Many Canadian and American companies haven’t aligned their total rewards strategy with their business strategy, according to a survey.
Mercer’s Total Rewards Survey finds that, while more than half (56%) of organizations made a significant change to their total rewards strategy in the past three years, less than one-third (32%) said their total rewards and business strategies fully align.
“It is critical that a company’s rewards strategy aligns with its business strategy to achieve overall success,” says Steve Gross, senior partner in the rewards segment of Mercer’s talent practice.
“A balanced approach to total rewards—one that acknowledges the needs of the business, the changing environment, the aspirations and demographics of employees, the local culture, and the current and future cost constraints—is both essential and challenging.”
According to the findings, the majority (89%) of organizations rank attracting and retaining the “right” talent as the most significant challenge of their overall total rewards strategy.
Other challenges noted as very important include gathering relevant market compensation data (reported by 74% of organizations), keeping rewards affordable (66%), communicating the value of rewards to employees (61%) and ensuring pay for performance and performance differentiation (62%).
“As companies focus on the cost of their talent, attracting and retaining the ‘right’ employees and differentiating rewards for top performers are challenges that can be made easier by incorporating the use of workforce analytics,” said Mary Ann Sardone, partner in Mercer’s talent practice and regional leader of the firm’s rewards segment.
“Additionally, incorporating offerings such as career development and work/life balance initiatives into total rewards strategies caters to the needs of millennials in the workplace.”
The survey includes responses from more than 350 employers across all industries throughout Canada and the United States.
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