Why total rewards optimization?

Help attract, motivate, engage, and retain the employees you need to drive desired results through total rewards optimization.

Help attract, motivate, engage, and retain the employees you need to drive desired results through total rewards optimization

Understanding employee needs is one of the most critical elements when designing and delivering a total rewards strategy, yet it is usually overlooked over the course of the decision-making process.

Often the dollars that organizations invest in total rewards are wasted on programs the employees either do not want or do not need.

Much of this disconnect results from a lack of company understanding of the needs and preferences of employees. Often the value that employees place on rewards does not directly align with the number of dollars being invested, so organizations are overspending in some areas and missing an opportunity to create value in others.

Mercer Rewards Optimizer™ provides an effective way to quantitatively measure employee preferences and address the lack of understanding that leads to missing the mark on delivering the most effective program (the right mix of rewards at the right level of investment). Mercer Rewards Optimizer™ is a powerful tool enabling clients to identify the most effective reward package that better meets the needs of their employees at the same or lower cost to the organization. 

Mercer Rewards Optimizer™ process

Total rewards optimization is the key to unlocking the power of total rewards programs. It enables organizations to factor in workforce preferences into process of strategy and program refinement, resulting in increased employee satisfaction, reduced wasted cost, and a better measurement of ROI – ultimately resulting in better attraction, retention, and employee engagement.

The optimizer process consists of two primary activities:

Listening to your employees

  • Conjoint analysis survey to measure workforce preferences
  • Managing awareness and expectation
  • Seamless employee feedback experience

Enhanced cost data analysis

  • Clear insights from data
  • Portfolio optimization to test different packages to look at the most effective combination of rewards options relative to preferences and costs
  • Detailed reporting and recommendations 

Collecting Preferences through a Conjoint Survey

The first step is to measure employee preferences through a custom survey that includes a simple series of trade-off questions using the Conjoint methodology. Conjoint is a sophisticated research methodology that allows for a comprehensive understanding of the preferences that drive employee behavior, providing both the rank order and magnitude of preferences for the program features tested. 

Bringing Together Preferences and Cost through Portfolio Optimization

The second step of the optimization borrows the idea of the efficient frontier from economics, allowing us to gain insight into the impact that program changes will have on the behaviors of the employee population.

The efficient frontier provides us with a series of “optimized” packages – pinpointing the most efficient way to spend dollars and maximize employee preferences.

Leveraging this total rewards optimization concept, organizations can deliver a total rewards package that better satisfies the needs of employees at the same or lower cost to the organization simply by taking out “wasted” dollars and re-investing them in under-delivered reward areas. 


Case Study Example

A large retailer was having trouble with high employee turnover and low engagement among their non-manager, hourly associates. For this retailer specifically, the medical plans posed a particularly difficult challenge. With finite resources to invest, the organization needed to identify better ways to invest resources to drive more value for their workers. Through a total rewards optimization project, the client was able to identify avenues for cost savings, yet still deliver a program that better met the needs of employees.

The optimal plan offerings included slightly higher monthly premiums but a significantly expanded medical offering that included less expensive telehealth and mental health support options and a richer contribution to the Health Savings Account for enrolled participants.

Mercer Rewards Optimizer ™

Watch the video and discover how Mercer can help your organization optimize your total rewards strategy. 
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