Aligning Total Rewards For Organisational Success

The definition of "total rewards" is broader than simply how you pay people and what benefits you provide. Total rewards can mean any component of the employment deal that makes your value proposition as an employer "attractive, compelling and motivational" to the talent you need to attract and retain to succeed.

A starting point: Charter and mission

In an ideal world, companies will formulate their total rewards strategy by starting at the highest strategic level (see chart above). By this, we mean that they start with a charter and mission that define the organisation's existence, answering questions such as:

• Who are we?
  
  
• What are we or what do we want to be known for?
  
  
• Who do we want to be when we grow up?
  
  
• When a client or customer hears our name, what image naturally comes to mind or do we want to come to mind?
  
  
• What does ultimate organisational success look like?
  
  

Level two: Value and strategies

Companies then need to focus on a secondary level of organisational definition to delineate internal values and go-to-market strategies. This level really starts to craft the "how are we going to get there" answer to achieving the ultimate mission as it shapes how the organisation approaches its markets, its employees and its goals.

A perfect example of the significant impact that value and strategy differences can have on a firm's actions may be found in examining three mail carrier organisations. While all three organisations have basically the same mission - to deliver mail and packages - their values and go-to-market strategies are vastly different - with vastly different implications for talent strategies and programs.

Level three: Business goals and objectives

These are the short- to mid-term goals of the organisation. They are often impacted by the current economic climate and competitive factors and may therefore not be in direct alignment with the long-term organisational mission. For example, if an organisation's mission is to be a "value" provider (not low cost) to clients, they may or may not be able to realise that "value-added" margin in emerging markets or highly competitive situations where they need to "buy market share".

The trick is to understand where near-term market and/or operational challenges are in alignment (or mis-alignment!) with the long-term mission, and to make conscious decisions that eventually get the organisation back on track. If you do not reconcile the differences between the two, the mis-alignment can be very damaging in terms of morale, not to mention expensive.

Programs, such as performance management processes or "pay for performance" programs based upon short-term goals, without consideration for impact on longer-term mission, can focus employee behaviours and outcomes with unintended consequences.

Level four: People strategy

Employees depart or remain with organisations ultimately because of their degree of success in navigating the environment. Within this phase, staff planning occurs based upon the desired end-state of the organisation as articulated in the mission statement. It is this goal that should be used to determine talent needs. "Given where we want to go, what do we need?" is the question to answer, along with:

• Do we need more talent? Less talent? Different talent?
  
  
• Is our talent organised most effectively to achieve our mission and goals?
  
  
• Are our talent selection, on-boarding, and development programs effective in communicating our desired actions and behaviours?
  
  
• Can we train the current talent in our evolving world, or do we need entirely different skills and competencies?
  
  
• Is our growth dependent upon the scalability of our talent? Or can repetitive tasks be scaled and made more efficient through technology?
  
  
• Are the skills and competencies we need available in the talent market, or do we need to "grow our own"?
  
  
• Does the management team have the skills and tools to lead our talent and make appropriate staffing decisions?
  
  

Level five: Total rewards strategy

Once the appropriate talent is identified, only then can you take the next step which is to define an "employment offering" or "deal" that is attractive, compelling and motivating to the desired talent.

The questions to be asked at this point are:

• What are the components of our total rewards offering?
  
  
• What are the objectives of each component of total rewards - for example:
  
  
  • To attract
    
    
  • To retain
    
    
  • To motivate specific performance
    
    
  • To recognise past performance
    
    
  • To align with market
    
    
  • To align with business strategy
    
    
  • To provide safety and security
    
    
  • To provide flexibility (work/life balance, choices, paid time off, etc.)
    
    
  • To support the culture and diversity
    
    
• Does our total rewards offering adequately and appropriately support ALL our desired objectives? Do we expect too much of some programs? Not enough of others?
  
  
• What is the ROI of each component? The total package? (Basically, can we acquire, keep and motivate the talent we need to achieve our mission with the "package" we are offering?)
  
  
• Where are there alignments and/or mis-alignments?
  
  

Level six: Program specific design

At this point, we are focused on specific program design to achieve greater alignment. The programs to be designed will vary based upon organisational priorities and the greatest potential ROI and impact. Design elements need to be aligned with all the prior analysis. Programs to be examined, designed, and modified at this point can include, but are not limited, to:

• Talent acquisition programs - Recruiting, on-boarding, competitive pay practices, etc.
  
  
• Talent development - Leadership development and coaching, training and development, career planning, tuition reimbursement, etc.
  
  
• Talent management - Job analysis, goal setting, performance management, pay for performance, etc.
  
  
• Talent retention and membership - Health and welfare, wealth accumulation, ownership alignment, etc.
  
  

The program design process should include a close examination of whether programs encourage employees to follow courses of action that ultimately benefit the organisation.

• Do our programs encourage employees to leave when it would be better for client relationships if they stayed?
  
  
• Do our programs encourage employees to stay when it would be more cost-effective if they "turned"?
  
  
• Do our programs encourage employees to "keep their heads down and not make waves" when it would be better if they came up with creative new ideas and challenged the old regime?
  
  
• Should our programs reward individual stars or encourage team achievements?
  
  

These are all questions that need to be answered strategically and then incorporated into specific design components.

Finally, Level seven: Employee behaviours and actions

The ultimate goal of the total rewards alignment model is to ensure and communicate the greatest line of sight possible between direct, individual employee behaviours and outcomes, and the mission of the organisation. Paraphrasing Jack Welch - no employee should come to work and not know what they need to do to help the organisation succeed.

As leaders, we need to be making conscious decisions that support the fundamental goals and mission of our organisation. We should be making those decisions in a way that enhances alignment and decreases any impediments to alignment that exist in the organisation through direct messages and indirect program design.

This is never more critical than in uncertain economic times when all investments, including those in people, are being closely scrutinised. Focussing on the proper alignment of all elements within your total rewards program, as described above, is the very best way to ensure that your "spend" on people is indeed well spent.

Author Credits