People now expect their employers to play an active role in helping them navigate economic stress. Get insights into how to determine whether your organization's total rewards truly align with what your people value.  

Authors: Kevin Talbot Gillian Scott


Employers are used to riding out difficult periods when demand for talent exceeds supply — they have strategies for that. But the factors that are important to consider have increased, while the depth of demand for hiring employees remains at odds with a shallow pool of availability.

Margins for error when determining the best approach to recruiting, rewarding and retaining talent may never have been so small. From January through June of 2022, 72% of organizations experienced an increase in open positions.1 Workforce shortages and the scramble for limited talent are now driving compensation and benefit reforms, aided by technological advances aimed at easing widespread staffing issues.

As long as inflation pushes up the cost of groceries, gas and other essential and non-essential goods while the job market remains strong, employee demands for higher wages will continue. Organizations are acutely aware that competition for talent in this economic environment is eroding compensation structures, adding costs and reducing profit margins. Tension between colliding wage and market inflation needs an outlet — and a reconfigured approach to compensation, and more broadly total rewards, can provide one.

Competitive compensation is a starting point for attracting and keeping top talent, but an updated approach to holistic total rewards design helps carry employers across the finish line. In 2022, 4% added childcare assistance to help with inflationary pressure, 11% are reimbursing for transportation costs, and 29% are extending timelines for remote work.1

The competitive necessity of putting a premium on flexibility

Returning to reopened workplaces as the pandemic moves into a milder phase, some employees may be greeted with an updated environment. But a more important focus on renewal applies to their experience beyond their surroundings. Wherever they work, employees expect more flexibility and choice in policies and benefits — and more employers are supporting different needs within the realm of affordability and effectiveness.

Large-scale remote work, initially regarded by many organizations as a temporary solution in 2020, proved its merits quickly. Extending this option to qualified employees is becoming a must-have policy in many industries, often as part of a hybrid model that requires or allows employees to work onsite for a set number of days each week.

In the last quarter of 2021, 36% of middle-market companies reported having remote employees who weren't remote before the pandemic. Research also indicates a growing preference for location flexibility among workers, showing that 1 in 3 would leave their jobs if remote work were eliminated. And 4 in 5 would recommend working remotely to a friend. 2

Short staffed in the face of increasing wage demands that can't be met, some employers (61%) have implemented flexible schedules to avoid overwhelming their workforce. And almost a third (31%) changed the composition of their workforce by hiring more part-time than full-time employees. 1

Efforts to enhance flexibility also extend to career development and performance management. For instance, managers may set aside time to talk about career goals and pay with employees more than once a year to stay current on ways to make their individual experience more rewarding. Programs that provide guidance on pursuing advancement, and support for emotional wellbeing, also increase satisfaction and contribute to a culture that promotes attachment to the organization.

Employers can optimize total rewards by evaluating everything employees gain from working for their organization, and making changes or additions that will continue to provide what's important. In 2022, this includes carefully considering options that are likely to slow attrition, attract new talent, and minimize hiring and rehiring costs.

The non-negotiability of adequate support for work-life balance

Older employees departed the workforce at a higher rate during the pandemic.3 Mid-career caregivers, whose average demographic is a 49-year-old working woman, are more prone to stress as members of the sandwich generation.4, 5 And younger generations have a tougher time getting ahead in the work world, which takes a toll on their mental health.6

Work-life balance is no longer just a general framework for benefits and work culture overall. In the interest of individual and organizational performance — and employee retention — the ability to achieve this outcome should be a criterion for every related decision and action.

31% of companies changes their workforce composition to make up for shortages.

Offering benefits that promote a better quality of life, 24/7, demonstrates an understanding that an organization's people determine their bottom line. Besides work-life balance staples such as parental leave that proved so essential during the pandemic, interest in forward-thinking policies like a four-day work week may soon be top of mind for employers. Already, select U.S. organizations are participating in a program that tests the realities of this concept.

When policies and total rewards are proven to actually enable work life balance, the achievement of higher engagement levels, increased productivity and reduced absenteeism will make saving costs much easier.

Attracting and retaining employees through a commitment to social responsibility

Realignment of talent management strategies increasingly emphasizes the need to set environmental, social and governance (ESG) criteria for the organization's operations. A growing number of investors consider these standards important when evaluating investments, including 82% from 24 countries around the world who say that companies have a responsibility to address social issues.7

Unfolding global events may lend a sense of urgency for many. While there's new confidence about a true end in sight for the pandemic, the current effects of geopolitical turmoil can be extreme, such as the widespread inhumanity of war in Ukraine. Many employees want to be associated with an organization that demonstrates a commitment to protecting the planet, advancing social good and supporting diversity, equity and inclusion (DEI) practices.

