While companies see the value of and invest significantly in total rewards programs, a new survey finds that few are seeing successful results, due to a lack of execution.

Aon Hewitt’s 2012 Total Rewards Survey of nearly 750 organizations shows that 58% use total rewards programs to drive employee engagement, while 48% want these programs to improve their ability to retain talent, as well as attract talent (44%).  However, 60% describe their engagement levels as low, and two-thirds indicated that the trend in engagement is holding steady or trending downward.

“Companies invest millions of dollars each year to recruit and incentivize talented people to be engaged and motivated to perform at their highest levels,” says Jane Kwon, associate partner of Aon Hewitt. “When rewards programs are properly aligned, designed and delivered, the positive impact on individual engagement and organizational performance can be significant. However, we find most organizations are not taking the necessary steps to achieve these desired outcomes.”

To uncover why employees were falling short on meeting their objectives, the study analyzed the total rewards programs of 150 high-performing companies and compared them with the remainder of the surveyed companies. The survey found the differentiating factor between high-performing companies and the rest was not about the programs they focus on, but how the programs are executed.

Here are four things high-performing companies do differently with respect to executing the programs:

  1. They articulate clear strategies and goals — The high-performing companies are almost two times more likely to have declared total rewards an area of focus and have a clear stated strategy compared to the rest of surveyed companies.
  2. They define the effectiveness of their total rewards programs differently — The analysis shows that the primary way high-performing companies define the effectiveness of their total rewards programs is by measuring employee engagement, while the rest of companies define effectiveness as cost versus budget.
  3. They use data and input to drive decision-making — Three-quarters of high-performing companies gather market data to assess the competitiveness of their programs, compared with just 61% of all other companies.
  4. The total rewards program is connected to the business, employees — The high-performing companies are more likely to align total rewards programs, such as those that focus on culture, challenging work and pay benefits, with top business objectives. Therefore, they communicate better and use targeted communications to meet the diverse needs of the workforce.

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