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 consider as components of total rewards and how they are measuring effectiveness of their total rewards strategy. 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 the total rewards package beyond employee compensation and benefits. When asked what they consider as part of their total rewards package, the majority of employers indicated that they include everything from tangible rewards (e.g., compensation and benefits, otherwise known as total compensation), to professional development, flex working programs, and non financial 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.
Measuring effectiveness
The employer’s understanding of the effectiveness their strategy is critical when it comes to knowing how to invest in different components of 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 total rewards programs.
Additionally, they are assessing the effectiveness of their total rewards strategy by looking at candidate attraction, employee engagement, and turnover, or employee retention, 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.”
Recognizing employees
As you know, employee recognition is a critical part of engaging, motivating, and therefore retaining employees. The majority of responding employers have employee recognition programs, with over half managing them internally rather than through a vendor. For hr professionals this means making sure that your performance management program aligns with and supports your total rewards strategy.
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 compensation, gift cards, or physical merchandise.
Last, but not least
Base pay, of course, is a critical pieces of the total rewards package to both the employer and employee. Mercer's Compensation Planning Survey , provides insight into the question “What do organizations spend for annual increases?”
Most recently we have seen lower projected budgets for base pay increases, though still not as low as before the pandemic
Timely information
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.
Looking for other information? Contact us at 1-855-286-5302 or surveys@mercer.com.
