Total Rewards and Inclusive Workplaces

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Just as organizations are increasingly favoring a total rewards approach to compensation to help them attract and retain talent, inclusive workplaces are also important in that regard. A recent Glassdoor survey found that 76 percent of employees and job-hunters consider a diverse workforce a key factor when reviewing employment offers. Almost a third said they’d pass on an organization that wasn’t diverse.

In this tight labor market and a business environment still reeling from the pandemic, let’s look at total rewards and inclusive workplaces. They go hand in hand.

The Issue

To lure and hold onto top talent, more organizations are developing total rewards packages that seek to address every aspect of their employees’ lives while fostering their professional development.

It only makes sense, then, that such a holistic pay and compensation approach is typically taken by companies that also embrace workplace diversity, equity, and inclusion (DEI) initiatives. Such efforts are increasingly important to employees and job candidates. In fact, they can inform benefit package construction. 

What is Meant by Total Rewards?

It’s the combination of all the monetary and nonmonetary benefits an employee gets from their organization. In addition to wages or salary, the package usually includes traditional benefits (health, vision, and dental insurance), voluntary benefits (financial counseling, disability insurance, etc.), and any wellness programs, training programs, work-life balance, vacation time, and retirement plans.

The Intersection of Total Rewards and Inclusivity

To create a more inclusive workplace, organizations are increasingly constructing total rewards packages that have elements that appeal to diverse needs.

Generationally Diverse

For example, Gen Z employees, born between 1997 and 2012, are particularly big on wellbeing and mental health, as well as organizational culture. Meanwhile, many millennials, born between 1981 and 1996, are having children and building families, so they’re generally more interested in benefits like dependent care assistance and fertility funds.

In fact, over 70 percent of millennials surveyed said they would change jobs for better fertility support. That’s how competitive total rewards can become. Such benefits can include ample parental leave, more flextime, and fertility treatments and egg freezing coverage, for example. A lifestyle spending account, also known as LSA, would also be attractive to the scores of millennials who have student loan debt.

Then you have Gen Xers, who were born between 1965 and 1980. Because many of them are raising children while caring for aging parents, they’d likely be particularly interested in a total rewards package that offered dependent care assistance in addition to budget-friendly healthcare benefits. A dependent care flexible spending plan, for example, permits employees to put pre-tax dollars toward some dependent and childcare costs. 

If you have on your workforce a number of Baby Boomers, employees born between 1946 and 1964, you may want to consider including in your rewards a health savings account or flexible spending account. This demographic is also more interested in traditional benefits and pensions than some other groups. 

More Equitable Total Rewards

More equitable total rewards also have been driven by a greater focus on gender diversity and at-work disparities. After all, more than men, women generally report feeling burned out, exhausted, and overwhelmed at work. Plus, they generally, and disproportionately, handle caregiving duties at home. Organizations would do well to remember this when crafting their total rewards approach.

Regarding race and ethnicity, employers can likewise use equitable total rewards to address disparities and as a way to improve health and wellbeing in an at-risk demographic.  

Ultimately, total rewards and inclusive workplaces are two sides of the same coin. In this environment, in which your ability to recruit and retain key talent can make or break you, you must get this right. For help with a more equitable total rewards plan, we recommend the leading global consultant Mercer.