During challenging economic times, corporate leaders often seek cost savings through cuts in employee compensation and benefits programs. In fact, a study by Corporate Executive Board (CEB) conducted in June indicates that 70% of HR executives are reducing or planning to reduce benefits spending this year.
The dilemma in reducing compensation and benefits spend is to do so without negatively impacting employee engagement, discretionary effort, or employee retention. However, leading companies are finding that you can have your cake and eat it too. They have been able to lower their overall cost of employee rewards by at least 5% without reducing the value of the offer to employees. These organizations use an analysis technique, known as conjoint analysis, which quantifies the value that is created or destroyed for employees through investments or cuts in the rewards offering. By reallocating rewards away from undervalued programs to those that are overvalued by employees, these companies are delivering much better results from their investments.
In order to optimize their investments in rewards companies should:
Make rewards decisions informed primarily by competitive benchmarks Count on senior executives to serve as the voice of the employee Have a workforce that is diverse in terms of age and level Make rewards decisions within silos—not across (e.g. health, retirement, compensation)
Good information about employee preferences for the key segments inside the company can be invaluable to companies seeking to keep employees engaged and costs down during this difficult economic environment.