Closing the gap
With wage growth lagging behind inflation, many organisations are turning to noncash perks and programs to help drive worker retention and performance. But perks and pay aren’t what matter the most.
Rewards programs are falling behind both internal and external expectations. For workers, rewards mean more than money. They are looking for personalised rewards that meet their needs—and yet most organisations have been guessing and don’t know what their people want or value. Meanwhile, rising social pressures on organisations, driven in part by disparities in wealth and the gains from economic growth, mean more organisations need to account for how their own pay and rewards systems stack up against broader worker and societal expectations. In the domains of learning, leadership, teams, and career development, rewards have to be adjusted to drive the desired outcomes. There are gaps and growing frustrations across the board.
As organisations compete for talent by touting organisational purpose, the workforce experience, career growth and fulfillment, and a wide variety of development programs, one critical component of the equation has fallen behind: rewards. This year, only 33 percent of respondents to our Global Human Capital Trends survey felt that their organisations were ready or very ready to address this issue, and only 11 percent of respondents believed that their rewards strategy was highly aligned with their organisation’s goals (figure 1). Why is this area of business so hard to manage?