In the inaugural edition of our new Mercer QuickPulse™ survey, we collected information from over 1,000 employers in the US and almost 400 employers in Canada. We asked employers what they are including as part of their total rewards strategy and how they are measuring effectiveness. We also asked how employee recognition fits into the total rewards strategy.
Defining total rewards
Though we have spoken about total rewards as a comprehensive offering for years, it seems like it’s just within the past few years that employers are strategically planning and managing rewards other than compensation and benefits. When asked what they consider as part of their total rewards strategy, the majority of employers indicated that they include everything from tangible rewards (e.g., compensation and benefits), to career programs, flex working programs, and intangible rewards such as work-life balance and culture.
Almost half of the respondents from each country plan to revisit their total rewards strategies in the next 6 to 12 months in order to increase their ability to attract and retain employees. In particular, they intend to make investments in areas such as:
- Compensation — 71% US / 69% Canada
- Mental or emotional wellness — 59% US / 53% Canada
- Career paths — 56% US / 50% Canada
- Training and skill development — 60% US / 58% Canada
- Culture and values —54% US / 51% Canada
- ESG — 65% US / 69% Canada
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How do they determine where to invest and which areas deserve attention? Through a mix of market data, benchmarking, and employee listening (such as focus groups and engagement surveys), employers can determine what the majority of labor market competitors are doing. Using these insights, they can customize their approach to meet the needs of their employees.
The employer’s understanding of the effectiveness their strategy is critical when it comes to knowing how to invest in total rewards. Survey respondents report using multiple methods to assess the effectiveness of their total rewards strategy, including annual employee engagement surveys, comparisons to market data/benchmarks, and tracking the utilization of programs.
Additionally, they are assessing the effectiveness of their total rewards programs by looking at employee attraction, engagement, and turnover, as well as market competitiveness. By looking at these and other indicators, the majority of participating employers in both the US and Canada indicated that their total rewards programs are “successful” or “highly successful.” However, when it comes to turnover, the number of employers indicating that total rewards are driving the desired behaviors is slightly lower, although around half of the companies in both countries still report success.
But, what do their employees think? In the US and CA, when asked whether their employees are satisfied with their total rewards, approximately 60% feel that their employees are “somewhat satisfied.”
As you know, recognizing employees is a critical part of engaging, motivating, and therefore retaining employees. The majority of responding employers have recognition programs, with over half managing them internally rather than through a vendor.
In the US and Canada, the majority of the companies have “manager to employee,” “peer to peer,” and “tenure recognition.” At this point in time, fewer than 1 in 5 respondents in each country report that they currently recognize the attainment of new skills and few are considering implementing such recognition. Employees receive their recognition awards in the form of cash, gift cards, or physical merchandise.
Last, but not least
As we await the next version of the Compensation Planning Survey, to be published in mid-April, the question on everyone’s mind is “What did organizations actually spend for annual increases?” According to this survey, we may see an increase in the 3.9% merit and 4.3% total increase budget that the US companies predicted in November of 2022. Thirty percent of US companies are reporting they increased their budget compared to what they were planning at the end of last year. In Canada, which originally predicted 3.4% merit and 3.9% total increase budgets, 27% of companies indicated an increase.
With these new Mercer QuickPulse™ Surveys, you can expect to gain insight on hot topics in a timely manner. Results are free to participants and we need you to participate in order to produce quality results. Sign up to be notified with the next QuickPulseTM opens for participation.
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