relative to peers. High performers naturally expect higher rewards and recognition, making it imperative to align rewards programs accordingly — including elements beyond base salaries, such as incentive pay, promotion and professional development. 

Changing work models and personalization add complexity

When considering emerging work models, demonstrating pay fairness in a world of increasing transparency becomes even more complex. Flexible working, gig contracts, virtual work and a whole host of hybrid models are becoming commonplace. They require innovative rewards programs that recognize individual skills and contributions beyond the traditional definition of a “job.” On top of this, personalization is now an expectation, adding another level of complexity. Employees desire highly personalized rewards programs that deliver a combination of cash, incentives and benefits aligned to their specific needs and circumstances. Personal and professional growth, skills development and the opportunity to do meaningful work that positively impacts society are vital components that leading companies cannot ignore when considering their overall rewards strategies and employee value propositions.

The convergence of fairness, personalization and transparency defines the next generation of total rewards in human-centric organizations. This establishes your organization’s identity and differentiates you from others as you compete for tomorrow’s top talent. So where do you start?

Putting principles into practice

It all starts with having a well-articulated and well-understood pay philosophy. Best-in-class organizations integrate career development, purposeful work and emerging work models into this philosophy, fostering robust employee engagement, long-term commitment, fairness and transparency.

Consider, for example, the unique employee segments you might be targeting for specific roles, what you’re offering and what you’re delivering to your employees (including virtual, gig and hybrid workers) as part of your pay philosophy. Should you differentiate by providing training and growth opportunities to help them develop new skills that make them more employable? Do you offer affordable and customized employee benefits that help employees manage the inherent risks in life and allow you to shine as an industry leader? Or do you provide access to employment with fair pay and benefits for recent immigrants to give them experience in their first local jobs, rewarding them for doing good work and helping them build new lives for themselves and their families? Employees will tell you they want all these things, but rewards professionals know that, with limited resources, you need to make strategic decisions — prioritizing the investments that will drive the greatest return for your employees and your business.

Tuning in to employees’ values

Many companies go straight to benchmarking when reviewing their rewards programs, focusing on whether their retirement plans, health and wellness benefits, and cash compensation are competitive with what other companies offer. But they skip the process of tuning in and listening to employees to see what parts of the pay programs resonate most with them (or which parts are not as highly valued). In short, they will invest in the external analysis but won’t balance it with the internal analysis of what matters most to the people they’re trying to attract and retain.

Consider the scenario of a large retail client whose distribution center, situated in a remote, low-transit area, experienced high turnover due to unpleasant work conditions. Despite initial assumptions, the HR team overlooked crucial insights by not tuning in to the needs of the predominantly immigrant workforce. Listening to employee feedback made it evident that they sought more overtime opportunities rather than disliking the nature of the work. However, existing union agreements favored senior employees for overtime, leaving newer hires without access. Through contract negotiations and increased flexibility in overtime allocation, retention improved without escalating total rewards spending. This case underscores the significance of understanding and addressing employees’ needs for informed decision-making.

You can gather such insights through various means, including workforce analytics, employee engagement data, focus groups, conjoint surveys, employee preference analytics, and benefits plan enrollment and usage data, to name a few. Collecting these types of insights and analyzing them holistically will allow you to target your total rewards investments for the most significant positive impact on your employees. You can set priorities by combining external market data with internal employee analytics. For instance, do you target investment in your work environment, retirement savings plan, wellness benefits, or employee recognition and rewards? Tuning in helps you determine the right mix of total rewards for your employee population — recognizing that even within your organization, there are different employee segments with different needs and priorities. 

The future of total rewards

For most companies, truly personalizing rewards in this way has not been a realistic deliverable. Most companies standardize their offerings to force-fit bundles to meet generalized employee populations. AI and technology hold the promise of true personalization. Imagine being able to genuinely offer each person a customized, targeted and meaningful total rewards package supported by predictive AI tools to help them make the most of what’s available, sustain them through specific periods in their lives, and customize their rewards to their unique needs and working relationships. 

The journey toward tomorrow’s total rewards begins today. There are strategies that organizations can deploy now, such as employee-level research and making foundational technology investments to connect systems, access meaningful insights and analytics, and offer self-service tools for employees to navigate and personalize their total rewards seamlessly. These kinds of investments can be sizeable and may require external providers and multiyear commitments, making it even more important to get started now.

    About the author(s)
    Related products for purchase
    Related solutions
    Related insights