Best fit vs best practice: 3 keys to developing a compelling rewards offering

3 keys to developing a seriously compelling rewards offering

A properly designed rewards offering should represent a differentiated brand in and of itself, according to Pete DeBellis who explains that there are three steps to designing and bringing such an offering to market

It’s a good time to think about your company’s rewards offering – not just because it’s essential to stand out in tight talent markets. But also, because you may be missing out on a valuable opportunity to attract candidates who are more in sync with your company, more likely to perform well, and more likely to stick around.

You can tell if you are missing this opportunity by answering a simple question: What information does your company use to design its rewards offerings?

If the answer is simply “best practices,” you’re not alone. It’s common practice to set rewards based on competitive benchmarks: just figure out what your competitors are offering and match or beat it. The problem is that a best-practices approach to rewards can be a prescription for mediocrity and anonymity in recruitment and retention.

Bersin’s High-Impact Total Rewards research reveals that high-performing organisations aren’t following the best-practices pack. Rather they are unapologetically different when it comes to rewards, and what makes them different is their approach to rewards design. They give a nod to best practices and benchmark data to make sure they understand what’s being offered by other companies. But they follow a best-fit approach to rewards that is tailored to their organisation.

The primary focus of the best-fit approach is finding candidates and keeping employees who are already aligned with your company. These are the people who like to do things the same way things get done in your company. And they are predisposed to go where your company is going.

“The primary focus of the best-fit approach is finding candidates and keeping employees who are already aligned with your company”

Bringing a best-fit rewards offering to market
A properly designed rewards offering should represent a differentiated brand in and of itself. It entices the candidates you want to come to you. There are three principal steps to designing and bringing such an offering to market.

1. Aligning rewards with corporate goals. A best-fit rewards offering must flow in an organic way from a company’s purpose, culture, and strategy. These offerings are not only aligned to the unique goals and needs of the company, but also support their achievement.

A best-fit approach should begin with the development of a total rewards strategy that helps eliminate rewards mismatches. For example, if your company is a meritocracy, it might ensure that your bonus plan is weighted to reward individual achievement. If you are moving to a team-based structure, perhaps compensation is based on the demonstration of collaborative behaviours. Or if you are seeking to create a culture of fast-paced innovation, it might reserve a lion’s share of the rewards pie for individual innovators or new and emerging business units.

In short, whatever the company’s goals and aspirations, a best-fit approach to rewards will resonate with and amplify them.

2. Fine-tuning rewards to employee need and desires. One of the ironies of the best-practices approach is that your competitors have more of a voice in your company’s rewards offering than your employees. A best-fit approach avoids this trap by tailoring and optimising rewards to the specific needs and preferences of your actual employees.

Value is in the eye of the beholder, and in the case of rewards, the beholder is the employee. Thus, creating best-fit rewards requires a customer-centric mindset. That means treating employees like customers: valuing them, caring about their experience, and actually asking employees what they want and need, instead of assuming the company knows what’s best for them.

An effective best-fit approach requires listening to, learning from, and fine-tuning rewards for your employees.

“What makes best-fit rewards unique to your company is also what will differentiate it in the market for talent”

3. Identifying and deploying a differentiated rewards brand in the talent market. When done right, the best-fit approach should result in a unique and compelling rewards brand. If it doesn’t, it could mean that the company’s purpose, culture, and strategy aren’t unique – which might not bode well for its future – or it could be that the organisation is not asking the right questions of its employees in the right way. For example, it isn’t enough to just ask employees how much they “like” a certain real or hypothetical offering. Instead, a more detailed line of questioning involving possible scenarios and trade-offs would reveal more detailed information about the magnitude of employee preferences, as well as the sensitivity of those preferences.

What makes best-fit rewards unique to your company is also what will differentiate it in the market for talent. So, you should identify those differentiating factors, figure out which of them are most compelling, and then communicate them far and wide. This will transform your rewards offering into a beacon that will help attract like-minded candidates to your company.

By the way, our research revealed that this is exactly what high-performing companies do. They are 12x more likely to identify specific rewards offerings as competitive differentiators and highlight them in their rewards brand than low-performing companies1.

Don’t chase the median. Instead, make the shift from best-practices to best-fit rewards. Align rewards with your company’s culture, goals, and aspirations; fine-tune them based on employee desires and needs; and take a differentiated and compelling rewards brand to market.

1 Seven Top Findings for Redefining Total Rewards, in the High-Impact Total Rewards series, Bersin, Deloitte Consulting/Pete DeBellis and Anna Steinhage, PhD, 2018.