In recent years, we have seen the concepts of flexibility and personalisation transform job designs and workplaces. They have also helped improve benefit programmes in Asia Pacific – 56% of employers in the region will offer more freedom of choice around their benefits by 2019.1 These movements could very well inspire employees to also want a personalised approach for their pay and rewards – custom-built according to their lifestyle and life stage needs.
In many organisations, segmentation based on job grades/levels or departments have helped modify uniform rewards programmes. Eventually, these practices will need to give way to individualisation based on an employee’s preference. But for this concept to be a viable policy within organisations, there are three main areas that need to be examined thoroughly from an HR and leadership standpoint.
Everyone is different, and individual preferences change over time
As we each journey through life, we go through different stages that greatly influence our priorities around preferred pay-mix. This essentially determines how much cash and incentive we need at certain points in our life. Those of us who may be sole breadwinners for a family of four, for instance, will usually prefer a higher fixed income and less variable pay. Whereas those of us who are more mobile, or without dependents might be willing to take a larger pay at-risk ratio, with a notion that higher risk would yield higher returns.
The idea gains complexity once you consider an employee’s pay level, performance and contributions to the business – especially at senior and executive levels. Many individuals at higher levels are typically in life stages that require a larger sense of future security with their cash flow. Thus in pursuing a personalised rewards approach, compensation models need to be aligned with perceptions regarding pay. Doing so will greatly assist organisations in finding the right models to best motivate their workforce. Ensuring the model is agile will provide employees with even more value, as they will have the opportunity to choose their option on a yearly basis. In certain countries, some forms of flexible rewards have tax advantages that will make these options worthwhile to pursue from a business and administrative perspective.
Of course, the enormous task of fulfilling personalised rewards for any employee profile falls squarely on HR’s shoulders. To say that this will be ‘challenging’ is an understatement. However, the good news is that existing digital technologies have provided multi-faceted solutions for manual tasks, so administrating the payroll process will not be a major issue. This challenge instead presents HR with a new opportunity to apply the consumer experience to employee engagement and to leverage technology for the analysis, management and innovation of rewards.
Using consumer marketing methods to craft this policy for your organisation will quickly help to reveal ‘market segments’ within the workforce. Having a clear profile of your ‘customers’ will help HR and leadership develop a more creative and relevant set of rewards portfolios to deliver more value to employees – especially your most critical talent. Digital technologies can help to effectively identify and monitor these various offerings.
A truly differentiated, individual value proposition
Willis Towers Watson’s research and our experience working with leading companies in the region shows that employee perceptions on rewards have a direct and measureable impact on attraction, retention, engagement, productivity and thus also the bottom-line. A crucial factor in sustaining employee engagement around rewards is realising that, the changes in employee attitudes and culture today are also helping to reshape rewards into dynamic forms beyond cash and performance. In short, the rewards of yesterday do not have the same appeal today.
This is largely because top talent today are very well aware of the numerous opportunities they can explore in the market versus the reasons for staying put in one place for long. Technology has enabled them to create an individualised design for their work and life, so being in a work environment that hasn’t adjusted to this mind-set will quickly make them impatient for change and greater autonomy.
Progressive employers that have caught on to this cultural shift already know that top talent are often willing to make a ‘social’ agreement – their loyalty and contribution in return for rewards that are commensurate to their work and need for continuous growth and flexibility. Changing rewards, on the basis of these insights, can significantly reduce employee turnover and attrition costs.2
Beyond simply being a policy, a personalised approach to rewards reflects more on the values and mind-set of an organisation. It gives jobseekers a good idea of how much you have transformed to become relevant in this day and age. It also helps them decide how attractive of an employer you are in today’s global marketplace. It is worth asking, what might employees and jobseekers think of how ‘employable’ you are from their point of view?
Capturing subjective choices through objective methods
Clearly, personalised rewards will not happen overnight, but we can expect this concept to gain tailwind as an increasing number of organisations explore and hone their mechanics through an improved understanding of workforce demographics and the employee experience. Consumer marketing relies heavily on a constant study of target audience through market research methods, including focus groups, data mining and surveys. These, and other research and analysis methods, are also available to HR for determining and testing what might work best within their organisation.
Among these methods are conjoint analysis and trade-off analysis. Conjoint analysis captures employee preferences through surveys that touch on multiple aspects of their pay and rewards. Trade-off analysis simulates various scenarios that demonstrate the potential changes of transferring the costs of a lesser valued reward type to a more valuable one.2 3
Total Rewards Optimisation (TRO) is an ideal way of aligning rewards with employee preferences to get the best value for your budget, promote desirable behaviours, and drive higher productivity. TRO also offers the flexibility to segment and differentiate rewards for different employee groups or parts of the business.
The simple truth is, each consumer has varying wants and needs throughout their lifetime, and it is crucial to capture these changes through objective methods. Building a reliable database of knowledge about your workforce will also present countless opportunities to innovate – allowing HR to flex their curiosity and creativity muscles.
1 2017/2018 Willis Towers Watson’s Asia Pacific Benefit Trends Survey
2 Willis Towers Watson: Treat Your Employees as Consumers
3 Willis Towers Watson: Guide to a Total Rewards Strategy
Sambhav Rakyan is the Data Services Practice Leader in Asia Pacific and Head of Talent & Rewards in India. Shai Ganu is Managing Director of Talent & Rewards in South Asia and leads our Rewards line of business in Asia Pacific. To connect with Sam or Shai, please email