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Every business wants the best–the best product, the best customer service, the best possible profit margin, the best market position, and the best people. Some actually achieve it. How do they do it?
From VisionLink’s point of view, there are four essentials that a company must get right if it hopes to attract and retain a level of talent that can drive all the other “bests” it is trying to achieve. We call these the Four Pillars of Total Rewards. In summary, they are as follows:
- Compelling Future
- Positive Work Environment
- Opportunities for Personal and Professional Development
- Financial Rewards
Compelling Future
A compelling future assumes, of course, that those in company leadership know where the business is headed and how its going to get there. They have a vivid and clear vision. They consistently communicate that vision and the strategy that is needed to fulfill it. They have reduced the business plan of the company to an easily understood, focused strategy statement that all of the principal players in the company can articulate. Everyone throughout the organization understands the vision and how the company is going to fulfill it.
But this is not all.
The “best” companies have an ability to make “compelling future” come alive for their workforce. They enable their employees to see themselves in the future of the business. The company and its employees have a shared value system. There is a unified financial vision for growing the enterprise that is understood by all. Premier talent are allowed to think and believe that the business cannot achieve its vision without them. They are allowed this view this because its an accurate one–not just something leadership says to rally the troops. As a result, they nuture a partnership relationship with employees–particularly key producers. Those the company needs to drive results see their unique ability as an essential ingredient to the company realizing its vision of the future. In essence, this is why employees consider the future to be “compelling.”
Positive Work Environment
World class organizations create a culture and environment that nutures individual unique abilities within the framework of unique teams. This means that people are placed in roles where their talent, experience, skill and wisdom allow them make the best contribution. Their distinctive ability blends with and compliments others in their sphere of influence to create a highly productive outcome for the company and an enriching experience for the employees. The whole becomes greater than the sum of its parts.
In such an environment, innovation is encouraged and thrives. There are open channels of communication for problem solving with company leadership and people feel empowered as stewards over their work. Roles and expectations are clear, fair and synchronized with the company’s business plan. A culture of execution, sustained success and confidence is nurtured, celebrated and rewarded.
Opportunities for Personal and Professional Development
Central to the definition of ”meaningful work” for employees is the ability they have to improve and advance. Organizations that want to attract “the best” must make sure there are clear opportunities for employees to magnify their unique abilities as a result of their affiliation with the company. This relates to everything from career path development to training and supplemental educational opportunities. However, it also relates to challenges employees are given, a sense of stewardship they are allowed to have in their roles and the feeling of confidence that is communicated to them about their ability to make a contribution.
At its core, this category has to do with building trust. The roles employees are given, how they are managed, and the way they are ultimately paid ties them to the business plan of the company and creates a sense of collaboration with ownership. Such a relationship breeds mutual respect and unity, which are foundational to a relationship of trust. In organizations where trust is high, results are accelerated. As the speed of performance increases, costs go down and revenues increase. If compensation is effectively engineered, all win and a positive, self-sustaining momentum is set in motion.
Financial Rewards
Many assume pay is the core issue for employees in determining whether to join or leave an organization. It’s not that simple. All of the factors described here play a role.
At issue with pay is not usually how much someone is getting but how they are being compensated. In other words, the best employees recognize and respond to the concept of valuation creation. If a business creates value for its customers, the marketplace rewards that company financially by buying its product or service. Value is received for value created. Similarly, employees recognize that if they create superior value, some part of their pay should reflect that. Conversely, if they don’t create additional value, they likewise shouldn’t be paid as if they did.
Great organizations understand that value creation has both a short-term and a long-term component– for employees as well as for the company. The business is interested in generating results today, tomorrow and through the remainder of the year. However, it is also interested in sustained results–those that will drive shareholder value over the next two to five years–even the next decade. Consequently, they are interested in good profits (those that come by virtue of benefiting the customer) and not bad profits (those that come at the expense of the customer and erode good will and long-term business value).
Employees are no different . They have short and long-term financial objectives–and look to their employment as the primary vehicle to achieve both. In this context, employees are primarilly interested in their pay program addressing three key priorities:
- Cash Needs/Standard of Living–this priority is typically met through salary and some type of annual incentive plan that gives the employee some control over short-term earning capacity
- Security–this area of emphasis has to do with protecting against financial risk through adequate insurance coverage and opportunities for employees to mitigate potential risk issues in their lives
- Wealth Accumulation–this area of focus has to do with participating in the long-term value employees help the business create and feeling empowered to “reap what they sow”; it goes beyond mechanisms such as 401(k) or pension plans that are purely retirement focused
These Four Pillars of a Total Rewards strategy can be a useful way to evaluate how your company is doing in positioning itself to attract the best and, as a result, become the best. It is our experience that the businesses that “get” this also end up ”getting” the results they are looking for on their pathway towards World-Class Performance.
