The Future of total rewards is DEI: How companies are adapting to meet changing employee needs
Employees needs are changing with gen-z
In today's workplace, it's not enough for companies to offer competitive salaries and benefits packages to attract and retain top talent. Increasingly, companies are recognizing the importance of diversity, equity, and inclusion (DEI) in creating a more engaged and productive workforce. This shift is reflected in the evolution of total rewards programs, which now place a greater emphasis on DEI initiatives.
What is the meaning of DEI?
DEI stands for Diversity, Equity, and Inclusion, or if you prefer, "Delight, Engage, and Inspire." It refers to a set of practices and initiatives aimed at creating a more diverse and inclusive workplace, where everyone feels valued and supported, regardless of their background, race, ethnicity, gender, sexual orientation, religion, or other factors.
Diversity: Having a heterogeneous mix of identities (race, ethnicity, nationality, gender, gender identity, veteran status, physical and cognitive ability, age, sexual orientation, socioeconomic class, experience, etc.).
Equity: Regardless of identity, all employees are compensated fairly and have the opportunity and support to succeed and grow in their jobs.
Inclusion: The identities of all employees are respected and valued. Employees have the opportunity to participate and contribute regardless of their identity.
Why DEI is important in total rewards programs?
Total Rewards is a term used to describe the full range of compensation and benefits that companies offer to their employees. This includes salary, bonuses, health insurance, retirement plans, and other perks like gym memberships or flexible work arrangements.
1 in 5 Americans are caregivers while over 60% are caring for a friend or an adult. As Gen-X requires more attention, Gen-Y and Gen-Z are stepping up to spend more time with family, and will need the workplace flexibility or perks support to accommodate those changes.
Historically, total rewards programs were designed to attract and retain talent by offering the most competitive compensation packages. However, in recent years, there has been a growing recognition that DEI must be a key part of any effective total rewards program.
Companies need to attract diverse talent if they want to remain competitive in today's market. A recent study found that companies with diverse workforces are more likely than their competitors with less-diverse workforces to:
- Have stronger financial performance (revenue growth)
- Have higher customer satisfaction
- Become more innovative and effective
- Are better equipped to make products and services that meet the needs of a wide range of customers
- Can attract and retain a diverse pool of talent, given that employees are increasingly looking for companies that share their values and are committed to creating an inclusive environment, and have
- Higher employee satisfaction, which impacts overall performance
As a result, DEI is important in total rewards programs because total rewards are meant to attract diverse talent, and to do so, companies need to understand the different needs of high performing talent. They can attract talent by making the workplace more equitable and inclusive.
Examples of companies with DEI-driven total rewards strategies
The following case studies demonstrate how companies are implementing DEI-driven total rewards programs to attract and retain top talent. These examples also highlight how these programs have improved employee satisfaction, retention, and performance.
- Microsoft implemented a flexible work arrangement program that allows employees to work remotely on a part-time basis - otherwise known as a hybrid environment. In addition to reducing commute times and costs for employees who live far away from headquarters, this initiative has helped Microsoft increase its workforce diversity by attracting more women who want flexibility in their schedules due to family obligations or other reasons.
- According to PwC's Financial Wellness Survey, 42% of employees who are stressed about their finances admit to being distracted at work by personal financial issues. Prudential Retirement began providing financial literacy through its human resources department so that each new hire gets an introduction to how money works before beginning work at the firm's headquarters location (or remote office). This effort has boosted morale among new hires while helping them understand what they should expect from their careers at this company over time--which may include promotions within departments as well as lateral moves across different functions depending on individual needs.
Several companies, such as Patagonia, Salesforce, Meta, and many more, have already recognized the importance of integrating DEI into their total rewards programs. Here are the top five common strategies they've leveraged:
- Pay Equity Analysis: Conduct regular pay equity analyses to identify and address any disparities in pay between different groups of employees. Recognize the importance of a fair and transparent compensation system by analyzing data on factors such as gender, race, and ethnicity. Implement systems that include clear job descriptions, salary ranges, and performance metrics for each role. This ensures that employees are compensated fairly and equitably based on their skills, experience, and performance.
- Equity-Based Compensation: Equity-based compensation, such as stock options, is offered to all employees. This helps to align the interests of employees with those of the company and provides an additional form of compensation beyond the base salary.
- Inclusive Benefits: Recognize the importance of offering inclusive benefits to all employees. This includes providing a wide range of benefits, such as healthcare, retirement savings, paid time off, parental leave, flexible work arrangements, and wellness programs.
- Diversity, Equity, and Inclusion (DEI) Focus: Make a strong commitment to DEI across all aspects of the company. Aim to ensure that all employees feel valued and supported and that their contributions are recognized and rewarded equitably.
- Training and Development: Invest in employee development and training, providing opportunities for skill development, leadership training, and career advancement. Offer programs and resources to help employees build diverse networks and promote a culture of inclusion.
The future of total rewards: Prioritizing diversity
As organizations continue to evolve and grow, they're looking for ways to ensure they're providing employees with the right tools and resources to meet their needs. The traditional approach has been to focus on financial rewards such as base salary, bonuses, stock options, and other incentives--but in today's workplace environment where employees are increasingly mobile and transient (and often work remotely), these programs may not be enough anymore.
Instead, companies are starting to understand that employee engagement goes beyond just being connected with each other; it also means being connected with the company itself through its mission statement or purpose statement so that employees can better understand how their role fits into the big picture.
The role technology plays here is significant: both in terms of how companies communicate this information internally through social media campaigns or mobile apps; but also externally by allowing customers access to these same channels (e.g., Facebook Messenger). By prioritizing DEI-driven total rewards programs over those based solely on financial compensation alone (which often leads only toward short-term gains), companies can create stronger relationships between themselves as well as between employees who feel more empowered by knowing exactly what kind of impact they're having on others' lives outside work hours.
We are living in a time of great change, both for individuals and for companies. As the workforce becomes more diverse, it is essential that employers find ways to meet the needs of their employees. The good news is that DEI-driven Total Rewards Programs can help you achieve this goal.