Total Rewards Reimagined: Strategic Insights for Growth

Introduction

As Chief Transformation Officer at WUF WORLD, Marissa Andrada draws from decades of leading rewards programs at icons like Starbucks and Chipotle to urge companies to Incentivize innovation by empowering employees to think boldly and fail smartly in service of breakout growth. In this installment of the Better Workplaces Challenge Cup Fireside Chat, Andrada knows firsthand the risks - and rewards - of leading with purpose. Her wisdom, forged over decades steering Starbucks, Kate Spade, GameStop, and other icons through massive shifts, holds keys for rising leaders ready to transform total rewards programs from budget line items into strategic drivers of agility, retention, and sustainable growth.

Seizing Total Rewards as a Strategic Lever

When aligned with clear business objectives, the incentive program becomes a lever leaders at every level can pull to spur the necessary behaviors for turnarounds, growth, and industry dominance. Andrada shares from experience shepherding companies through periods of unprecedented upheaval.

The questions then become: How does this strategic linkage actually manifest? How can leaders take the nebulous notion of "incentives" and forge proactive plans to attract and retain top-tier talent and motivate them to think bigger, move faster, and surmount seemingly impossible goals?

Here, Andrada pushes past one-size-fits-all packages to urge customized rewards targeting each segment of the workforce mosaic. For entry-level, "Look beyond just transactional benefits to holistic wellbeing and upskilling. Help people build purpose-driven careers." With over 85% of employees suffering from work-related stress, which costs companies $300 million annually, wellness programs boost retention and productivity. Moreover, SHRM research shows almost 1 in 5 employers offer designated paid mental health days, separate from regular sick time, as organizations make mental health a priority.

"I think what we all know around what really drives the various generations in the workforce, and it's all around retention,” Andrade cautions that balance is essential. Extrinsic perks can nudge behaviors but fall short of nurturing the intrinsic drive that sustains passionate cultures. Leaders must ask, 'How are we incentivizing people to bring their best selves forward each day?' Start there.

SHRM research illuminates the pivotal role company culture plays in retention. Of surveyed global employees rating their organizational culture as poor, an overwhelming 90% report having considered quitting. Comparatively, that percentage drops to 72% for those assessing culture as average and 32% for those categorizing it as good^[3]. The data spotlights culture's centrality in the exit equation - a risk factor spurring turnover when toxic yet a retentive force when positive.

Fostering Development through Well-being

Well-being and development walk hand-in-hand along career journeys full of twists and turns. How to foster both amid volatility? Andrada suggests starting with foundations. "Education is a huge one with that. And I think about the work that my team did at my last company, Chipotle. We introduced debt-free education, starting with English as a second language, because we had such a diverse workforce." Considering the average student loan debt now exceeds $29K per bachelor's graduate and Americans owed $1.74 trillion in education debt as of Q3 2023, debt-free offerings create space amid career transitions. In addition, SHRM research shows the large majority of employers also cover costs for professional memberships, certification/recertification, and professional licenses, enhancing educational offerings.

With bases covered, the possibilities for support through seasons of rapid growth and change compound. SHRM Research shows around 8 in 10 employers provide formal training or education for upskilling/reskilling employees and keeping skills current. Though paid and unpaid sabbaticals remain relatively rare outside of academic settings, these can provide valuable opportunities for employees to recharge. The question again: Are people able to envision a future with our company where they can truly thrive?

Co-Creating Reward Strategies with the Future Workforce

"I think organizations need to understand this gig economy and different from fun, frontline work. But the fact is that at the human beings’ core, there’s the human being who has defined their passion, right?" Andrada contends. Visionary leaders are finding ways to nurture and retain talent rather than dictate narrow definitions of success.

This starts with acknowledging diverse definitions of purpose and progress and then getting creative, through micro-pilots, to co-design policies that add value. Unlimited PTO to handle burnout? Stipends for career reinvention? Shifts towards output-based performance metrics? Nothing should be off the table.

Again, Andrada challenges leaders to listen first, with empathy, to both emerging trends and early feedback. Having the courage to test things that upend the usual is essential. Not everything will land, but the collective momentum created when people feel genuinely empowered to chart new courses? That is rewards innovation at its best.