Understanding the critical relationship that often exists between adherence to ESG principles and how employees perceive their organization can boost success when competing for talent. That's likely to be the case in any labor market, especially among younger generations. By clearly communicating and consistently upholding their mission, vision and values, employers can authenticate their belief in these tenets.

Creating a total rewards feedback loop for employers and employees through periodic evaluation

Uncertainty about workforce opinions on the value of their total rewards serves as an important maintenance-required alert. A key step in assessing the effectiveness of compensation and benefits is measuring outcomes against program goals, but some employers overlook this investment checkup.

A variety of total rewards evaluation tools are available, and many address goals for specific programs. But essential takeaways and actions should include a clear understanding of employee experiences and preferences to guide the development of a plan that prioritizes improvements to be made over time.

If the goal is to increase employee satisfaction and reduce attrition rates, conducting baseline surveys on total rewards before implementing a new program allows comparative insights. Focus groups add dimension to these findings by gathering data on the pros and cons of the current benefits package and generating new ideas for enhancement. Firsthand feedback from employees at all levels of the organization is essential to overall relevance.

Artificial-intelligence-enabled and virtual focus groups can deliver efficiencies. When employers are considering specific changes to total rewards, these groups help speed the process of identifying, segmenting and documenting concerns for predictive analysis of possible outcomes.

Surveys can be useful for measuring the opinions and attitudes of employees across a broad spectrum of indicators. Besides reactions to total rewards design and policies, data on their levels of satisfaction, engagement, commitment, motivation and sense of purpose can be very informative.

Renewing and implementing total rewards takes careful planning and preparation, but often provides a more comprehensive and reliably effective response to volatile workforce dynamics.

Driving better decisions with better data

It's difficult to find a reasonable substitute for objective data when determining the most effective approach to one of the organization's most substantial annual investments. And the time required to properly plan and conduct total rewards surveys —and interpret their results —is insignificant compared to the competitive value insights can provide when properly applied. There's also a side benefit to survey: They directly express interest in the employee experience, which can be very significant when employers realign total rewards to more closely match workforce preferences.

External benchmarking of compensation and benefits allows very precise targeting, too. Employers can get a view into market data specific to states or regions, and evaluate whether total rewards components are comparatively fair, equitable or competitive in attracting and retaining talent. There's also transparent, publicly available data to complement findings from other surveys or focus groups, enabling employers to directly compare their total rewards against others.

Granular results may even pinpoint recruitment of the same candidates in the same market space. What's more, data can help measure whether current and previous spending on total rewards leads to talent attraction, satisfaction and retention.

Renewing and implementing total rewards takes careful planning and preparation, but often provides a more comprehensive and reliably effective response to volatile workforce dynamics. Employers should expect the ongoing tussle over talent — often settled with competing compensation and benefits — to continue for a while.

Known solutions show promise for helping to break this cycle at some point, such as automation or immigration reforms that allow the U.S. to bring in labor from abroad. Meanwhile, in an unsettled market, ongoing dialog can inform more strategic and proactive decisions. The agility to respond more quickly will then help employers keep pace with a faster rate of change for everything from recruiting to pay scales, and talent development and retention.

Learn about the latest trends in compensation, benefits, healthcare consumerism and more, to help you run a thriving organization in a volatile economic climate. Download the Q3 issue of Gallagher Better WorksSM Insights.

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Author Information


1Gallagher. "2022 Workforce Trends Pulse Survey #2," Jun 2022.

2Oldham, Ethan. "2022 Remote Work Trends," Emsi, 1 Feb 2022.

3 "Why Millions of Older Americans Are Retiring Early in the Wake of the Pandemic," PBS News Hour, 23 Febr 2022. Transcript of audio broadcast.

4Calhoun, Ada "Gen-X Women Are Caught in a Generational Tug-of-War," The Atlantic, 7 Jan 2020. Updated 14 Jan 2020 .

5Allan, Lindsay. "The Sandwich Generation Needs Help Now More Than Ever: Here's What We Can Do," Healthline, 31 Mar 2022.

6Mcmaster, Geoff. "Millennials and Gen Z Are More Anxious Than Previous Generations: Here's Why," University of Alberta, 28 Jan 2020.

7Goodsell, Dave. "Values Alignment Is Only the Tip of the Iceberg for ESG," Natixis Investment Managers, Oct 2021.


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