Benefits and compensation plans are evolving in the workplace as the workforce and nature of work continues to change in light of digital trends, employee expectations, and the need to meet those expectations while keeping costs in check.

Vendors and consultants are continually developing new ways to deliver those benefits to their clients. They tout the opportunities for cost savings, operational synergies, and improved employee perception which in turn improves attraction and retention.

Companies can be tempted to take the plunge and transition from a siloed approach to a holistic one, often titled “total rewards“: a benefits approach that encompasses health, retirement, well-being, compensation and more recently employee experience.

But is this approach right for you, your company, and your employees?

Total rewards transformation is no small transition. While the opportunities for greater savings and improved employee experience are significant, the challenge of transformation itself may be a roadblock. Consider these five factors before deciding to go down that road:

1. Stakeholder buy-In. Total rewards transformation involves many aspects of a company's business, and with an increasingly crowded C-Suite, it's important for there to be sufficient buy-in for the transition. CHROs, CFOs, COOs, and CXOs are just a few of the decision-makers that must be on board to achieve holistic transformation.

Reaching consensus on what a company-specific total rewards offering should be can be a daunting task, and if that consensus cannot be reached, efforts to transform may be doomed to failure before you even begin.

2. Corporate culture. If the initial challenge of stakeholder buy-in is achieved, the planning phase for defining what benefits and services are to be offered (and how) must be in alignment with overall corporate culture.

Services provided must hold true to your company's core values. Having that approach clearly defined will provide strong guidance in terms of services and vendor selection.

3. Digital infrastructure. Is your company digital savvy? Do you regularly modernize your employee dashboards and digital tools, or have you kept legacy systems that are years behind the times? If your digital capability isn't up to modern standards, the cost of total rewards transformation will increase.

Your digital and IT infrastructure must be modernized to properly convey and administrate your new benefits services, as the holistic approach can be complex and hard to communicate to your workforce, particularly at the outset.

4. Workforce profile. Is your company boutique, mid-sized, or large? The answer to that will greatly impact the complexity of your engagement strategies when making the transition to total rewards.

Beyond the size of the workforce, one must also consider its demographics. As with the workforce, the scope of geographic presence also greatly impacts the complexity of total rewards offerings.

Moving away from the siloed approach, companies that embrace total rewards place additional emphasis on well-being and employee experience in the same breath that they speak of traditional health, retirement, and compensation benefits.

But how these services are defined can depend largely on your geography. Employee experience, workforce perspective and expectations can vary significantly based on culture. Even more importantly, the dynamics of regulatory environments lead to increased compliance complexity and concern. This is yet another important factor to consider when deciding to make the leap to total rewards, as it may increase your operating costs.

5. Change management capability. Transformation that impacts across the enterprise can fall flat if not effectively communicated to all involved. Well-designed communication strategies are essential during a time of transformation that is highly dependent upon employee participation and enrollment for success.

Multigenerational workforces require multipronged approaches to communications, including traditional approaches (enrollment packets, meetings) and new digital mediums (online platforms, mobile apps). The cost of the engagement strategy can vary greatly depending on its complexity, and may require the assistance of outside firms to facilitate it if your company does not have an internal change management office, which in turn raises the price tag.

If you do decide to transition, you may need outside help. Luckily, you have a plethora of options. For pure consultative support, particularly for large multinational companies, PwC, Deloitte, and EY are great options to consider. For those seeking a blend of consulting and benefits administration support, Aon and Mercer are strong contenders. Plenty of firms that offer tactical or niche support can be of value as well, such as The Segal Group, with significant experience in the public sector.

There are many factors to consider, but those listed above should provide a strong starting point. Total rewards transformation can be daunting, but the end-state can be worth the initial effort.

Matthew Merker is a Senior Analyst with ALM Intelligence, providing competitive intelligence in the management consulting industry. Matthew has researched the benefits consulting industry for over four years, bringing in-depth analysis of defined benefit, defined contribution, private exchange, health, and well-being. Previously, he has worked as an Associate and Senior Consultant for Booz Allen Hamilton, providing management consulting services for public sector clients, including the Department of Defense, Department of Homeland Security, and others.

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5 factors to consider before plunging into a total rewards program

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