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Skip to main contentThere’s no getting around the fact that money works very well to attract and retain employees. Data from Korn Ferry’s Workforce 2024 report—a survey of 10,000 professionals across the globe—found that generous compensation is among the top priorities for employees when they’re considering a new role or deciding whether to stay with their current employer.
And yet, it’s not all about salary. A whopping 81% of respondents to the survey said it’s critical for employers to understand the weight of the benefits that come alongside pay. “Financial compensation is important, but it’s not everything,” says Tom McMullen, an expert in Total Rewards at Korn Ferry.
Still, even non-financial rewards and employee recognition programs can be pricey—and that’s a challenge for almost every company. But by taking a holistic look at compensation, it’s possible to develop a budget-friendly rewards program—not cheap, but fiscally effective—that engages and motivates workers.
So how can HR leaders design affordable employee rewards programs that drive satisfaction, engagement, and retention? Consider the following steps.
The value of a benefits program is in the eye of the beholder. Do the benefits you’re investing in truly matter to your workers?
“There is no one-size-fits-all answer,” says Yanina Koliren, General Manager at Korn Ferry Pay. “This is where knowing your employee population is critical.”
Different segments of people want different things. That’s why splashy and expensive benefits, perks, and other non-financial rewards, such as on-site childcare or employee retreats, can sometimes land with a thud, while cheaper or more straightforward benefits, such as direct childcare subsidies or bringing a food truck on-site for a monthly, company-paid lunch, can sometimes drive greater value. Organizations that take the time to learn what their employees value—and what they don't—improve their reward ROI.
An analysis of what employees want and the value of each of those things, known as total rewards optimization, can be an eye-opening process.
Whether conducted internally or by a total rewards solutions expert, such an exercise can also help reveal the no- and low-cost measures that truly move the needle for workers.
Your employees’ feelings about their rewards programs aren’t static, so your rewards shouldn’t be either. Whether it’s changing needs and priorities based on life stage or external forces such as inflation or what the competition is doing, employee rewards programs need to be flexible and fit for purpose.
Aligning employee and company priorities, especially on a budget, might include getting creative about using short-term incentive programs as levers.
“Around 90% of for-profit companies use annual incentive plans from entry level on up,” says McMullen.
“Long-term incentives, like stock options or stock grants with vesting periods, can work well, especially for a start-up or a company that doesn’t have immediate access to cash but has big aspirations.”
Employees can’t appreciate their benefits and perks if they don’t know much about them. An internal communications plan that illustrates what’s available is critical.
Koliren says technology can help. “I’m seeing an increasing number of companies using AI to tailor their communications to different employees,” she says. “Based on their life stage or other segmentation, they want to hear something different, and want to easily understand what’s available to them.”
Since nearly four in 10 workers say they don’t think their contributions and compensation are aligned, according to the Korn Ferry Workforce 2024 Survey, having open conversations about salary and rewards is also key to communicating total value.
This includes clear criteria around job and performance expectations, pay scales, and competitiveness relative to the market.
“More than ever, employees today expect transparency when it comes to compensation,” says Koliren. “They want to know what they have to do, or not do, to have their compensation increased over time or to unlock benefits and other rewards so they’re empowered to have control over their outcomes.”
Without pay transparency, employers can be seen as untrustworthy, she adds, and that runs the risk of counteracting even a solid benefits package.
Some highly motivating rewards don’t cost much at all.
“A great example is McDonald's sabbatical program,” says McMullen. Under the quick-serve restaurant’s no-questions-asked leave policy, employees are entitled to eight weeks’ paid leave for every 10 years of employment.
“The company gets incredible mileage out of it,” says McMullen. “People will be a year or two away from their sabbatical, and it’s already top of mind. It’s low cost but has incredibly high perceived value. And that's where you want to be.”
Developing a highly motivating employee rewards program starts with a refined understanding of what excites and drives workers today.
Korn Ferry’s new Global Rewards Pulse Survey offers deep insights into how companies are adapting their rewards strategies to today’s economic climate and includes up-to-date salary forecasts.
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