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Few companies effectively managing total rewards programmes - Aon Hewitt

Companies are investing significantly in total rewards programmes, but few are seeing successful results due to a lack of execution, says a new survey by Aon Hewitt.

Aon Hewitt’s survey of nearly 750 organisations shows that:

  • More than half of respondents (58%) use total rewards programmes to drive employee engagement.
  • 48% want these programmes to improve their ability to retain talent.
  • 44% want the programmes to attract talent.

However, 60% of companies surveyed describe their engagement levels as low, and two-thirds reckon that the trend in engagement is holding steady or trending downward.

Jane Kwon, associate partner of Aon Hewitt, said: “When rewards programmes are properly aligned, designed and delivered, the positive impact on individual engagement and organisational performance can be significant. However, we find most organisations are not taking the necessary steps to achieve these desired outcomes.”

What do high-performing companies do differently?

To uncover why employees were falling short on meeting their objectives, Aon Hewitt analysed the total rewards programmes of 150 high-performing companies - those organisations that reported the highest levels of innovation, employee engagement and revenue - and compared them with the remainder of the surveyed companies.

Aon Hewitt found the differentiating factor between high-performing companies and the rest was not about the programmes they focus on, but how the programmes are executed (see Document Extract below).

As a result of these differences:

  • 51% of high-performing companies say their employees understand the value of their total rewards programmes, compared with a third of all other companies.
  • 51% also report increases in employee engagement over the past 18 months, compared with just 30% of the rest of the firms surveyed.
  • High-performing companies report they are more effective in achieving key business objectives such as operational effectiveness (96% vs. 75%), customer service (85% vs. 48%) and quality (63% vs. 28%).




According to Aon Hewitt’s analysis, high-performing companies do several things differently with respect to executing total rewards programmes:

1. They articulate clear strategies and goals: High-performing companies are almost two times more likely to have declared total rewards an area of focus and have a clear stated strategy compared to the rest of surveyed companies. They are also more focused on leadership development, culture and learning.

2. They use data and input to drive decision-making: Three-quarters of high-performing companies gather market data to assess the competitiveness of their programmes, compared with just 61% of all other companies. Additionally, high-performing companies are more likely to gather cost data (57% vs. 39%) and input from employees (40% vs. 26%)

3. They connect their total rewards programme to the business and employees: High-performing companies are more likely to align total rewards programmes, such as those that focus on culture, challenging work and pay benefits, with top business objectives. Therefore, they communicate better and use targeted communications to meet the diverse needs of the workforce.

4. They define the effectiveness of their total rewards programmes differently: Aon Hewitt’s analysis shows that the primary way high-performing companies define the effectiveness of their total rewards programmes is by measuring employee engagement, while the rest of companies define effectiveness as cost versus budget.



A final word

“High aspirations and mediocre execution are producing a lot of pressure for change. This is a time for breakthrough thinking that may require bold new ideas, including new ways of looking at the issues.” - Jane Kwon, associate partner, Aon Hewitt.

Want to know more?

Title: Total Rewards Survey, Aon Hewitt, May 2012.

Availability: You can download the 84-page survey in PDF format at www.aon.com/totalrewards.

Aon Hewitt is the global leader in human resource solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. It has more than 29,000 professionals in 90 countries. For more information visit www.aonhewitt.com.

Date 29/05/2012

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