Rewards at Work
As competition for quality workers heats up, companies are seeking new and innovative ways to reward and motivate their workers. Rewards can help with attraction and retention of good people. Most companies have similar rewards, as many types of benefits are considered to be standard -- things like health insurance, time off, dental and others are considered the norm in any position worth having at a company worth working for. Companies have to have such benefits in order to compete for the best people, and companies that do not offer a comprehensive benefits program may finding themselves wanting for talent. Thus, there has been significant innovation in rewards packages in recent years, as companies have sought to gain competitive advantage over their rivals in attracting talent. This paper will answer several critical questions with regards to the ways that companies in the 21st century are trying to attract and retain talent.
Innovations
An organization's compensation strategy plays a critical role in acquiring and maintaining the talent that it needs in order to meet its strategic objectives. Compensation of all types costs money, so there is going to be a cost-benefit analysis on compensation plans, but there are basically two main ways to look at compensation strategy. The first is that there is a baseline of compensation that an organization has to offer in order to attract competent people. This usually takes the form of "normal" compensation packages, a combination of pay, time off and insurance, offered either in a traditional "take it or leave it" sort of manner, or in a buffet style benefits plan. In either case, companies that want workers with education, experience and any sort of track record of success will need to offer these basic benefits.
The next level of strategic compensation management is that companies that wish to attract top talent need to offer superior benefits. This does not mean things like letting them use the Internet -- which is pretty much equivalent to letting them use the bathroom without having to raise their hand in class or obtain a hall pass -- it means equity-based compensation, and benefits that are geared to maximizing creativity and productivity. These are the sort of benefits that have been popularized to some extent by their success in the tech sector, where competition for talent is intense. In other fields, competition for talent may not be as intense, but companies have started to become more creative in what they offer their employees in order to affect that actual work environment. Normally, benefits focus on what the employee takes home from the job at the end of the day -- a pension, some health care, braces for their son, glasses for their daughter. The modern, innovative approach to benefits has started to focus more on what the company can offer employees while on the job to improve their motivation and performance. Work environment and career development have become, along with pay and benefits, an integral part of total compensation in the 21st century (Kaplan, 2005).
This has come about because companies have started to realize that there is more than one type of person in the world, and that sometimes different people want different things from their employment. Some people are focused more on career development, some people just want to work in a location that they like, and others are focused on self-actualization than anything else. The idea that there are different needs is old, going back at least as far as Maslow, but companies are starting to build this idea into their total compensation packages. The most important thing is that companies need to align their total compensation packages, and all innovations contained within, to what type of worker they hope to attract.
The innovations therefore have to have a specific purpose. Tech firms offer their unique benefits in order to entice younger workers to spend more time at the office, which is necessary in work that requires long hours for projects -- give people a place to nap or blow off steam, and some food, and they can give you a lot more hours when it is needed to get a project on deadline. In other instances, workers are attracted by the opportunity to work and live in a major city, or to work for a company that is rapidly growing and thus will give them an opportunity to build their career along with it.
2. Aligning benefits with jobs
There are different rewards preference profiles for...
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