Spotlight on Cutting-Edge Rewards Startups

The competition also provided a glimpse into several emerging startups aiming to transform elements of the rewards ecosystem:

• Essence: This novel platform synchronizes work schedules with the four menstrual cycle phases to improve wellness and productivity. Early pilots with major employers have demonstrated Essence's potential to enhance inclusion, engagement, and retention among female talent.
• Manifest: By consolidating retirement accounts across employers, Manifest simplifies the process for today's mobile workforce to maximize retirement outcomes. Studies show the platform has already increased savings rates and defrayed administrative costs.
• Pivt: Supporting relocated and remote employees with hyper-personalized content and connections, Pivot focuses on community building and social wellness. Early signs indicate reduced relocation-driven turnover and faster transitions to new roles or locations.
• Scope Zero: The Carbon Savings Account incentivizes sustainable upgrades through shared funding from employers and employees. Beyond significantly reducing carbon footprints, Scope Zero delivers material lifestyle savings and strengthens corporate social responsibility stories.
• Silver: Silver removes headaches from FSA and HSA accounts by automatically identifying and reimbursing eligible purchases. With scans of $7.5M in purchases identifying $250K in claims to date, the platform meaningfully boosts access to tax-advantaged savings.

The People’s Choice winner, Essence, and semi-finalist Silver represent just a sample of the latest platforms modernizing elements of the rewards experience for employers and talent. As Andrada contends, creative approaches that meet emerging needs across the mosaic of modern workers will define best-in-class total rewards programs going forward.

Best Practices for Total Rewards Programs

An effective total rewards program is crucial for attracting and retaining top talent in today's competitive labor market. As employees reassess their priorities and expectations of employers, organizations must evolve their rewards programs accordingly. Here are some best practices to consider:

Prioritize Well-being and Mental Health

With burnout reaching alarming levels, employees expect employers to support their physical, mental, and emotional health actively. Comprehensive wellness initiatives, including designated paid mental health days, are no longer “nice-to-haves” but baseline prerequisites for healthy, engaged, and productive workforces. SHRM research shows 90% of employers have increased mental health support since the pandemic began, with 86% citing it as a priority in 2023. And 48% now offer specific mental health days separate from regular sick leave. These programs demonstrate an employer’s commitment to holistic employee well-being.

Wellness encompasses more than just mental health, however. Given widespread concerns over burnout, employers should equally emphasize physical health and work-life balance. Consider subsidized gym memberships, activity tracking programs, ergonomic equipment, standing desks, onsite healthcare, nutrition guidance, and stress reduction techniques. Promoting regular vacation time usage also signals the organization values renewal and restoration. Building a culture focused on sustaining employee energy, capacity, and resilience across all dimensions pays dividends.

Customize Rewards to Workforce Segments

Today’s multigenerational workforces have widely varying needs and motivations. Tailoring rewards to employee segments promotes engagement across all demographics. For example, 63% of employers now offer student loan repayment benefits catering to younger staff, up dramatically from just 8% in 2019. 75% provide tuition assistance more broadly, while 56% make financial advice services available. For entry-level employees, the focus could be on foundational offerings like skills training, financial literacy programs, and primary healthcare. Mid-career employees may prioritize career development courses, tuition reimbursement, and retirement planning resources. C-suite executives might value executive coaching, sabbaticals, and flexibility to pursue board roles.

Benefits should align to life stages rather than strictly age ranges to maximize impact. New parents need childcare support and parental leave regardless of when that occurs. Midlife career transitions happen at varied times as well. Conducting stay interviews and surveys informs the tailoring process, as does segmenting by factors like income levels and family status rather than generation. Ultimately, it is about meeting people’s needs wherever they are.

Foster a Positive Organizational Culture

A toxic culture drives even the most talented employees to quit, whereas a supportive one boosts retention. SHRM research shows that employees who rate their culture as good are far less likely to consider leaving - 3.8 times more likely to recommend their company to others. Transparent communication, empathetic leadership, and inclusive policies contribute to a positive culture. Additionally, 58% of employees who quit cite issues with workplace culture as the reason for leaving.

Culture stems from environmental cues, daily interactions, and formal and informal reinforcement mechanisms. Simple changes can shape attitudes over time - opening meetings recognizing achievements, celebrating diversity, and empowering employees to lead initiatives. Ultimately, culture manifests accumulated signals to employees whether leadership cares, trusts, and supports them. Monitoring turnover rates, stay interviews, engagement surveys, and satisfaction metrics informs culture cultivation efforts. By continually assessing and thoughtfully nurturing culture, organizations thrive.

