Employee engagement does not simply increase through monetary rewards alone.
In line with the diversification of employee values, a unique and attractive reward package "Total reward" becomes required to enhance engagement, which combines the interesting nature of the work itself, a pleasant working environment, organizational culture, skills and career development, employee benefits, and work-life balance.
Therefore, understanding and designing the "Total reward strategy" is a way for companies to enhance engagement.
1. Engagement & Total reward
There is a strong correlation between employee engagement and total rewards, while employee engagement has a high correlation with company performance and productivity.
In other words, if the total rewards are insufficient, it can decrease employee engagement and adversely affect company performance and productivity. In such cases, the following signs may be observed:
Feeling unrewarded and that efforts are futile can diminish motivation and enthusiasm towards work, leading to a decrease in productivity.
Insufficient rewards can create a sense of distance and alienation from the company, resulting in increased unplanned absences and sick leave.
Lacked sense of ownership:
Employees may adopt a more passive attitude and stop going above and beyond what is expected. Additionally, creative activities and suggestions may decrease.
Employees may start looking for opportunities elsewhere that offer proper rewards. Registration and consultations on job search websites may become more active.
2. Total reward strategy
To improve engagement and ultimately maximize company performance and productivity, it is essential to strategically design and provide a total rewards system.
a) Clarification of Total Rewards Strategy:
- Assess the current state of the total rewards, including its purpose and content, along with its underlying objectives
- Important to note that non-monetary rewards may not always be clearly recognized as rewards or incentives
b) Engagement Assessment:
- Gain a clear understanding of what employees value and whether they have any dissatisfaction regarding monetary and non-monetary rewards
- Conduct engagement assessments to gather insights into the situation
c) Needs Analysis and Understanding:
- Employee needs and preferences for total rewards vary greatly
- Differences based on generation, gender, country/region, and job type are evident, and even on an individual level, expectations for each reward item may significantly differ
- Further insights can be gained by combining individual or departmental performance data with reward needs
- Understand the engagement and reward needs of individuals or departments especially where retention is critically important
e) Action planning:
- Identify challenges and prioritize based on importance and urgency, and formulate actions
- Crucial to provide a personalized reward package to the extent possible, considering practical feasibility
- Elaborately communicate reward contents, purposes, and alignment with organizational goals
- Unless employees fully understand them, the effectiveness of rewards on engagement can be diminished
g) Regular Updates:
- The total reward strategy should evolve based on strategy, organizational needs, and employee preferences
- Continuous improvements contribute to the enhancement of both employee engagement and performance
The total reward strategy is essential for the advanced human capital management along with engagement.
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