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‘Hidden demographics’ among employees can provide more useful insights into how to create an effective rewards scheme than those most commonly used, according to EY partners Rohan Connors and Richard Kantor.

Their research shows things such as whether employees were hired or acquired factor significantly in employees’ response to rewards schemes. Meanwhile benefits like workplace flexibility, typically targeted at female employees, show no correlation with gender in terms of who appreciates them most.

These findings are important because many workplaces spend vast sums of money on employee reward programs, often with very little research into what kinds of things employees actually want, they say.

“The piece that’s missing is what do employees want,” Kantor told HR Daily ahead of this month’s webinar on reward strategies. “Designing a reward package, in my mind in today’s competitive world, is analogous to a product design exercise, and I don’t know any organisation that would go out and do product design without getting input from the customer and testing different design options against customer input. But virtually every organisation designs their reward package that way.

“We’re defining reward here broadly as everything we provide to our people that they find valuable and rewarding. So it includes things like career development and opportunities, performance management in addition to pay and benefits.”

Unlikely insights

One concept frequently ignored by workplaces trying to draw insights from their data is hidden or latent demographics, Kantor says. While a lot of workplaces gather data on their demographic composition in terms of gender, generation and so on, fewer use their technology to “reverse engineer” demographic groups who express similar wants, needs or preferences.

“Instead of saying ‘how do the preferences and wants and needs of men and women differ?’ you’re saying ‘where have we got people who have similar preferences and what else is the same about them?’ to try to uncover where you have groups in the organisation that may respond in a similar way to new programs or changes to your existing programs,” he says.

Connors says this can bring valuable insights in terms of how to target your rewards program.

“People traditionally think women want more workplace flexibility, but latent demographic studies show it’s actually people with childcare responsibilities, and it doesn’t matter if you’re male or female,” he says. 

This could help employers improve engagement and workplace satisfaction among male workers, Connors says. “In many workplaces, male access to flexible workplace arrangements is not as easy. While they have the same responsibilities they don’t get the same support.” 

Whether a person is single or married also frequently determines his or her response to benefits such as health insurance or time off. “Single people tend to value health insurance in a different way to people who are in couples,” he adds.

Further, Kantor says base pay level is often a better predictor of employee wants and needs than any other demographic.

“We looked at data where people were in their 20s and 50s. Their base pay was the same and what they wanted from the rewards package was similar, because they were basically trying to satisfy similar needs if you put aside where they are in their life stage,” he explains.

“Whereas people who were very high earners, irrespective of whether they were old or young, male or female, tended to want the same things from the rest of the package.”

Another interesting latent demographic was whether employees chose to join an organisation or whether they became part of it by default because their previous company was acquired.

“Engagement of acquired employees was a few points to several points below the engagement of those who had chosen to join, and this was true even 20 years later,” Kantor says.

This dissatisfaction had gone unaddressed for too long, he says. “For those people it just wasn’t exactly the deal that they had signed up for. They weren’t really there by choice. So it’s a demographic that many don’t think of.”

Get a better return

Kantor says every workplace has an opportunity to get better value from its rewards program in terms of the perception employees have of the generosity of their employer. He has not yet discovered a client whose current rewards package is on the “efficient frontier” of value-for-money. 

“Which means everybody is leaving money on the table,” he says. “You should either be getting a better return from the money you’re spending, or if you’re happy with the return that you’re getting with the level of engagement and productivity and satisfaction and competitiveness that you have, you could be achieving that by spending less.

“For some organisations, this could be a choice between rebalancing the package and cutting jobs.” 

Many workplaces are either guessing what their employees want, or simply offering similar packages to those of their competitors.

“Employee engagement is hovering around 50 per cent nationally and globally which means one out of every two workers is disengaged,” Kantor says. “Which means just copying what everyone else is doing is maybe not a good plan.”

Kantor and Connors will explain how to understand what employees really want from total reward packages, and how to increase the returns from your available spend, at our webinar on 26 June. Learn more or register here as a casual attendee.

First published: 12 June 2014

Source: HR Daily