Support Education and Career Development

Ongoing disruption means skills have shorter half-lives, so employers must help workers continuously develop. Offering debt-free education, professional membership subsidies, certification funding, and skills training empowers employees to fluidly reskill and transition between roles. SHRM data reveals over 75% of employers already fund these offerings, with 78% providing professional membership subsidies, 73% offering development opportunities, and 48% providing formal mentoring.

Beyond direct funding, leaders should incorporate learning into everyday work rather than siloing development programs. Project-based assignments, job rotations, and stretch opportunities facilitate growth too. Managers play a pivotal role through coaching conversations, reviewing individual development plans, and advising on skills gaps. Ultimately, organizations must foster cultures of continuous learning where people proactively build capacities. The more employers empower self-directed development, the better-prepared workforces become for future roles not yet conceived.

Encourage Innovation and Flexibility

Risk-averse cultures stifle agility and innovation. Employees need space to experiment, take smart risks, and champion new ideas without fear of failure. Revolutionary policies like unlimited vacation time, career reinvention stipends, and output-based performance metrics give talent room to bring their best selves to work. For example, 6% of companies now offer unlimited paid time off, 70% permit flexible work hours, and 68% allow remote work arrangements.

Flexible policies empower employees to work in ways optimized for them, boosting engagement and productivity. Accommodating individual styles and needs also signals trust in staff to perform. The more organizations can move from command-and-control management to results-focused empowerment, the greater the creativity and innovation results.

Leverage Cutting-Edge Platforms and Technology

HR tech is elevating the employee experience with personalized, mobile-first platforms. Rewards startups like Essence and Silver Health also gain traction by interweaving wellness tracking and tax-advantaged savings nudges. Embracing these solutions creates a modernized, seamless experience that talent expects. 81% of HR leaders report increasing HR tech spending, with 67% specifically planning to invest in next-gen rewards and recognition technology.

Consumer-grade interfaces familiar to digitally native talent enable self-service access, interactive planning tools, and integrated dashboards aggregating compensation details from multiple systems. Such seamless data consolidation streamlines administration while empowering employees. Adoption does require overcoming inertia yet delivers exponential efficiency gains.

Align Programs to Business Strategy

Too often, rewards programs operate in isolation from broader objectives. Effective total rewards tie directly to strategic goals around growth, agility, innovation, or industry leadership. This context gives employees clear direction on which behaviors to prioritize. Research shows organizations with aligned HR and business strategies are 2.3 times more likely to report higher performance. When programs get misaligned from strategy, organizations suffer through disengaged workforces chasing the wrong outcomes.

Proper alignment requires collaboration between executives, business leaders, and HR to define priorities and ideal culture. Then, programs should reinforce desired mindsets and activities through compensation metrics, learning opportunities tied to objectives, branding, and communicating strategic vision. For example, innovation-focused companies could emphasize output over hours worked, skills building over tenure, and internal mobility over role specialization. Maintaining alignment also demands continually evaluating programs and refreshing messaging as strategies evolve. By keeping rewards laser-focused on strategy, human capital efforts multiply rather than compete with business efforts.

Concluding Thoughts

At the end of the day, the devil lies in the details—$80 billion details, to be precise. As Andrada mentions, that is the massive size of the rapidly evolving rewards marketplace. With SHRM’s data as a glue to piece together patterns and a proactive peer group connecting dots on front edge practices, she believes leaders can transform programs and whole ecosystems that position people and organizations to thrive.

Frequently Asked Questions

What is the strategic value of incentive programs?

When tightly aligned to business goals, incentives strongly influence behaviors organization-wide. By incentivizing collaboration towards growth objectives from the frontlines to the C-suite, leaders gain a powerful lever for transformation.

How can we balance extrinsic and intrinsic rewards?

Extrinsic incentives like compensation and learning opportunities are table stakes today. However, nurturing intrinsic motivation through purpose, autonomy, and belonging is vital for passionate cultures. Evaluate if programs inspire employees' best selves.

As retention efforts evolve, how should we support career growth?

Spotlight development Planning rotations, special projects, and mentors can strengthen mobility. Debt-free education also provides financial stability for transitions. With average student debt at $30K, relieving loan pressures allows for upskilling.

How do you engage growing freelance and gig cohorts?

Acknowledge side passions. Then get creative - unlimited PTO, project stipends beyond healthcare, and output-based performance measures. Treat talent as partners in co-designing policies that add mutual value.

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