Know Which Benefits Your Employees Care About

Understand and offer the rewards your employees most care about to increase loyalty and performance.

Every year for the past five years, about one-third of organizations have increased their benefits offerings. As a result, the average organization now offers more than 20 distinct benefits. Unfortunately, 67% of employees don’t believe their organizations understand which rewards are relevant to their needs.

Among employees who believe that understanding exists, intent to stay with their employer is 4% greater and employee performance is 12% higher — an increase associated with a 3.2% profit improvement.

So, better performance, higher retention and higher profits. How can HR leaders increase the relevance of benefits to capture those gains?

To answer that question, Gartner interviewed heads of total rewards, compensation and benefits from 40 organizations and surveyed more than 10,000 employees across 22 countries and over 20 industries to study 12 rewards categories, including base pay competitiveness, family and work-life benefits, and health insurance.

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3 rewards categories stand out globally

The most important categories to employees are base pay competitiveness, time off, and promotion and recognition. Within these top three categories, five attributes have the highest sensitivity scores and are most aligned to employee needs:

  • Growth in base pay over three years
  • Paid vacation days
  • Paid sick days
  • Average time to promotion
  • Base pay increase for promotion

The take-away for HR? To maximize the relevance of total rewards — and by doing so drive talent and business outcomes — focus disproportionately on these five attributes.

Different employee segments want different things

It’s also important to differentiate among employee segments. “Understanding segment preferences allows organizations to tailor the rewards they offer to their employees, which in turn increases employee loyalty, engagement and productivity, and can also boost talent attraction and retention efforts,” says Brent Cassell, Vice President, Advisory, Gartner.

The 2019 Gartner Total Rewards Employee Preferences Survey investigated the rewards preferences of the four employee segments that differ most from the global benchmark: Millennials, tech employees, employees in China and India, and hourly employees.

The results showed that millennials prioritize family benefits (particularly paid elder care and paid maternity leave), event-driven medical benefits (such as prescription drug co-pays), and more frequent rewards and promotions that recognize their contributions. Tech employees also prioritize promotions and recognition. They are also more interested in short-term incentives, like the frequency and probability of payout, and they want compensation that’s competitive and perceived to be fair.

Employees based in China and India also seek excellent family benefits, including paid elder care and paid maternity and adoption leave. Moreover, they want more frequent and more likely short-term incentive payouts, and are focused on growing their careers via promotions and pay increases. 

The final employee segment Gartner profiled, hourly employees, cited event-driven medical benefits and financial benefits as their rewards priorities.

An agile approach moves the needle

In a tight labor market with more open jobs than people to fill them, rewards play an increasingly important role in attracting and retaining talent. While many organizations realize a relevant rewards package would help improve talent outcomes, they struggle to adapt to fast-changing employee needs.

An agile approach to total rewards means that organizations can offer lower-cost rewards that can be implemented quickly and address employee needs at the basic level. From there, total rewards and HR leaders can measure the value, cost and impact of a particular reward to determine whether to scale the reward up or down or remove it entirely.

Building a more relevant rewards portfolio based on employee preferences and ensuring that HR can make frequent and impactful changes based on real-time feedback enables organizations to harness the talent benefits of their rewards offerings.

Gartner for HR clients can watch a two-part webinar series on Data-Driven Total Rewards Plan Design: Leveraging Employee Preferences, part one and part two.

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